Property cooling measures averted a 10-15% growth in home prices

Romesh Navaratnarajah16 Nov 2018

Singapore residential area

National Development Minister Lawrence Wong clarified that the government wants to stabilise the property market so that prices may move broadly in line with income growth.

While developers may want a “complete laissez faire situation” of allowing “the market to run its own course”, the government cannot take a hands-off attitude on the property cycle and allow property bubbles to form, said National Development Minister Lawrence Wong.

“Let me be very clear. The government cannot and will not take a hands-off attitude to the property cycle. So there should not be any surprise when we intervene in the market,” he said at the anniversary dinner of the Real Estate Developers’ Association of Singapore (REDAS).

More: No Rationale For New Property Cooling Measures, Says REDAS

In explaining the rationale of the July cooling measures, Wong said government intervention is necessary to prevent bubbles from forming and to achieve a stable property market.

He noted that property prices would have soared by up to 10 to 15 percent had the government not introduced the latest measures, reported Today Online.

And while prices had not come down with the measures, they have remained “flattish” or increased only at a very gradual rate. Overall transaction volumes and land sales have also slowed down, he said.

“(More) importantly, the measures have encouraged en bloc sellers and developers to be more realistic in their price expectations.”

However, Wong clarified that it is not the government’s aim to bring property prices down, but to steady the cycle and stabilise the market in order that prices may move broadly in line with income growth.

“Our own experience has shown that if corrective actions are not taken to prevent a bubble from forming, the costs will eventually be larger and more painful, and ultimately this will harm the vast majority of genuine home buyers and owners.”

Speaking at the same event, REDAS’ president Augustine Tan said the cooling measures has led to a state of uncertainty within the property market – with sales momentum at new private property launches slowing down, while supply of units in the market remains high.

Tan believes there would be 44,667 private residential units coming from the unsold stock and the potential new supply from collective sale sites and government land sales.

“Barring tighter regulations, it will take up to five years for these units to be fully absorbed”, he said, while noting that demand will likely remain subdued for the rest of the year on the back of the cooling measures.

Tan also underscored the challenges facing developers – development cost has become higher due to the new five percent non-remissible Additional Buyer’s Stamp Duty (ABSD) payable whenever they acquire a land for residential development.

There is also the risk of paying the 25 percent remissible ABSD with interest, if developers fail to move all units at a residential project within five years from acquiring the site.

With this, Wong said that while developers believe that the market is very subdued with room for prices to grow, buyers think that prices are too high.

“Real estate and property is something that Singaporeans care deeply about. A residential property is a home and also an asset — probably the single largest asset that many people own. So, understandably, there will always be differing views when it comes to the property market… The government is in the position of having to take the responsibility and weigh these different views carefully,” he said.

Although Wong acknowledged that developers have short-term commercial goals, he hoped they would understand that actions taken by the government is the “more responsible approach”.

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Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email

Donald Hanson
Nov 30, 2018
I've got a question. Seems to me that people don't really care what property prices are. They care about property acquisition cost. A tax on the acquisition just gives the government a piece of the action. Property prices plus tax will adjust to what the market will bear in the rather short-term. The only real way to control prices in the long term is to control supply (units available) or to control demand (number of buyers). It's fine if the government wants to get revenue from housing transactions and suppress prices in the short-term, but if it only wants to prevent a bubble it could control supply though either housing regulation or demand by limiting the number of houses a person could own or foreigners entering the market. Taxing foreigners more and Singaporean's less also makes sense because the tax on a foreigner is a form of export. I'd be interested to know why Singapore takes the heavy transaction tax approach instead.

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