June 17, 2007

No need to panic, there are enough flats, says Mah

National Development Minister Mah Bow Tan spoke about the booming property market last night. Here are edited extracts from what he told reporters after the launch of a dance festival in Tampines

Q Following the announcement of the land sales, some analysts are concerned that in the mid- and long-term, there'll be a supply glut. What are your views on that?

A The Government Land Sales (GLS) programme is a very market-responsive programme in the sense that we monitor the market and see what the supply-demand situation is.

In the last year or so, the take-up rate has been very strong. So the Government has decided to push up a lot more supply.

Having said that, not all the supply is in the confirmed list. In fact, out of the 41 sites, only 14 are on the confirmed list. There are still 27 on the reserved list which is subject to market demand.

I think it is important to keep the supply-demand situation very much in mind. We don't want to oversupply, neither do we want to have a shortage. It is very important for us to make sure that prices do not overshoot or race ahead of the real growth in the economy. I think it's not sustainable in the long run and of course it's also not good for our competitiveness if prices and rentals go up too fast.

Q There has been news of HDB flats going for $600,000 to $800,000. Are there concerns that this may price average Singaporeans out of the property market?

A If you look at the two cases that have been reported, the buyers are not really your average HDB upgrader.

In fact, I'm told the two buyers paid cash for it, they didn't even ask for valuations, didn't even take a loan.

The flats are also quite special in the sense that they're in special locations, got good views; renovation is probably also of a very high standard. They're more the exception rather than the rule.

I think the general market, based on the information that we have, is really quite steady. There is an increase but this increase is in line with the increase in the strength of the economy, in line with job growth.

I think, by and large, I'm quite comfortable with the pricing in the broader market at the moment.

Q Are there plans to release more land in the next six months?

A We monitor the situation every six months. It's a bit too early to tell what's going to happen in the next GLS programme. But what I want to stress is that we will continue to keep a close eye on the market. We will make sure that there is sufficient supply. And if the demand goes up, we will ensure that there are new sites released.

We also want to make sure that the information that buyers and sellers have is complete. So we will release more information, so that everybody will have a clearer picture. The picture is that there is sufficient supply in the market in the next two, three, four years. There's no need for people to panic.

Don't feel that you have missed the boat because actually there are quite a lot of boats coming along. And generally I think we make sure the market continues to grow steadily and not get overly heated.

Q Are there concerns that the heat from private property is spilling over to public housing? With the en bloc fever, sellers have the perception that a lot of buyers have a lot of cash to splash. Will the Government step in?

A I don't think it's going to spill over onto the broader market because there are plenty of HDB flats available for sale.

There's no need for everybody to feel that prices are getting out of their range. If you can't buy an executive flat, buy a five-room. If you can't afford a five-room, buy a four-room. If you can't afford central areas, go to the suburbs. If you can't afford Tampines, go to Woodlands or Yishun or somewhere.

Q There are a lot of en bloc projects and there have been reports of this destroying heritage in Singapore. Any comments on this?

A I think the fundamental reason behind an en bloc redevelopment is really to make sure that older parts of Singapore have a chance to be rejuvenated and redevelop themselves.

I think if we don't have this, we're going to have a static situation where things are going to run down and there's no opportunity for people to actually redevelop.

At the same time we've got to make sure that the needs of the minority are taken care of. But there may be certain gaps and I think this is what the Ministry of Law and Singapore Land Authority are now undertaking...a consultation exercise and try and see how they can improve the process. So let's wait and see the outcome of that.