National Development Minister Mah Bow Tan said yesterday, “There are limits to what the Government can and should do,” telling developers about government’s limitation to guarantee the smooth sailing and the long-term stability in the property market.
“For instance, we cannot dictate to banks that they should extend loans to companies or individuals with weak financial standing,” Mah said.
“We also cannot work against market forces and try to prop up property prices artificially. Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run.”
Mister Mah spoke at the Shangri-La Hotel yesterday during the 49th anniversary of Real Estate Developers’ Association of Singapore (REDAS). He said any measure the Government takes effect must be carefully studied and calibrated.
“Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further,” Mr. Mah said. “It is in our interest to ensure that property prices move in line with economic fundamentals, as this affects home ownership, asset values, retirement savings and other sectors of the economy.”
However, he gave assurance that authorities will keep an eye to any situation and will not hesitate to take appropriate measures if needed.
The Ministry of National Development (MND) suspended last month the Government Land Sales up until the end of the first-half of 2009.
Since then, the MND received numbers of suggestions from REDAS and other stakeholders regarding the help for property sector. “We will study these suggestions as we continue to monitor the property market closely,” Mr. Mah said.
He also said that due to slow economic growth, “it is inevitable that demand will be lower and (property) prices will soften”. The private home price index dropped 2.4 percent from Q2 to Q3 in 2008.
On a more positive way, Mr. Mah said major projects being secured in the past few years would continue to provide jobs and opportunities as well as sustain capital spending of the economy for the next few years.
The government along with real estate sectors will continue to support housing projects and several key infrastructures to ensure long-term social needs and economic growth in the country.
First, construction and real estate services accounted about 9.6 percent overall GDP and 13 percent total employment in the country in 2007. Second, the boast of property market affects the major part of economic output. “Third, as a country with the highest rate of home ownership of more than 90 per cent, the property sector is where most of us have invested our hard-earned lifelong savings,” said Mr. Mah.
“Our economic prospects in the medium term and our fundamentals remain strong. I urge you to continue building up capabilities within the industry and use this period to strengthen your competitive advantages so you are well prepared to capitalise on opportunities that may emerge when the current economic uncertainties subside.”