On Feb 19, Deputy Prime Minister Heng Swee Keat told Bloomberg TV that the Government has no plans to ease property cooling measures amid the ongoing Covid-19 outbreak which has threatened to develop into a global pandemic (What Covid-19 does to already fragile residential market, March 1).
This is after the Government announced that listed developers with a substantial connection to Singapore can apply to be exempted from the qualifying certificate (QC) scheme. The scheme requires developers to complete their projects within five years after acquiring the site, and to sell all the units within two years of completion.
The penalties are punitive, with extension charges starting from 8 per cent of the land purchase price up to the maximum 24 per cent for those unsold units. Empirically, this scheme has helped to stabilise the property market since its introduction, supplementing the additional buyer's stamp duty (ABSD) to rein in the uncontrolled property frenzy not long after the last global financial crisis.
While the economic overheating has recently subsided and the coronavirus epidemic has started to work its effects on the local property market, the authorities should avoid overreacting and undoing this effective policy tool which has served its legislative intent.
To avoid the hefty penalties, the developers could have just adjusted the selling price to stimulate demand, up to the maximum penalty they would have paid to the state, and move their inventory. This would help clear the unsold units while maintaining the desired margin, after factoring in the penalties.
But they seem more interested in lobbying the Government to change the laws.
Even if this latest policy tweak is necessary, the Government could have calibrated the implementation rather than provide a full exemption, such as allowing partial QC exemption for only projects which cater to the mass market segment, outside the core central region and applicable to units sold to Singaporean first-time buyers only.
According to a Colliers International research paper, Singapore home prices are expected to grow 3 per cent this year, as the "record high" housing supply from 2014 to 2017 is expected to taper off from 2018 to next year.
The last thing we want is another frantic wave of selling en bloc and aggressive land bidding by developers, that will set off another property crisis in the next cycle.
Ee Teck Siew