Home Affairs and Law Minister K. Shanmugam has said that market stability is crucial when evaluating property cooling actions and the government will review these strategies when the hazards are “less or manageable.” Singaporean real estate agencies have been pressing the government to review the policy, especially in light of $100 million in charges that developers could face for unsold private residential units.
Although New Launch Condo units, particularly North Park Residences and Botanique at Bartleyhave been doing very well, the general market is dealing with oversupply. According to Augustine Tan, president of the Real Estate Developers’ Association of Singapore, the market had a record 25,000 vacant units as at the end of 2015.
Still, there is no indication that government will lift the restrictions, even temporarily, to reduce the number of condos for sale. The measures seek to guard Singaporeans from over-leveraging, and to prevent a total collapse in the banking system. Measures include the Additional Buyer’s Stamp Duty, and the total debt-servicing ratio, which restricts borrowing by individuals to 60 per cent of their gross monthly income.
We think, said Shanmugam, we forecast, we evaluate, so when we set on a path, we have analyzed the costs and benefits to the populace, and to the different sectors, and we keep to the path. He added that the government has a rough idea on when to change, but “that doesn’t mean we announce it.” He also said that the measures are designed to balance the needs of New Launch Condo and other agencies and their customers with the greater good of Singapore as it positions itself on the global market.
Singapore’s vulnerability to the worldwide economy is amplified by the fact that its external trade volume is four times that of its gross domestic product, and Shanmugam emphasized that the property market does not exist in a void, but is connected to the country’s economy. He added that because of the government’s pump-priming actions, Singapore barely felt the 2008 worldwide economic crisis, but the global economy is different now with bits of instability seen on many fronts.
All of these factors affect condos for sale and the general real estate market. Shanmugam said the government had cautioned developers about the vast upsurge in supply as it increased land sales, and then Minister for National Development Khaw Boon Wan reiterated that prices were not justifiable given the future supply.
Shanmugan said that the buyers and the developers both knew this, because the government had been announcing it over and over again, but the developers kept on bidding on projects.
Still, real estate agencies are looking ahead. The nation’s largest agency, ERA Realty, is ramping up training for its 6000 agents. It has doubled its training budget to $2 million, and is also planning on rolling out a series of corporate initiatives to enhance the agency’s market presence.