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Published November 22, 2006

S'pore property market not overheating, says Mah

More private developers to be allowed to build, sell public homes

(SINGAPORE) Minister for National Development Mah Bow Tan said he saw no signs of the property market overheating as price gains were still largely confined to the high-end luxury segment and these were underpinned by robust economic growth.

'The people buying are not borrowing excessively so there is no strain on the banks. These are chaps who have confidence in the economy and the future,' he said.

Mr Mah also poured cold water on market speculation that the country's public housing body would divest its commercial assets into a real estate investment trust or Reit, as rival financial centre Hong Kong has done. 'We are in no hurry as there are no compelling economic reasons.'

On public housing, Mr Mah said he expects the resale prices of public homes to rise as the property market improves, but sees no signs of overheating as price gains were still largely confined to the high-end segment.

Singapore will allow more private-sector developers to build and sell state-subsidised homes, Mr Mah told Reuters in an interview.

Mr Mah, who also oversees urban planning in the city-state, said more private firms would be invited next year to build residential projects that qualify for government subsidies.

'We don't want to have a property market dominated by the government. We are trying to move out of things that the private sector can do.'

The first such development - by listed developer and builder Sim Lian Group - was subscribed 10 times when it was launched last month.

Singapore real estate prices, which lagged the Hong Kong property market for years, began to pick up after July 2005 when the government eased rules on property financing and purchases by foreign investors.

While an index of private-sector property prices is still 30 per cent below its 1996 peak, some upscale properties are now fetching prices last seen before the 1997-98 Asian financial crisis. - Reuters