It cannot dictate to banks on loans or work against market forces on property
National Development Minister Mah Bow Tan told developers yesterday 'there are limits to what the Government can and should do' to ensure the long-term stability and smooth functioning of the property market.
Toast to the future: (from left) Simon Cheong, president of Redas; MND Minister Mah; Kwek Leng Beng, Redas's patron, at its 49th anniversary'For instance, we cannot dictate to banks that they should extend loans to companies or individuals with weak financial standing,' he said.
'We also cannot work against market forces and try to prop up property prices artificially. Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run.'
Speaking at the Real Estate Developers Association of Singapore's 49th anniversary dinner at the Shangri-La Hotel, Mr Mah said any action the Government takes must be carefully calibrated.
'Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further,' he said. 'It is in our interest to ensure that property prices move in line with economic fundamentals, as this affects home ownership, asset values, retirement savings and other sectors of the economy.'
But he gave the assurance that the Government will keep a close watch on the situation and will not hesitate to take further measures if necessary.
Last month, the Ministry of National Development (MND) suspended Government Land Sales through the confirmed list until the end of first-half 2009.
Since then, MND has received various suggestions from Redas and other stakeholders on how to help the property sector. 'We will study these suggestions as we continue to monitor the property market closely,' Mr Mah said yesterday.
He also told developers that with slower economic growth 'it is inevitable that demand will be lower and (property) prices will soften'. The official private home price index slipped 2.4 per cent in the third quarter from Q2.
On a more upbeat note, Mr Mah said the committed pipeline of major projects secured in the past few years will create a steady stream of job opportunities and sustain capital spending in the economy in the next few years.
'At Marina Bay alone, we have invested close to $5.7 billion in infrastructure and we will continue to invest to support the future growth of Marina Bay and to enhance connectivity with the existing city,' he said.
The Government will also continue with several key infrastructure and housing projects to support medium to long-term economic growth and social needs, as well as to rejuvenate older estates. Mr Mah stressed the importance of the real estate sector.
First, real estate services and construction together accounted for about 9.6 per cent of overall GDP and 13 per cent of total employment in Singapore in 2007.
Second, the health of the property market affects other major sectors of the economy. 'Third, as a country with the highest rate of home ownership of more than 90 per cent, the property sector is where most of us have invested our hard-earned lifelong savings,' Mr Mah said.
'Our economic prospects in the medium term and our fundamentals remain strong. I urge you to continue building up capabilities within the industry and use this period to strengthen your competitive advantages so you are well prepared to capitalise on opportunities that may emerge when the current economic uncertainties subside.'
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