The property market is “on track for a soft landing”, but it is still not time to unwind cooling measures, National Development Minister Lawrence Wong said yesterday.
“Resale prices have softened gradually to 2011 levels, and more than half of resale flats are now transacting close to their market value,” he wrote in a blog post yesterday.
When asked if this meant some of the property cooling measures could be lifted, however, Mr Wong maintained it was still “too early” to unwind any of them.
The measures, many introduced in 2013 to keep the lid on a simmering housing market, include a lower mortgage servicing ratio limit of 30 per cent,which caps the proportion of gross income that can be used to service a loan for an HDB flat.
Mr Wong added, however, that the Government would continue to monitor factors such as interest rates and economic growth, and make adjustments when necessary.
He told reporters during a visit to Build-To-Order (BTO) project Tampines Greenlace: “What we’ve seen in recent months is that resale prices have stabilised.”
Resale prices for Housing Board flats have been on the decline in recent years, due in part to the measures.
Since their peak in the second quarter of 2013, prices have fallen about 10 per cent, according to the HDB’s Resale Price Index.
But the decline has been slowing down in recent months, leading some property experts to believe that the market might be on the brink of a rebound.
Others like SLP International Property Consultants research head Nicholas Mak believe that next year’s prices will remain “rather stagnant”.
He said conditions such as the cooling measures, increased new flat supply and impending interest rate hike will continue to dampen the market.
Referring to yesterday’s announcement that the BTO flat supply would be raised to 18,000 units next year, he added: “The increase in BTO flat supply will also reduce the demand for resale flats.”
But ERA Realty key executive officer Eugene Lim said the supply boost is unlikely to diminish resale prices as the market is “behaving rationally” now.
He pointed out that many buyers would still choose resale flats as they do not want to wait years for new units to be built.
Mr Wong yesterday also said the Fresh Start Housing Scheme, which helps tenants in public rental flats own homes again, is shaping up.
Describing it as an “inclusive” policy that ensures more Singaporeans can own homes, he said: “We are starting to tweak and design the parameters of the scheme, and we’ll be putting up more details of that early next year.”