Singapore Plans More Measures to Cool Property Market, Lee Says

Singapore's Prime Minister Lee Hsien Loong
Singapore's Prime Minister Lee Hsien Loong said more measures will be taken to cool the property market during the annual National Day Rally speech. Source: Ministry of Information, Communications and the Arts (MICA) via Bloomberg

Singapore will announce more steps to cool the property market after previous measures failed to keep prices from rising, Prime Minister Lee Hsien Loong said.

The Ministry of National Development will unveil the measures before markets open today, Lee, 58, said in a televised National Day Rally speech yesterday, without providing details. The Singapore stock market starts trading at 9 a.m. local time.

“We twice attempted to cool the property market, once last year and once in February this year, but the prices are still rising,” Lee said. “I think we need to do more. Our purpose is to make sure in the long term, Singaporeans can own their homes and afford it and it will be a gradually appreciating asset which will grow as Singapore grows.”

The plan is among a range of measures to address Singaporeans’ concerns that an influx of foreign workers and immigrants will create more competition for housing, education and jobs. Additional measures to curb real estate prices may hurt developers such as CapitaLand Ltd. and City Developments Ltd. as they seek to sell more homes in one of the world’s fastest-growing economies this year.

The government in February said it will levy a seller’s stamp duty on all residential properties and lands that are sold within one year from the date of purchase. The city-state also lowered the loan-to-value limit to 80 percent from 90 percent for all housing loans provided by financial institutions regulated by the Monetary Authority of Singapore.

Previous Measures

Last year, the government barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments that are still being built.

Singapore private residential prices rose 38 percent in the second quarter from a year earlier, according to the Urban Redevelopment Authority. The island led 36 markets around the world in property-value changes last quarter, gaining 34 percent from a year earlier, according to the Global Property Guide in its survey of house prices.

Prices of cars and property have surged as Singapore’s $182 billion economy rebounded from last year’s global slump to expand at a record 17.9 percent pace in the six months through June. The government expects gross domestic product to grow 13 percent to 15 percent this year after the island in 2009 exited its worst recession since independence 45 years ago.

Companies have boosted hiring amid an increase for goods and services and the city state has added about 63,000 jobs this year, according to government statistics. The benchmark stock index has climbed 3.6 percent this quarter and the Singapore dollar has climbed 2.8 percent against its U.S. counterpart.

Foreign Workers

“This year, with a booming economy, we will definitely need more foreign workers so we can create more jobs in Singapore,” Lee said. This is “a trade-off that we face and cannot avoid. Higher growth that will benefit our workers also means accepting more foreign workers to come and work in Singapore. If you choke off the foreign workers, the economy is stifled, growth is not there, our workers will suffer.”

The government will control the inflow of foreign workers even as it allows them into the country to meet the needs of the economy, Lee said. The nation may let in about 80,000 foreign workers this year, less than the 100,000 estimated previously, he said.

Singapore almost doubled the rate it grants citizenship and permanent residence in the past five years to counter a falling birth rate, and let companies bring in thousands to work at hotels, shipyards and restaurants. Foreigners make up one in every three people on the island.

Consolidate Pace

“We have moved quite fast over the past five years,” Lee said. “We’ve accepted a larger inflow of foreign workers and we’ve taken in more new citizens and permanent residents. But now I think we should consolidate, slow down the pace. We can’t continue going like this and increasing our population indefinitely” by more than 100,000 a year, he said.

Singapore had a population of 5 million in 2009, with citizens accounting for 3.2 million, according to the statistics department. The size of the populace has increased by about 720,000 people since 2005, government figures show.

The government will “manage immigration to make sure Singapore doesn’t become too crowded,” Lee said. Authorities won’t allow “immigration to upset the current mix of races among our population,” he said. About 75 percent of Singapore residents are ethnic Chinese, 13 percent are Malays and 9 percent are Indians.

The country will also spend S$60 billion ($44 billion) over the next decade to develop and double its rail network and ease congestion, Lee said.

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