The property market may see some radical changes in the coming months, according to analysts.
They say the newly sworn-in Cabinet is expected to carry out extensive review of current housing policies.
This may include a review of the government land sales programme and moderating home prices.
However, some analysts say the population must continue to grow, otherwise the housing market will risk an oversupply situation in the next three years.
The new Minister for National Development Khaw Boon Wan has pledged to make the HDB flat a popular icon again, and market watchers are waiting for the government’s thorough review of housing policies, which they expect will take place between six and 12 months.
The review to increase the income ceiling for HDB flats, which started in early May, kicked off the process.
Patrick Liew, chief executive officer, HSR Property Group, said: “Increasing the income ceiling is a two-edged sword … because you are transferring some of the demand from the private sector to the public sector, we need to look at the supply side.
“We need to decrease the supply of land for private residential development and maybe increase the development in the public sector.”
But housing supply remains a hot issue among analysts.
According to estimates, there will be 41,400 public and private housing units to be completed by year 2014.
And analysts forecast that only about 33,000 units will be taken up in the next three years, based on an annual take-up rate of 11,000 units.
Analysts say population growth needs to increase by 1.8 per cent annually to maintain a healthy take-up rate.
For now, market watchers are not expecting new immigration policies soon, as they were tightened just over a year ago.
They warn that an oversupply in housing may limit property price growth.
But they are confident that future housing policies will prevent a large price correction as well.
Liang Thow Ming, head of residential services, Credo Real Estate, said: “I don’t think the government is working towards a huge correction. A huge correction is not in anybody’s favour, especially in a situation like Singapore, where the majority of us are house owners.
“A huge correction will impoverish a good part of Singapore and I don’t think the government wants to see that happening.”
Market watchers say they are hoping for more details about foreign workers in Singapore, as they say this will help them monitor the impact on property demand.
Source : CNA – 23 May 2011