Khaw Boon Wan addresses issue close to heart of Singaporeans as H2 land sales programme is released
By UMA SHANKARI 07 June 2011
Determined to tame the runaway property market, the government will sell vast chunks of land this year on which private homes can be built in record numbers.
The idea is to quell the fears of those who see their Singapore Dream slipping away, said National Development Minister Khaw Boon Wan.
He also highlighted that ‘sharp property price increases cannot go on forever’. ‘We have always recognised that unsustainable, rapid price increase brings with it enormous risks and that got us to act earlier on,’ he said in his latest blog entry. ‘While sharp rises are painful, sharp declines are just as disastrous.’
In particular, Mr. Khaw said Singaporeans must be mindful of the dangers of oversupply - especially if foreign buying eased.
For now, it’s all systems go: the government will sell new land for at least 17,510 private homes and executive condo units in 2011 - a sharp increase from 2010, when land for a then-record 13,945 new homes was sold to developers.
The Ministry of National Development (MND), which released the government land sales (GLS) programme for the second half of 2011 yesterday, plans to release 43 residential, commercial and hotel sites over the next six months.
Out of these 43 sites, 19 will be on the confirmed list, while 24 will be on the reserve list.
To address the strong demand from homebuyers and developers, 17 out of the 19 land parcels on the confirmed list will be for residential use. These 17 sites will yield 8,115 new private homes and executive condominium (EC) units.
The new supply comes on top of the land supply for 9,395 private homes and ECs that will be sold in the first half of the 2011 programme.
Even more homes may be built if any of the 13 residential sites on the reserve list - which can together yield about 6,100 homes - are triggered and sold.
Mr. Khaw said that a sharply rising property market ‘upsets and frightens many’ and so MND has to confront the issue ‘head-on’.
‘Young people aspiring for the Singapore Dream get angry to see the dream seemingly slipping away. Their parents worry for them and get into panic. We have to confront this issue head-on,’ Mr. Khaw said.
But while MND will inject another bumper supply of residential land into the market, it will also watch out for possible pitfalls in the medium term - such as oversupply.
‘Together with committed investments, some 53,000 units will be looking for buyers over the next couple of years or so. That is not a trivial number,’ said Mr. Khaw.
The 53,000 figure includes sites from the confirmed list of the H2 2011 GLS programme, potential supply from recently sold GLS sites, and some 34,270 unsold private homes from projects that are already under construction, as well as those projects that have been granted planning approval but are not being built yet.
In particular, Mr. Khaw said that demand from foreigners can drop off sharply if external situations worsen. ‘Foreign buyers . . . have been strong. In the recent quarter, they made up 16 per cent of all buyers of these private properties. Many Singaporeans also buy properties with the intention to rent them to foreigners coming here to live or work. In the event of any external shock, both foreign demand and rental demand can fall quite quickly. The impact can be serious if the drop in demand happens at a time when there is a substantial increase in supply,’ he said.
In addition, interest rates will not remain low forever, he said: ‘Cost of borrowing and repayment must go up and households must factor this in.’
Analysts noted that the H2 2011 GLS programme tries to balance the steady demand for housing - which is pushing prices up - against the risk of flooding the market.
Bank of America Merrill Lynch economist Chua Hak Bin noted that the supply of potential homes in the H2 2011 GLS programme remains similar to what was released in the last programme - despite slower property price increases and slowing economic growth.
Private home prices rose 2.2 per cent in Q1 this year after climbing 17.6 per cent in 2010. ‘It (the second half 2011 GLS programme) should help put a cap on the risk of a housing bubble,’ Dr Chua said.
Chia Siew Chuin, Colliers International’s director of research & advisory, said it is evident that the residential property market remains the government’s top concern right now.
In all, the second half GLS programme will supply 14,195 homes from both the confirmed and reserve lists, as well as 2.88 million square feet of commercial space and 3,750 hotel rooms. Analysts also noted that changing policy risk will continue to weigh on real estate stocks over the near term.
