The property market shows signs of stabilising, but "we are not out of the woods yet" when it comes to the rise of resale flat prices, said National Development Minister Khaw Boon yesterday.
He warned that prices could "rise beyond sustainable levels" because the global environment of low interest rates looks set to continue, owing to monetary expansion in the US and Europe.
The possibility prompted the Monetary Authority of Singapore (MAS) to restrict the length and size of home loans earlier this month, he told Parliament in response to MPs' questions on the affordability of HDB flats.
In his first comment on the curbs, Mr Khaw said the measures are to "encourage greater financial prudence among property purchasers".
He added: "This is a calibrated step to prevent excessive speculation."
The latest restrictions are the sixth round of cooling measures the Government has imposed since 2010.
All home loans are now capped at 35 years.
If a buyer wants a loan that extends past 30 years or beyond the re-employment age of 65, he must fork out in cash a down payment of 40 per cent for his first loan and 60 per cent for his second or subsequent home loans.
Mr Liang Eng Hwa (Holland-Bukit Timah GRC) asked Mr Khaw if there would be enough new flats to accommodate the entry of singles into the market.
Singles, hitherto restricted to resale flats, will soon be allowed to buy new flats from the board, which has yet to announce the criteria they must meet.
Mr Liang also asked if the Housing Board would consider building and holding a buffer stock of flats to meet unanticipated demand.
Mr Khaw said that the HDB had planned to roll out 25,000 new flats last year and again this year.
This would provide a buffer over and above the 15,000 families that are formed every year.
The planned supply would be "winding down" now, but the incipient entry of singles into the market has led him to ramp it up instead.
Last month, HDB said this year's supply would be raised to 27,000 flats.
But it is "very hard to put a figure on how much we should cater for singles", Mr Khaw said
In response to Mr Zaqy Mohamad (Chua Chu Kang GRC) and Ms Foo Mee Har (West Coast GRC), he said the rise in resale prices is not at an unacceptable level.
What is an "acceptable resale index" depends on the economy, he added.
"If prices remain unaffordable, that means people cannot afford to buy (property), then there will be no buyers and there will be no market."