Although cooling measures for the real estate market in Singapore are set to continue in 2012 more land is to be released for the development of executive condominiums.
The Ministry of National Development (MND) says that it is prepared to supply land sites for 5,000 units in 2012 as part of a government plan to help more higher income Singaporeans own private housing by expanding the market.
The government has already increased the monthly income ceiling for the purchases of new executive condos from S$10,000 to S$12,000 and said that since it was launched in 1995 almost 15,000 units have been launched and another 3,000 are coming on stream.
Minister of State for National Development and Manpower Tan Chuan-Jin told the Real Estate Developers’ Association of Singapore (REDAS) anniversary dinner, that he expects that the majority of Singaporeans will continue to live in public housing.
He reiterated that the government remains committed to help first time owners and newlyweds purchase their own homes but in 2012 the government will begin to pay more attention to helping HDB second timers.
He added that the volatile equity markets and uncertainty in the eurozone may result in more foreign funds being attracted to Singapore’s property market. The latest move is targeted to moderate such investment demand to avoid the need for a major correction in the future.
Tan said that developers may not welcome such a move but it is needed for the good of the industry where there are concerns about rising prices.
The most recent figures show that residential property prices were slightly higher, up 1.7% in November. The Singapore Residential Property Index (SRPI) from the National University of Singapore (NUS) also shows that prices increased 1% in October.
Some experts want property cooling measures to be removed if the Singapore economy deteriorates or stagnates amid the looming economic downturn. However, if home prices continue to increase despite the new policy, home buyers can expect the measures to remain.
Some developers have said cooling measures could turn away foreign investment, drive down property values, and therefore, possibly damage an already volatile economy.
Wong Heang Fine, President of the Real Estate Developers Association, warned of a knock on effect on mortgages that could lead to a decline in home equity values and shrinking wealth.