Sustainable property market benefits all

We thank the various Forum letter writers who discussed the recent property market measures. They include those by Dr Jeremy Teo (Many benefits to property curbs; July 9) and Mr Toh Cheng Seong (Tackle property bubble with targeted measures; July 11).

The objective of the cooling measures is not to send prices down, but to moderate the property market cycle.

Experience here and abroad has shown that, left to itself, the property market tends to go through large price swings that harm many, especially home buyers. If corrective actions are not taken to prevent a bubble forming, the costs will eventually be larger and more painful.

In the last cycle, the Government acted after a very sharp rise in prices. We had to intervene eight times before stability was restored.

This time, the Government acted earlier to steady the cycle, after prices increased more than 9 per cent in 12 months, reversing much of the 12 per cent decline over the preceding 48 months.

The latest measures have focused especially on developers, who have been bidding aggressively for residential land and pricing units higher. Most citizens will benefit from moderation in the current property cycle.

If land and housing prices continue to run sharply ahead of economic fundamentals, especially income growth, they raise the risk of a destabilising correction in a few years' time, when interest rates are higher and a significant amount of private housing supply enters the market.

However, in seeking to moderate the property cycle, we have maintained Additional Buyer's Stamp Duty (ABSD) rates for Singaporeans and permanent residents buying their first property. Neither should upgraders be discouraged.

Married Singaporean couples who jointly purchase a second property can apply for an ABSD refund, if they sell their first within six months.

Mr Toh suggested cutting supply from Government Land Sales (GLS) and reviewing rules on residential unit sizes.

But crimping supply when prices are rapidly rising would only exacerbate price increases. This is why we have maintained a steady supply in the recent GLS programmes.

We also have guidelines on unit sizes, and continually review them to ensure that developers do not introduce excessive numbers of "shoebox" units.

In short, the recent cooling measures should benefit the majority of citizens over time, especially those aiming to buy and own their homes for the long term.

Doreen Tan (Ms)

Chief Tax Policy Officer

Ministry of Finance

Jermaine Loy

Senior Director (Strategic Planning Division)

Ministry of National Development

Rosemary Lim (Ms)

Executive Director (Macroprudential Surveillance Department)

Monetary Authority of Singapore

Correction note: In an earlier version of the letter, we said that "upgraders are also not affected" by the Additional Buyer’s Stamp Duty rates. We have amended it to reflect the original statement: “Neither should upgraders be discouraged.”

A version of this article appeared in the print edition of The Straits Times on July 17, 2018, with the headline 'Sustainable property market benefits all'. Subscribe