Government maintains stand to control asset inflation: JLL

The 1H2011 GLS Programme shows that the government has maintained its stance by placing 30 sites for residential development or about 14,300 housing units, said Jones Lang LaSalle (JLL).

A total of 17 sites or 8,100 housing units were put up under the Confirmed List for 1H2011, which indicates that the government is careful not to restrict supply that results in continual asset inflation in spite of a substantial supply pipeline, said JLL.

“As the residential market continues to be closely watched by the government, the competition for the sites on the GLS Confirmed List for 1H2011 would be influenced by the take-up of the upcoming launches in the vicinity. Examples of these projects include the Prive located in Punggol and the H2O Residences located at Seng Kang West,” said Mr Desmond Sim, associate director for research and consultancy at JLL.

The government has also raised the supply in the Reserve List by 7.5 percent to 6,200 housing units from a total of 13 sites for residential development in case market sentiments turned positive sooner than the government could react to control asset inflationary pressure.

Dr. Chua Yang Liang, Head of Research South East Asia, said that contrary to JLL’s expectations, “the more aggressive stance taken by the state to continue to flood the market with supply signals the serious implications of asset inflation.”

She added that the risks “involved far outweighs those of controlling supply, which could lead to phenomenal price hikes that are unsupported by the intrinsic values of properties and hence, a severe correction when the market turns. However, in view of a potential supply overhang, we much prefer the government to put the emphasis on the Reserve List which responds better to market dynamics.”