Govt won’t let property market crash: Shanmugam

Home Affairs and Law Minister K. Shanmugam during his dialogue session with ERA agents

The government has a “rough idea” on when to revise the property cooling measures, “but that doesn’t mean that we announce it”, said Home Affairs and Law Minister K. Shanmugam.

Speaking to over 2,000 property agents at an ERA Realty conference on Wednesday (3 Feb), the minister said such a decision would be made by the National Development and Finance ministers when they assess the risks to be “less or manageable”.

He was responding to questions on when the Additional Buyer’s Stamp Duty (ABSD) would be removed.

He explained that the measures were put in place by the government to protect Singaporeans, and they have managed to avert the disaster of an overheated property market.

He noted that while some people are worried that the property market could go the other way, the government will ensure this doesn’t happen.

“We cannot have a healthy economy if the property market has crashed. So it’s not in anybody’s interest to see it crash.”

First introduced in December 2011, the ABSD was revised upwards in January 2013 to rein in Singapore’s escalating residential property prices.

Singaporeans are required to pay an ABSD of seven percent for a second property, and 10 percent for a third and subsequent property. However, foreigners are required to pay an ABSD of 15 percent for their first and subsequent property purchases.

Eugene Lim, Key Executive Officer at ERA Realty, believes that the government is watching the market closely and will tweak the property measures in due time.

“The question is when, and many analysts have tried to set a target of how much prices will come down before the government removes the measures, but I do not think that is the case. The government is concerned about Singaporeans over-leveraging themselves as there are many potential buyers waiting on the sidelines.

“Right now, we’re not sure how quickly prices will rebound if one of the measures is removed, and I think that is the litmus test for the government. They don’t want to remove something and cause prices to rebound, derailing the measures.

“They are looking at market stability rather than a target price. When the time comes, they will make the decision to reverse the measures, which will be a quick and easy process.”

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