By KALPANA RASHIWALA

THE Budget's measures to help the property market suggest the government is saving its bullets in case the economic situation worsens.

The measures announced by Finance Minister Tharman Shanmugaratnam for the property market yesterday effectively comprise property tax rebates to lighten the burden of businesses and steps to give property developers greater flexibility to help them pace their supply to better cope with the current downturn. These include a one-year extension of the project completion period for private housing developments, and allowing a reassignment of government sale sites and private residential land owned by foreign housing developers with Qualifying Certificates.

Yesterday's package will augment a key supply-side initiative the Ministry of National Development announced in October last year - to suspend the sale of state land through the confirmed list until June 2009.

What yesterday's Budget did not contain were the demand boosters that developers had put on their wish-list - such as reinstating the deferment of stamp duty payment for projects under development, or better still, a temporary cut or suspension of stamp duty. Also high on their agenda is seeking a reintroduction of the deferred payment scheme (DPS) - which was scrapped in October 2007 and blamed for fuelling excessive property speculation. Developers have been suggesting some safeguards being worked into a reincarnation of the DPS to minimise the speculative features of the system. After all, DPS did help genuine home buyers tide over temporary cash-flow problems, such as the HDB upgrader who needed a reprieve on instalments for his new private home until he sold his existing HDB flat.

And then of course there was the suggestion to rekindle demand for private homes from foreign buyers by changing the investment criteria for Economic Development Board's Global Investor Programme for foreigners to be considered for Permanent Resident (PR) status, by allowing a higher quantum for property purchase or even lowering the total threshold value. (Under an option to the Programme announced in July 2005, a foreigner can be considered for PR status if he invests at least $2 million in business set-ups, other investment vehicles, and/or private residential properties, with up to half of the investment allowed in private residential properties.)

There have also been murmurings of relaxing the use of CPF savings for buying homes.

But as National Development Minister Mah Bow Tan said last week: 'At this stage, it's not the right time to talk about stimulating demand. Until there's a little more certainty in the market, it's pointless to talk about artificial measures to stimulate demand. They'll not work.'

He's right. The biggest worry for the man-in-the-street today is whether he'll keep his job - and the roof over his head. He's not in a mood to buy a new property.

When the job market improves and the all-round economic situation looks more hopeful, dishing out some demand boosters may provide just the right incentive to lure home buyers from their shells again.

And when the property market starts to warm up again, the government could also consider granting developers another of their wishes - reverting to the previous formula for calculating development charges (DC). Prior to July 2007, the formula creamed off 50 per cent of the enhancement in land value. Today it is 70 per cent. Turning back the clock on this policy would help restore the incentive developers may need to redevelop ageing buildings and rejuvenate the city as they pick up the crumbs left by the property slump.

Interestingly, the relatively short duration of most of the policies announced by the government this round to help the weakening property market means it wants to retain flexibility to reverse things swiftly - just in case the property market stages an unexpected sharp recovery.

In 1999, the official private home price index shot up 34 per cent after the Asian financial crisis. Back then, the government had frozen land sales completely - there was no reserve list system at the time - between late 1997 and end-1999.

The government later introduced the reserve list system, which is still in effect despite the suspension of land sales through the confirmed list. Sites in the reserve list are launched for tender only upon successful application by developers.

Nimbleness is the keyword in managing the property market.

This article was first published in The Business Times on January 23, 2009.