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Property price surge ‘cannot go on forever’
Khaw Boon Wan addresses issue close to heart of Singaporeans as H2 land sales programme is released
By UMA SHANKARI
07 June 2011
Determined to tame the runaway property market, the government will sell vast chunks of land this year on which private homes can be built in record numbers.
The idea is to quell the fears of those who see their Singapore Dream slipping away, said National Development Minister Khaw Boon Wan.
He also highlighted that ‘sharp property price increases cannot go on forever’. ‘We have always recognised that unsustainable, rapid price increase brings with it enormous risks and that got us to act earlier on,’ he said in his latest blog entry. ‘While sharp rises are painful, sharp declines are just as disastrous.’
In particular, Mr. Khaw said Singaporeans must be mindful of the dangers of oversupply - especially if foreign buying eased.
For now, it’s all systems go: the government will sell new land for at least 17,510 private homes and executive condo units in 2011 - a sharp increase from 2010, when land for a then-record 13,945 new homes was sold to developers.
The Ministry of National Development (MND), which released the government land sales (GLS) programme for the second half of 2011 yesterday, plans to release 43 residential, commercial and hotel sites over the next six months.
Out of these 43 sites, 19 will be on the confirmed list, while 24 will be on the reserve list.
To address the strong demand from homebuyers and developers, 17 out of the 19 land parcels on the confirmed list will be for residential use. These 17 sites will yield 8,115 new private homes and executive condominium (EC) units.
The new supply comes on top of the land supply for 9,395 private homes and ECs that will be sold in the first half of the 2011 programme.
Even more homes may be built if any of the 13 residential sites on the reserve list - which can together yield about 6,100 homes - are triggered and sold.
Mr. Khaw said that a sharply rising property market ‘upsets and frightens many’ and so MND has to confront the issue ‘head-on’.
‘Young people aspiring for the Singapore Dream get angry to see the dream seemingly slipping away. Their parents worry for them and get into panic. We have to confront this issue head-on,’ Mr. Khaw said.
But while MND will inject another bumper supply of residential land into the market, it will also watch out for possible pitfalls in the medium term - such as oversupply.
‘Together with committed investments, some 53,000 units will be looking for buyers over the next couple of years or so. That is not a trivial number,’ said Mr. Khaw.
The 53,000 figure includes sites from the confirmed list of the H2 2011 GLS programme, potential supply from recently sold GLS sites, and some 34,270 unsold private homes from projects that are already under construction, as well as those projects that have been granted planning approval but are not being built yet.
In particular, Mr. Khaw said that demand from foreigners can drop off sharply if external situations worsen. ‘Foreign buyers . . . have been strong. In the recent quarter, they made up 16 per cent of all buyers of these private properties. Many Singaporeans also buy properties with the intention to rent them to foreigners coming here to live or work. In the event of any external shock, both foreign demand and rental demand can fall quite quickly. The impact can be serious if the drop in demand happens at a time when there is a substantial increase in supply,’ he said.
In addition, interest rates will not remain low forever, he said: ‘Cost of borrowing and repayment must go up and households must factor this in.’
Analysts noted that the H2 2011 GLS programme tries to balance the steady demand for housing - which is pushing prices up - against the risk of flooding the market.
Bank of America Merrill Lynch economist Chua Hak Bin noted that the supply of potential homes in the H2 2011 GLS programme remains similar to what was released in the last programme - despite slower property price increases and slowing economic growth.
Private home prices rose 2.2 per cent in Q1 this year after climbing 17.6 per cent in 2010. ‘It (the second half 2011 GLS programme) should help put a cap on the risk of a housing bubble,’ Dr Chua said.
Chia Siew Chuin, Colliers International’s director of research & advisory, said it is evident that the residential property market remains the government’s top concern right now.
In all, the second half GLS programme will supply 14,195 homes from both the confirmed and reserve lists, as well as 2.88 million square feet of commercial space and 3,750 hotel rooms. Analysts also noted that changing policy risk will continue to weigh on real estate stocks over the near term.
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