Property prices in Singapore may fall further, said Deputy Prime Minister Tharman Shanmugaratnam on Friday.
“I don’t think the (property) cycle is over,” he said to a question at the DBS Asian Insights Conference.
He said it is unlikely that the market will see a crash as the Government has introduced cooling measures early to quell any potential housing bubble.
Mr Tharman’s remarks come on the back of calls by some, including the chairman of property developer City Developments (CDL), for the government to review some of the cooling measures it has put in place.
On Wednesday, CDL chairman Kwek Leng Beng said, “The overall picture seems to suggest that it may be timely now for the Government to take another look at the cooling measures introduced and make adjustments accordingly.”
A day earlier, the Urban Redevelopment Authority (URA) released flash estimates which saw private residential prices in Singapore fell 1.1 per cent to 209.3 points in the three months ended June 30. This followed a 1.3 per cent decline in the previous three-month period.
Prices have been falling for 3 straight quarters since last year.
Mr Kwek said that because of the cooling measures which the government has introduced since 2009, “foreigners were choosing to plough their investment dollars into countries like Britain, Australia and the US over Singapore, while Singaporeans have been investing abroad.”
“We are losing these investments to other countries even though these foreign properties have a higher risk profile,” Mr Kwek told The Straits Times. “It is unlikely these investment dollars will return to Singapore.”
However, the government seems to hold to its position that the measures are still necessary.
“The market determines the cycle and the Government has put in place rules and stamp duties,” Mr Tharman said on Friday. “We’ve also pumped in a fair bit of supply into the market. But market players will determine where the cycle goes.”
Dismissing fears that the market will crash, Mr Tharman, who is also the Finance Minister and chairman of the Monetary Authority of Singapore, said, “[I] don’t think we’ll see a crash, because we moved early enough. And we moved each step of the game, knowing full well that what we do may not be enough, but if too much we might engineer a crash.”
“So, we started early, moved step by step and avoided a huge bubble in the market. That’s why we won’t see a crash. But I think further correction will not be unexpected,” he added.
Mr Tharman’s remarks echo that of the Ministry of National Development on Monday.
“It is still too early to relax the property market cooling measures,” said a ministry spokesman. “If the measures are removed prematurely, we could see a sharp increase in demand and housing prices.”
Read also: “CDL chairman again calls on gov’t to ease property curbs“.