Housing market has slowed, government to monitor prices and borrowing: DPM Heng

Jan 27, 2023

THE pace of property price increases in the last quarter has slowed and sales volume is down after fresh cooling measures kicked in last year, but the government will continue to watch prices and borrowing, said Deputy Prime Minister Heng Swee Keat.

“We must guard against a sustained increase in prices that is not backed by income and other fundamentals. Left unchecked, this could impair affordability and lead to a destabilising correction later on,” said Heng, who was speaking at the spring festival celebration of the Real Estate Developers’ Association of Singapore (Redas) on Friday (Jan 27).

Latest official data released on Friday showed private residential prices were up by 8.6 per cent in 2022, slowing slightly from the 10.6 per cent rise in 2021. The increase in resale prices of Housing and Development Board (HDB) flats similarly flattened, rising 10.4 per cent in 2022, compared to 12.7 per cent in the year before.

In 2022, more than 23,000 public housing flats were launched, and this year, up to 23,000 more will be launched. In the private residential market, the government has also ramped up supply through its state land sales programme, adding 6,300 units last year, with another 4,100 units in the pipeline in the first half of 2023 alone, Heng noted.

Still, “despite global uncertainties and greater supply, property prices here have remained buoyant” and “demand for owner-occupied private and resale homes from Singaporeans remains strong”, he said.

“We must also pay attention to the significant increases in mortgage interest rates,” Heng added, as borrowers are facing higher repayments.

The three-month Singapore Overnight Rate Average (Sora), a commonly used benchmark for floating-rate mortgage packages, has gone up from 0.2 per cent to 3 per cent in the past year and could “rise further in the coming months before stabilising”, he said.

Heng, who is also the Coordinating Minister for Economic Policies, noted that home ownership is a “key tenet of our social compact” as 80 per cent of Singaporeans live in and own HDB flats. “Our commitment is for all Singaporean families to own a roof over their heads, but we must enable them to do so in a financially sound and sustainable way,” he said.

A round of property market measures, including tightening of the Total Debt Servicing Ratio rules and loan-to-value limits, was introduced in December 2021. Further tightening measures were rolled out in September last year.

In his speech, Heng also noted that the pandemic has been “extremely challenging” for the built environment sector. But the construction sector is recovering and manpower crunches are easing. “Most pressing is to ramp up construction productivity, for which digitalisation and tech adoption are key,” he said.

Heng cited the Built Environment Technology Alliance which has supported industry collaborations such as the Construction Technology Innovation Lab, set up last year by Woh Hup and the Singapore Institute of Technology to develop productive construction technologies.

Another area that needs greater innovation is sustainability, said Heng. “There is a critical need to pivot to a much-greener environment, which today accounts for 40 per cent of annual global CO2 emissions.”

In his speech, Redas president Tan Swee Yiow noted the challenging outlook for the year amid uncertainties and slowing global economic growth. As life expectancy rises and fertility rates remain low, he highlighted the need to address demographic shifts and provide sustainable and inclusive urban solutions.

“We must continue to invest in technology and sustainable solutions to ensure that property development can be undertaken in an environmentally friendly and socially responsible way. It is imperative as well that we continue to collaborate and contribute to youth and talent development,” Tan added.

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