Home prices moving the right way: Tharman

Government has no plans for another round of cooling measures for now

ST 20130419 SINGA19 3620359

PROPERTY prices remain high but they are moving in the right direction, said Deputy Prime Minister Tharman Shanmugaratnam, adding that the Government has no plans for another round of cooling measures for now.

The Government is determined to lower the prices of homes relative to incomes, he added, but does not want to cause a crash in the short term.

"We're not planning another round of measures, but it depends on market conditions," said Mr Tharman, who is also Finance Minister and chairman of the Monetary Authority of Singapore (MAS).

"We're determined to achieve our objective of having prices come down relative to incomes. And that can be achieved both through income growth as well as some stabilisation or even cooling of prices, he said.

His comments came amid speculation that more cooling measures could follow the seventh and toughest round in January.

Mr Tharman was replying to a question on how the Government can manage inflation in a wide-ranging video interview with The Straits Times last week.

The question had picked up the third most number of votes from readers in an online poll on The Straits Times' current affairs website Singapolitics carried out over seven days. The videos are available at Singapolitics.sg

Mr Tharman, who also gave insights into the tax system, the economy and politics, and shared his vision of society in the future, said he believes "there is bound to be some softening in prices" as more new homes come into the market over the next two years.

But he did not completely shut the door to more measures.

The Government has a range of tools to stabilise the market, and can also tighten the criteria for banks giving loans, though it does not directly control the mortgage spreads, he said.

"Whether we do anything more on the MAS front, on the fiscal front, or on supply measures depends on market conditions. We don't rule out any measure," he said.

The Government has rolled out seven rounds of measures to bring under control a rising property market fuelled by a long period of extraordinarily low interest rates and pent-up demand.

It has also delinked the prices of Build-To-Order flats from the resale market, and rolled out 70,000 new flats since 2011.

Mr Tharman's comments will temper speculation that an eighth round of measures is already in the works.

New private home sales surged to an all-time high last month, though analysts believe the momentum will not continue as the tough measures kick in.

Mr Donald Han, special adviser at HSR Property Consultants, said: "This will help reassure the market that the Government is working to find a level of sustainable prices in the long term, but will not bring it down with a sledgehammer."

In the longer term, Mr Tharman said, he favours a more steady growth of property prices and the ratio of prices to incomes being "somewhat lower" for "the average family... including those who are in the upper middle income group and go for private condominiums".

The Government has not decided what level it wants to reduce that ratio to, however, and the change will be through an "evolution" rather than any sharp correction.

Speaking more broadly about inflation concerns, DPM Tharman said that excluding housing and cars, "regular inflation" - costs for basic items, education and health-care needs - is "getting under control".

chanckr@sph.com.sg

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