Response to Property Market Measures 'A Sustainable Residential Property Market Benefits All' by MOF, MND and MAS

We thank the writers who discussed the recent property market measures. Some, like Dr Jeremy Teo (“Many benefits to property curbs”, 9 July), supported the moves. Others, including Mr Toh Cheng Seong (“Tackle property bubble with targeted measures”, 11 July) expressed concern over their necessity or timing.

The cooling measures are not meant to send prices down, but to moderate the property market cycle. Experience here and abroad has shown that, left to itself, the property market tends to go through large price swings that harm many, especially home buyers.

If corrective actions are not taken to prevent a bubble forming, the costs will eventually be larger and more painful. In the last cycle, the Government acted after a very sharp rise in prices. We had to intervene eight times before stability was restored. This time, the Government has acted earlier to steady the cycle, after prices increased more than 9% in 12 months, reversing much of the 12% decline over the preceding 48 months. The latest measures have focused especially on developers, who have been bidding aggressively for residential land and pricing units higher. 

Most citizens will benefit from moderation in the current property cycle. If land and housing prices continue to run sharply ahead of economic fundamentals, especially income growth, they raise the risk of a destabilising correction in a few years’ time, when interest rates are higher and a significant supply of private housing enters the market.

In seeking to moderate the property cycle, we have maintained ABSD rates for Singaporeans and Permanent Residents buying their first property. Neither should upgraders be discouraged. Married Singaporean couples who jointly purchase a second property can apply for an ABSD refund, if they sell their first property within six months – as many do.

Mr Toh suggested cutting Government Land Sales (GLS) supply and reviewing rules on residential unit sizes. But crimping supply when prices are rapidly rising would only exacerbate price increases. Hence, we have maintained a steady supply in recent GLS programmes. We also have guidelines, and continually review them to ensure that developers do not introduce excessive numbers of ‘shoe-box’ units.  

In short, the recent cooling measures should benefit the majority of citizens over time, especially those aiming to buy and own their homes for the long-term. 

Doreen Tan
Chief Tax Policy Officer, MOF

Jermaine Loy
Senior Director (Strategic Planning), MND

Rosemary Lim
Executive Director (Macroprudential Surveillance), MAS

Last Modified on 26/07/2018