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Government Open to New Cooling Measures but Focusing on Current Policies

As property prices continue to climb, Minister for National Development Desmond Lee has reassured Singaporeans that the government is “not averse” to introducing more cooling measures. However, he emphasized the importance of letting current policies take effect before making further adjustments.

Balancing Market Stability and Economic Uncertainty

Mr. Lee highlighted the need to strike a balance between market regulation and the uncertain global economic environment. With challenges like rising interest rates, potential trade restrictions, and geopolitical tensions, any new policies must avoid overcorrecting the market.

“Tough demand-side measures could risk a sharper market downturn than expected,” he cautioned during a recent media interview.

The Impact of Current Cooling Measures

Singapore has implemented four rounds of cooling measures since December 2021. The latest round, introduced in August 2024, tightened the loan-to-value (LTV) limit for HDB loans, reducing it from 80% to 75%. This change aims to moderate demand in the high-end public housing market, impacting about 10% of buyers.

Another key policy, the 15-month wait-out period for private property owners purchasing non-subsidized HDB resale flats, has significantly reduced demand in this segment. Before the rule’s implementation in September 2022, private homeowners made up 34% of buyers of million-dollar flats. By November 2024, this number had dropped to just 12%.

While the wait-out period has been effective, Mr. Lee described it as a temporary measure that will remain until the market stabilizes.

Addressing Housing Supply

To ease market pressures, the government is ramping up housing supply. The commitment to deliver 100,000 Build-to-Order (BTO) flats by 2025 is on track, alongside increased private housing supply. In the first half of 2025, 8,505 private homes will be launched under the Government Land Sales programme, up from 8,140 units in the second half of 2024.

“Let the supply and demand-side measures work their way through,” Mr. Lee said. “We are not averse to putting in new measures if necessary, but our priority is to ensure there’s no property bubble in either the public or private markets.”

Rising Prices and Market Sentiment

Despite these efforts, HDB resale prices rose by 9.6% in 2024, almost double the 4.9% increase in 2023. Mr. Lee attributed this to temporary supply constraints and strong demand for centrally located properties.

He also pointed out the impact of market psychology, where reports of million-dollar flats fuel both sellers’ expectations and buyers’ urgency. While these record-breaking flats represent a small fraction of transactions, they create a ripple effect across the market.

“This sentiment-driven psychology risks pushing the resale market ahead of economic fundamentals, which could lead to a bubble,” Mr. Lee warned.

Supporting Affordability

To ensure housing remains affordable, the government has introduced initiatives like the HDB Flat Eligibility (HFE) letter, which provides buyers with a clearer understanding of their housing budget. Enhanced grants, such as the CPF Housing Grant, have also been increased, offering up to S$120,000 for families and S$60,000 for singles buying their first flat.

According to Mr. Lee, about 80% of first-time homebuyers in the last two years were able to service their loans almost entirely through their CPF savings. This reflects the government’s ongoing commitment to support Singaporeans, especially first-time and lower-income buyers.

Looking Ahead

As the property market evolves, the government remains vigilant in monitoring trends and implementing measures to maintain stability. While additional cooling measures may be introduced if necessary, the focus remains on ensuring current policies have the desired impact.

With a steady increase in housing supply and support for buyers, Singapore’s property market continues to work towards long-term sustainability.

CNA

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