Property market risks remain, careful approach needed to manage supply and demand: Desmond Lee

SINGAPORE: There are still risks to prices in the property market, even with cooling measures and subsidies, said Minister for National Development Desmond Lee. 

As such, there is a need to maintain a cautious approach to managing demand and supply, amid rising costs, high demand for housing, and supply disruptions caused by the pandemic, he told CNA on Thursday (Mar 2). 

On ensuring a resilient property market while keeping homes affordable and accessible, Mr Lee said Singapore considers various models to gauge the housing demand. 

“And we keep improving the system. But nowhere, whether Singapore or elsewhere, can a sophisticated modelling system actually predict accurately what will happen when a crisis strikes,” he said, referring to disruptions caused by the pandemic. 

“Having a larger number of (flats with shorter waiting time) to accompany your BTO (Build-To-Order) supply, to accompany your balance flats and open selection flats, and to accompany the available resale market flats, adds to that resilience and allows for dynamic management,” he added. 

“Of course in a crisis, things will need to be managed. But that kind of combination of flat sources, new flat supply and resale flat supply with grants, enables you to more dynamically respond when a crisis strikes.”

HOME OWNERSHIP FOR SINGAPOREANS

Mr Lee noted that home ownership for Singaporeans continues to be a focus. 

“People feel a lot of assurance in owning the home that they live in,” he said. “In other parts of the world where people principally rent, they're at the mercy of the landlords, and when the life circumstances change and they can't pay rent, then they're under stress.”

Mr Lee said he understands that Singaporeans also consider their home as an asset. 

“As people who are going through different stages in life, you're looking at the home first and foremost as a place for you to live - a shelter, a place for safe harbour, a place to raise your family,” he added. 

“But most homebuyers also want to look and say, is this a good property or not? Because ultimately, I might need to move and when I move, I need to have the resources from the sale of this property to buy my next home, to renovate it, to make it ready for my family. 

“And that means that home is both a home and an asset, and you want to make sure that you address both needs.”

As a small city state, Singapore faces challenges in managing the needs of its people as well as their aspirations. 

“They want a good home. But they also want some other things in life, like they want green spaces, they want all old familiar spots to be conserved, especially if they are precious national memories. And so they rightfully have high expectations of Singapore,” said Mr Lee. 

“And we want to be able to meet those aspirations, and this conversation constantly with Singaporeans about the tradeoffs that we have to manage, in order to meet growing aspirations on this very small island of ours, is a continuous work in progress.”

NEED TO BE CAUTIOUS, PRUDENT

On the cyclical property market, he pointed out that Singapore is at the stage driven by crisis, where resale prices are rising and there is high demand for property, both in the public and private markets. 

“We are taking steps to restore the supply demand imbalance, for instance, by ramping up supply of housing with HDB (Housing and Development Board) as well as private housing through GLS (Government Land Sales),” said Mr Lee, adding that there are also measures to ensure Singaporeans exercise prudence at this point in time.

“We have put in cooling measures to moderate demand. And of course, we put in grants and subsidies to help Singaporeans afford (their homes).” 

He noted that there are many risks affecting the property market, including the Ukraine war and ongoing supply chain disruptions. 

“Therefore, even as we tackle the challenges that come with supply and demand imbalance, leading to this heightened property market situation, I think all of us need to be mindful of what's happening in other parts of the world, where property markets are falling and falling quite rapidly,” said Mr Lee. 

“So we do need to be cautious. We do need to be prudent. And as much as we are balancing and managing this upward trajectory, you also need to be fully mindful of the risks to the property market.”