S’pore govt will not implement measures to stimulate property sector

The Singapore government will not introduce measures to stimulate demand or prop up prices artificially in the property sector.

Speaking at an industry event on Wednesday, National Development Minister Mah Bow Tan said such efforts are not sustainable.

However, the government will study suggestions by market players on how to help the property sector.

Developers are feeling the heat from the economic downturn, credit crunch and poor consumer confidence, and many new project launches have been shelved.

To boost property demand, some developers hope the government could relax some of its policies, such as reviving the Deferred Payment Scheme, reducing the development charge rate and introducing property tax exemptions.

But the national development minister said there are limits to what the government can and should do.

Mr Mah said: “We cannot dictate to banks that they should extend loans to companies or individuals with weak financial standing. Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further. It is in our interest to ensure that the property prices move in line with economic fundamentals, as it affects home ownership, asset values, retirement savings and other sectors of the economy.”

Mr Mah said the government will not hesitate to act if needed.

It could roll out public sector projects which have been deferred to boost the industry when construction costs come down, and the pressure on manpower and building materials ease.

The deferred projects are worth some S$4.7 billion. They include the construction and upgrading of schools, civic and community institutions as well as other public infrastructure.

Mr Mah said a number of major projects secured in past years will also create jobs and sustain capital spending in the economy.

Together, the real estate services and construction sectors accounted for about 9.6 per cent of overall GDP and 13 per cent of total employment in Singapore in 2007.

The Real Estate Developers’ Association (REDAS) said market stability and restoring confidence are important in helping the sector weather the economic storm.

REDAS added that developers should take this opportunity to improve its product and get ready for the next upturn.

“Pricing alone does not lead to sales volume; sentiment and confidence leads to sales volume. A tripatite plan of action is needed between developers, financiers and the government through moderating new supply, shoring demand and introducing fiscal measures to help ease funding for the industry,” said Simon Cheong, president of REDAS.

The association said it will work closely with the government to provide timely market feedback.

Despite the tough times, REDAS also hopes developers will continue to drive sustainable development.

Source : Channel NewsAsia – 26 Nov 2008

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