Saturday, December 1, 2012

'Let cooling measures take their course'


'Let cooling measures take their course'
Redas urges policy-makers not to tighten the demand tap further

DECEMBER 01, 2012
BY ONG CHOR HAO

Let the golden goose that is the real-estate sector continue laying its golden eggs.

This was the message from Wong Heang Fine, president of the Real Estate Developers' Association of Singapore (Redas), who last night urged the government to allow the recent cooling measures for public housing to take their course.

Speaking at Redas' 53rd anniversary dinner, he said it was an unusual time for developers, with high global liquidity and low interest rates.

The slew of recent cooling measures already made for a safety valve to moderate the market, he said, and urged that policy makers refrain from tightening "the demand tap" any further.

"We do not want a situation where people look back and say we overdid it in our policy measures," he said.

He noted that, in the last two decades, both new and resale Housing and Development Board (HDB) flats have become increasingly treated as investment assets, on top of being homes.

"Coupled with pent-up demand for homes from new households every year, we have seen record housing prices both for HDB homes as well as private residential units," he said.

The government, responding to this, has stepped up the supply of flats, hastened land sales and implemented several rounds of cooling measures.

Mr Wong said while Redas shared the government's intention of fostering a stable and sustainable property market, the measures penalised private developers, whose projects comprise only 20 per cent of the housing market.

Developers have come up against a "vicious cycle of rising land costs", he said.

But because land is like flour in the "bread" that developers make, they have little choice but to take part in land bids - even when these are highly competitive, he said. This is so that they can sustain their operations, retain the jobs they create and provide adequate returns to their shareholders.

Chia Ngiang Hong, the group general manager at City Developments Limited, asked for his reaction to Mr Wong's speech, agreed that high land costs are a challenge to developers.
He said he hoped that the government could moderate the supply of land, put more land on the reserve list and put a halt to more cooling measures.

Group chief executive of Frasers Centrepoint Limited Lim Ee Seng, also spoke to reporters on the sidelines of the dinner, responding to Mr Wong's point that the government's cooling measures had led to private developers becoming burdened with not only "persistently high development costs and taxation" but also the increasing strain from rising inventories.

Mr Lim said developers with large inventories need to have a "quick turnaround" as soon as they can to minimise their risk.

Mr Wong, who is also chief executive at CapitaLand Residential Singapore, also said in his speech that, with more than 90 per cent of Singaporean households being homeowners, sharp falls in property prices will have "undesirable consequences".

He said Redas shared Minister for National Development Khaw Boon Wan's views that everyone should help ensure a soft landing as the residential market undergoes its current transition.

Mr Khaw was the guest of honour at last night's event held at the Mandarin Orchard Singapore.

Mr Wong said it may be time to rethink a balanced housing policy menu which offers affordable public housing for the majority, while ensuring that the private sector continues to play an important role.

To that end, Redas will release a paper reflecting developers' collective voice on the challenges of property development and the vision of Singapore in 2030, he said.



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