Posted: 01 March 2013 2332 hrs
SINGAPORE: Singapore property prices still have "some ways to go" before reaching an acceptable level, according to Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam.
Speaking in a Bloomberg Television interview, Mr Tharman said Singapore's property is now in a wrong part of the cycle, and prices would become acceptable through a combination of income improvement and prices not going up further.
"Some correction in prices will not be out of order," he added.
With property prices at record highs, Singapore has imposed steps to cool the housing market since 2009. New stamp duties implemented in the latest round rose by much as 7 percentage points from January.
Mr Tharman is "pretty confident" that the government will get a handle on the situation, saying "we can prevent a real bubble from being formed which then eventually crashes, and that's our objective".
Singapore has allowed its currency to appreciate faster even as the economy expanded the least in three years.
The search for higher-yielding assets amid monetary easing in developed economies has fuelled record property prices in Singapore, sparking inflationary pressures and social tensions.
But Mr Tharman noted that monetary stimulus, like that of the US and Japan, is not needed in Singapore because of its full employment.
"We don't have an output gap, and evidence of that is in an extremely tight labour market," he said.
Singapore's jobless rate fell to a five-year low of 1.8 percent last quarter as companies hired more local workers after the government tightened the inflow of foreign labour.
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