33,000 is hell of a lot of unsold flats

PROPERTY - the word alone sets the Singaporean heart racing. Those capital gains, the own-your-own-home dream all make for a potent elixir. Every now and then, National Development Minister Mah Bow Tan has to raise a red flag when real estate gets over- heated and prices threaten to enter the realm of the ridiculous. 'As the Government, we need to make sure that we look at the overall interest of the economy and everybody concerned, including the developers, real estate agents, buyers and then take it not just now but... down the road as well,' he said. The balancing act has become more difficult of late with a perfect storm of low interest rates, ample liquidity and record-breaking economic growth fuelling the property boom. Trying to keep a lid on all this has preoccupied Mr Mah, 62, for much of the past 12 months. A range of cooling measures has been adopted to take the heat out of the market, while large tracts of state land have been released to ensure developers can keep up the supply of homes. But as the minister told The Straits Times last week, buyers should perhaps curb their enthusiasm as there are already plenty of homes around. There are about 33,000 uncompleted units that remain unsold, and that is 'a hell of a lot of flats', said Mr Mah, enough to tide over the private market for three years and casting a shadow of a potential oversupply over the housing landscape. Buyers and developers must take into account this huge supply before making any big-ticket purchase decisions, he added. Throw in the fact that interest rates will certainly rise at some point and the risk of external shocks to Singapore's economy, and the equation for a potential home-buyer becomes that much trickier. Huge global uncertainties such as the turmoil in the Arab world could also have a knock-on effect on Singapore, throwing a spanner in the works of rising prices. But he acknowledges that the supply overhanging the market may not depress prices. If the global economy gets back on track and confidence returns, then demand will keep prices firm. Confirmed list sites go on sale regardless of interest and are often an indication of the Government's strategic development plans. Land on the reserve list is put up for tender only if developers make an acceptable initial offer. There are others who believe the Government should stay out of the private sector and let market forces reign, but he rejects the free-for-all approach. One recent measure - levying stamp duty of up to 16 % on homes sold within certain periods - has been attacked as being too harsh. But he pointed out that 1,101 buyers did not find it too onerous, choosing to purchase new private homes last month. This represented a 'reasonably healthy level of activity in the market' from buyers who were mostly owner-occupiers or looking at the purchase as a long-term investment. In a booming market with prices heading north, frustrated buyers can get angry and foreigners have been the target of some of this resentment. But he says Singaporeans are 'over-blaming' them. Foreigners cannot buy public flats - which comprises about 80 % of the market - and are restricted in buying landed homes. This limits them to only a narrow sector of the non-landed private market. The proportion of foreigners buying such homes has not increased over the years, hovering at around 20 to 30 %, he added. Another hot issue centres on calls for more regulations over the sale of homes of less than 500 sq ft - so-called shoebox flats - but this is one the Government has decided to sit out. These tiny homes, which can have psf prices of up to 20 % more than standard flats, make up only about 5 to 6 % of all transactions, he said. But if sales soar and begin to distort the Urban Redevelopment Authority's private property price index - which is based on the psf prices - the Government may consider a sub-index for shoebox homes.

- The Straits Time, P18

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