Minister in the Prime Minister’s Office Lim Hwee Hua said the government had to step in with cooling measures to minimise speculation in the HDB market because of a small group of private property owners.
Housing was a hot topic that Mrs Lim dealt with at her walkabout on Sunday at Kampong Chai Chee, a relatively old estate under the East Coast GRC.
The current state of the property market and the Lehman Brothers minibond saga were also some issues raised by residents during the hour-long dialogue.
Mrs Lim acknowledged that owning a property is something close to the hearts of Singaporeans and that’s why the HDB makes every effort to meet the housing demands of Singaporeans, especially first-time home owners.
For 2011, HDB has announced that it plans to build 22,000 units of flats.
Mrs Lim said: “Their feedback to us is that for the resale flat, the Cash-Over-Valuation (COV) is rising all the time. So the HDB and MND (Ministry of National Development) looked at what’s causing this to rise and who are the participants in the market. And they realised that there is a group of private property owners, a small percentage who speculate (on) the properties… and this has caused prices in certain areas to rise faster.
“So we decided to have the cooling measures… it includes the stamp duty, the levy on the seller. It’s not a restriction on private property owners but a whole series (of measures) to cool the market down. And the starting point is meeting the needs of Singaporeans who would like to own a flat.”
Even though Singapore’s economy has recovered strongly, the Lehman Brothers minibond saga two years ago which resulted in stricter regulation of financial institutions was also raised.
In that saga in 2008, investors were sold toxic products. About 3,900 people got back $107 million after a misleading sales probe.
In the aftermath, the Monetary Authority of Singapore (MAS) also realised the need for stricter financial regulation and rolled out proposed changes.
“If you over-regulate, the market may never take off, and may not even survive beyond a few months. So we have the delicate balance of ensuring that there is enough regulation to minimise the risks but at the same time, the risks that people take are real investment risks so that the market can survive,” said Mrs Lim, who is also the Second Minister for Finance and Transport.
“In a case like this, the MAS has imposed stricter regulations so the tightening of the regulations is one important aspect. The other area is that of compensation – how much compensation there should be. The MAS has worked with all the banks and they have gone through a very thorough analysis and set up a process where the investors can approach the banks where they bought the bonds from and submit a request for compensation,” she continued.
“The banks would have to decide whether the investor, at the point of making the investment, has been misled. And some of them have gotten the full compensation. You can’t have a blanket ruling where you say that for Lehman Brothers (case), every (investor) must get 100 per cent compensation or 50 per cent. A lot depends on how knowledgeable the person is at the point of investing. That is how the MAS approached the whole problem with all the banks.”
Sunday’s visit to Kampong Chai Chee also saw some new PAP activists helping ministers at their branch and getting a feel of issues on the ground.
Source : Channel NewsAsia – 5 Dec 2010