Singapore - Market stability is key when assessing property cooling measures and the government will review these policies when the risks are "less or manageable", Home Affairs and Law Minister K Shanmugam said on Wednesday.
Adding that he was not in a position to make government announcements unilaterally, Mr Shanmugam said: "When the finance minister and the national development minister see that those risks are less or manageable, then they will relook at the policies. Whether they will change or they will not change, it's not for me to go and say."
The minister was fielding questions at a dialogue session with over 2,000 property agents at a conference held by ERA Realty when the question on whether the government would lift property cooling measures, particularly the additional buyer's stamp duty (ABSD), was raised.
Cooling measures such as the ABSD and the total debt servicing ratio, which caps individuals' borrowings to 60 per cent of their gross monthly income, seek to avert a systemic risk in the banking system and protect Singaporeans from over-leveraging.
"We plan ahead, we think, we assess so when we set on a course, we have calculated the costs and benefits to the population, to the different sectors and we keep to the course. We have a rough idea on when to change but that doesn't mean we announce it," Mr Shanmugam said.
He added that policies are designed to balance the need to meet the aspirations of Singaporeans wanting to "own a piece of their own country" with being an international city.
He also stressed that the property market does not exist in a vacuum but is linked to Singapore's economy, whose susceptibility to the global economy is magnified by the fact that its external trade volume is four times that of its GDP.
Even though the 2008 global economic crisis was hardly felt in Singapore, thanks to the government's pump-priming activities, the world economy is different now with fragments of fragility seen on many fronts, Mr Shanmugam observed.
The European economy is still in the doldrums, China is facing great uncertainty and Japan is not in a "roaring" stage. While the US economy seems stable, there is still the oil price rout, unrest in the Middle East and increased global terrorism to contend with.
At the same time, Singapore is on a different growth trajectory now and an ageing population is becoming its biggest challenge. "The property sector is not divorced from all of these."
When asked about the oversupply situation in the property market, Mr Shanmugam pointed out that the government has been warning about the huge ramp-up in supply as it increased land sales, with then-Minister for National Development Khaw Boon Wan reiterating that prices were not sustainable given the upcoming supply. Back-of-the-envelope calculations would have shown that the number of completed homes over the next three years represents 30 per cent of current private residential stock.
"The government had been announcing this over and over and over again, so that the developers knew it, the purchasers knew it," Mr Shanmugam said. "But developers were bidding like there was no tomorrow."
Addressing the property agents, Mr Shanmugam said: "While you don't like a dull market, a market that overheats and then crashes is the worst thing that can happen to you."
ERA Realty key executive officer Eugene Lim noted that the government is probably not looking at a target level for how much property prices should fall but rather market stability. He said ERA agents adjusted to market conditions by catering to an increased pool of upgraders, resale transactions and tenancy volumes.
ERA agents collectively accounted for over 25.5 per cent of the total 174,795 sales and leasing transactions that closed in 2015. So far, ERA has secured its appointment as marketing agent for eight upcoming residential projects this year.
The largest agency here will further bump up training for its 6,000 agents this year with a S$2 million budget, up from S$1 million last year, Mr Lim said. A series of corporate initiatives will also be rolled out to enhance ERA's market presence in the commercial property segment.
ERA will focus on building relationships with commercial clients such as Ascendas, Ascendas Reit, Keppel Reit and C&P Logistics Hub. It will then consolidate and publish its commercial listings on the new ERA Singapore website; its agents can go directly to developers or owners to close the listings or team up with ERA's commercial department.
This article was first published on February 4, 2016.
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