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Lawrence Wong: S'pore property market now healthy and stabilised

But it's too early to consider cooling measures still, he says, adding HDB will launch 18,000 new flats in 2016
Thursday, December 31, 2015 - 05:50
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During a visit to Tampines Greenlace on Wednesday, Mr Wong met families that have moved into their new homes in the recently completed BTO project.

Singapore

SINGAPORE's housing market is now "healthy" and "stabilised" and is "on track for a soft landing", but it remains too early to talk about unwinding any property cooling measures.

Minister for National Development Lawrence Wong said this to reporters on Wednesday after visiting the recently completed Build-To-Order (BTO) project, Tampines Greenlace, and meeting several families who had just moved in.

As new macro-economic changes such as higher interest rates and a slowing Singapore economy come into play in 2016, the government will have to keep monitoring the market, he said. "It may affect demand, but we are watching all these indicators very carefully, and will make adjustments when necessary."

In October 2014, Deputy Prime Minister Tharman Shanmugaratnam said that property prices had not yet seen a "meaningful correction", without specifying what would constitute "meaningful".

When asked by BT if his latest remarks on the stabilised market mean that the market is ready to be weaned of some cooling measures in 2016, Mr Wong said "I didn't say that", and added that it was "too early to talk about (it)".

Official data indeed show both public and private housing prices stabilising. Their rates of declines have been levelling off.

Prices of Housing & Development Board (HDB) flats fell 6 per cent in 2014, and 1.8 per cent for the first three quarters of 2015. PropNex chief executive Mohd Ismail said that prices may be flat or drop one per cent in 2016.

Private home prices fell 4 per cent in 2014 and 3.2 per cent for the first three quarters of 2015. Mr Ismail expects a 3-4 per cent drop in 2016.

Flash estimates for both segments are expected in early January.

Mr Wong also announced that the HDB would launch 18,000 new flats in 2016 - 3,000 units or 20 per cent more than in 2015 - to accommodate the higher demand following new policies announced this year.

These new policies include new two-room flats with flexible leases, higher income ceilings and additional grants such as the new Proximity Housing Grant and the enhanced Special CPF Housing Grant.

Mr Wong said: "If you look at the housing market, I think the indicators are positive. They are very healthy."

After falling over the past few years and stabilising in recent months, HDB resale prices are now at 2011 levels, and more than half of resale flats are transacting close to their market value, he said. "On the private property side, I think the decline has been smaller in the last quarter . . . so I think there are signs of stability, which show that there is still very healthy demand for housing," he said.

Mr Ismail of PropNex said that there doesn't seem to be a sense of urgency on the government's part to tweak the cooling measures. "But to me, a cooling measure is only meant to be for a period of time and not permanent. I may accept that we are still not ready in the first half of 2016.

"One of the greater concerns has been the possible interest rate hike and that liquidity around the world will create the inflow from elsewhere (into Singapore) and spike prices all over again. But the second half of next year may warrant recalibration or a serious look into the cooling measures."

ERA Realty key executive officer Eugene Lim said: "It still goes back to looking at when (the government is) confident to pull back measures. It will be at a point when it will not cause prices to rebound."

He added that rising rates, increasing supply and weak external economies all have a direct and indirect play on the market and overall demand, and may themselves act as further coolers of the already chilly market.

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