Giving that a wide berth was the aim of the government’s move to implement a fresh round of property cooling measures in July. And they are standing by the move.
Government stands by the cooling measures aimed at prevention of a property bubble
The National Development minister, Mr Lawrence Wong has recently said at the Real Estate Developers’ Association of Singapore (Redas) that the number of new private homes sold last month signifies that July sales figures, which were high despite the cooling measures, were not a true reflection of market demand.
It could have been a knee-jerk reaction from consumers who were trying to beat the property curb’s implementation deadlines.
Mr Wong also said that the property curbs’ main purpose was to rein in the market before a property bubble arises. This market-stabilisation was necessary to align property prices to income growth and economic fundamentals.
Should the government have taken a hands-off approach to the rising property prices in the first 2 quarters of the year, he thinks that “there would have been significant momentum behind prices“.
Property prices have fallen 12% over the last 4 years but has increased by 9% within the first 6 months of this year. Were prices truly rebounding in the third quarter? Or were they merely recovering?
The government needs to align real estate prices to income and economic growth
The government has expressed their concerns over the pace at which prices were rising.
Prices were going up by 9% earlier in the year, and Mr Wong says they could have risen by 15% and well into 2019 should they have remained taciturn.
He estimates that had the price-increase been left unchecked, Singaporeans will be hurt by the crash which could have occurred in 2 to 3 years’ time.
The fear of a destabilising situation which many would have trouble grappling with should property price outpace economic fundamentals, were what prompted the government to roll out the measures as early as July this year.
Developers are worried as sales momentum has slowed after each launch after July. Only 487 private homes were sold in October, compared to the 932 in September, 617 in August and 1,724 in July.