Singapore minister sees no property bubble, not even at high end of market

Singapore minister sees no property bubble, not even at high end of market

2/12/2007 4:40:00 PM

SINGAPORE (XFN-ASIA) - A property bubble is not forming here, not even at the high end of the housing market, despite a sharp rise in prices, Minister of National Development Mah Bow Tan told Parliament.

The government has said property prices increased by an average of 11.9 pct last year, but property analysts have said prices of upmarket dwellings have surged by as much as 50 pct, and market watchers are increasingly concerned that excessive speculation will cause a property bubble.

However, the government, citing the number of sub-sales seen in the fourth quarter of last year, says there are no signs of a property bubble. Mah said there were 426 sub-sales in the fourth quarter, 5.4 pct of all transactions during the quarter.

"Is there a property bubble forming? I guess if you look at the number of sub-sales, I would say there is currently no cause of concern," Mah said.

"Prices and take-up of private housing are only rising sharply in the core central region," he said. "In other parts of Singapore, the increase is steady and supported by a growing economy."

But Mah advised buyers to be cautious.

The minister said Indonesia's ban on exports of sand would have no significant effect on the construction sector here, given the government's stockpile and alternative sources.

"Several shipments of sand from alternative sources have arrived in Singapore early this month. We will work with the industry to diversify our supply sources," Mah said.

He did not say what these alternative sources are. Mah said that while the price of sand from these alternative sources would be higher because of higher transportation costs, the government had fixed the price of sand to ensure development projects remained on course.

"[The increase in the cost of sand] will only increase the overall project development cost by 1-3 pct," Mah said.

Feb 13, 2007

No bubble in property market: Mah

He allays concerns that sector is overheating; Govt to 'ensure market stays healthy'

By Li Xueying


MINISTER for National Development Mah Bow Tan yesterday sought to allay concerns that a bubble is forming in the property market.
'I guess if you look purely at the number of sub-sales, I will say that there is no cause for concern at the moment.'

Still, the Government is 'monitoring the situation and making sure that the property market stays healthy', he said.

Sub-sales refer to the quick resale of a new property, and are a proxy of speculative activity.

Record prices and long queues at property launches last year led to concerns that Singapore is returning to the heyday of excessive speculation in the mid-1990s.

But Mr Mah listed a litany of figures to support his case that this is not so: In the fourth quarter of last year, sub-sales accounted for 9.7 per cent of all private home transactions in prime areas.

Although it was the highest among corresponding figures for the rest of Singapore - 3.5 per cent in other parts of the central area and 2.3 per cent in outlying suburban districts - it was still far lower than the record figure reached in 1996. Then, sub-sales formed 28 per cent of all private home deals.

This is the third time in four months that the minister is making it clear the property market is not overheating.

But MPs wanted more assurance, with Hong Kah GRC MPs Alvin Yeo and Zaqy Mohamad querying the minister further.

Mr Yeo asked Mr Mah to comment on newspaper reports that prices of super-luxury homes have risen 25 per cent in less than a year.

He was worried that if the bubble bursts, it could hurt foreign investor sentiment.

Dismissing the press reports as 'somewhat exaggerated', Mr Mah said the price rise was in fact 17 per cent.

'Having said that, of course, there is a big difference between the increase in this segment and the others. There is also a lot of flipping - sub-sales,' he conceded.

The reason: There is a 'much higher' level of interest among international buyers in such properties.

'But it's no different than what it was in the last few years,' Mr Mah said.

Mr Zaqy asked about measures to 'prevent another property bubble in the public sector' arising because of increasing private property prices.

There is 'no cause for concern', said Mr Mah. While the prices of Housing Board flats have climbed steadily, the rise is 'not as sharp' as that of private property. Last year, prices climbed by 2 per cent.

Yes, there was 'a little bit of a frenzy' last month when rumours swirled that there were flats for sale in the mature estates, he said.

A rush for an HDB walk-in selection, for instance, turned ugly, although the flats on offer were old leftovers.

Stressing that the supply of HDB flats is enough, he said: 'These flats may not be new flats per se or not in the areas they want, but there will be flats available - both new and resale - and the Government will continue to make sure that this is so.'

Warming to the theme, Ms Jessica Tan (East Coast GRC) noted that rents for office and commercial space are also on the up, and asked how this was affecting Singapore's competitive edge in wooing foreign companies.

Mr Mah acknowledged the problem but said it was a 'very short-term imbalance'.

When the economy was not doing well, developers did not take up the land offered for sale. Now that they are, a 'gestation period' is needed for the new buildings to be completed, and supply boosted.

Meanwhile, the Government is offering empty government buildings and schools as temporary space.

'I expect this shortage to be resolved within three years and after that, a more balanced situation will prevail.'

[email protected]

Right now only the ministers' properties are rising in values, so there is no bubble because the ministers' properties are actually worth much more.
But when the HDB flats starts rising in price very fast, then it is a bubble because poor men house not supposed to be worth so much.

If he thinks no bubble then curb the Deferred payment loh , after all not much people speculating right ? just do this loh , then we see where property market headed .