New home sales in Singapore have shot through the roof recently. Resale prices of many popular projects have also risen from the lows early this year.
MEASURES TO ENSURE A STABLE AND SUSTAINABLE PROPERTY MARKET
THE Government has introduced new measures to prevent the fast-rising private property market from overheating.
It is removing the interest absorption scheme, which allows buyers to defer the bulk of their purchase price until the property is ready for occupation, with immediate effect. Only those uncompleted private projects where the units have already been offered for sale under this scheme can continue to do so.
It is also taking away the interest-only housing loans. These two schemes are forms of housing loans that entirely eliminate or substantially lower regular instalment payments for property purchasers in the first few years before the properties are completed.
They could thus encourage property speculation in a buoyant market where prices are rising rapidly, said the Government in a joint release on Monday.
The removal of both schemes comes into immediate effect.
As well, it will reinstate the confirmed list of land sales for the first half of next year. Under this method of sales, sites are put out for tender according to a pre-determined schedule, regardless of developer’s interest.
National Development Minister Mah Bow Tan has twice hinted at bringing back the confirmed list. Because recent land tenders have attracted overwhelming response from developers, market watchers have been expecting the Government to introduce more land supply via the confirmed list.
Now that the market is experiencing strong demand, the Government also said it will not extend the Budget assistance measures introduced earlier this year, when they expire. These include allowing developers to extend their project completion period by one year without having to pay an extension premium.
Responding to questions from MPs in Parliament, Mr Mah said the Government has been monitoring the property market very closely.
‘It is in everyone’s interest to have a steady property market where prices move stably in line with economic fundamentals. If excessive speculation develops and a property bubble forms, eventually a severe correction must take place,’ said Mr Mah.
‘This will have serious consequences for the economy, for the property market and for property owners. We are currently seeing signs of heightened speculative activity, although the level of speculation is not yet extreme.’
Demand for uncompleted private housing units has picked up strongly since February, and the proportion of buyers sub-selling their units has increased.
Developers sold 10,000 units in the first seven months of this year, more than the 4,300 units sold for the whole of 2008.
At this take-up rate, the total sales for 2009 may well exceed the historical high of 14,800 units in 2007, Mr Mah warned.
‘Prices for some projects are also increasing in tandem with the strong demand. Based on the caveats lodged for property transactions, overall private housing prices have started to increase significantly since June,’ he told the House.
Low interest rates have also spurred home buyers, encouraged by a steady rise in the volume of bank lending for housing loans.
‘These low interest rates have reduced the cost of property financing and if unchecked, this trend can lead to a rising spiral of demand and prices as more and more property buyers and speculators are drawn into the market,’ said Mr Mah. Property prices can potentially build up a strong rising momentum under these conditions.’
Source : Straits Times – 14 Sep 2009
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