National Development Minister Khaw Boon Wan on Tuesday (Mar 10) reiterated that Singapore wants to see a “soft landing” for its housing market.
2014 was the first full year that home prices fell after several years of increase, amid Government measures to cool the property market. HDB resale flat prices slipped by six per cent, while private homes saw a four per cent decline.
Some Members of Parliament (MPs) raised concerns that the market may slip too far, and Mr Khaw said the Government will be careful in that respect. The current property cycle picked up from its trough in 2009.
Between then and last year, HDB resale flat prices went up and reached a peak in 2013. However, prices have since cooled.
Outlining plans for his ministry in the year ahead, Mr Khaw noted the Government’s efforts in taming the housing market have seen results. HDB resale prices have eased by 37 per cent above the 2009 level. Over the same period, median household income has caught up, rising by 38 per cent.
But there were some MPs who cautioned that the Government’s efforts to rein in housing prices should not be overdone. “We want a soft landing for our housing market because a market crash benefits no one,” Mr Khaw said.
He added: “Ms Foo Mee Har said that we should not go into overdrive, and unwittingly undermine the retirement plan of our seniors who look to their housing assets for monetisation. I agree, that is why we have substantially reduced the supply of new flats.
“Ms Foo and Er Lee Bee Wah suggested that we adjust the Additional Buyer’s Stamp Duty, especially for Singaporean buyers, when we are ready to unwind the cooling measures. I have also heard Dr Lily Neo’s very thoughtful words of caution.
“Indeed, we should not overkill. The property market is in transition and it is a time that calls for vigilance and nimbleness. We will be careful.”
With new flats being subsidised substantially, Mr Khaw noted that those buying flats directly from the HDB have benefited even more. Compared to the increase in median household income, Mr Khaw noted that with grants, prices of Build-To-Order (BTO) flats in non-mature estates have grown by six per cent.
Last year, about 20,000 BTO flats were booked by Singaporeans. Ninety per cent of three-room flats were sold at below S$250,000, while 81 per cent of four-room flats were sold under S$350,000. Eighty-nine per cent of five-room flats were sold below S$450,000.
Mr Khaw said that according to a survey, this was all within the amount that respondents had said they were willing to play for a flat. “I would like BTO prices to be within four years of an applicant’s annual salary. But this assumes that BTO applicants will be prudent in their choice of housing.”
Mr Khaw added that home ownership is not only a privilege of the rich. He noted that benefits of its home ownership policy have reached all income groups – including those from the lower-income group.
Between March 2012 and July last year, 1,491 families with household incomes below S$1,000 booked a two-room flat.