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Mr Simon Cheong on Wednesday questioned the need for Government
intervention to stop private residential prices from rising.
The Ministry of National Development (MND) issued a statement on
Thursday to say it 'disagrees totally with his view'.
MND said the government's objective is to maintain a steady and
healthy property market where price movements are supported by
economic fundamentals.
'This is important as a stable market matters to the well-being
of Singaporeans and the economy. A property market bubble, if
allowed to form, may not only impact housing affordability but also
severely impact the economy when it bursts,' it said.
In his speech at the launch of a new price index for private
homes in Singapore on Wednesday, Mr Cheong highlighted the results
of two recent government land tenders to illustrate the 'conundrum
and the dilemma' developers face in bidding for such sites.
Rebutting this, MND said 'it is arguable if awarding the two
sites at the low bid prices in 2008 would have moderated property
prices or simply allowed the bidders to achieve a higher profit
margin'.
Secondly, it said that the reserve price has not deterred the
successful sale of sites under the Government Land Sales (GLS)
programme.
Also, the yield of the two sites is small - estimated about 800
units - and is questionable whether the added supply from these
sites in 2008 would have affected prices today in any way.
MND also said that the Government also has a duty as the
'custodian of state land to ensure it obtains a fair market price
for a site'.
'The Government had awarded sale sites in the past even when the
top bid was below the Reserve Price.
'However, for the two sites cited by Mr Cheong, the Government
was not convinced that the bids represented fair market value
rather than opportunistic bids, as there were very few bids for the
sites, and the bids were exceptionally low.'
SPEAKING at the launch of a new price index for private homes in
Singapore on Wednesday, Mr Simon Cheong had said: 'As the supply
side of the development equation is managed by the public sector,
market forces are often not wholly free to respond to demand.'
'During periods of high volatility, it is not able to respond
quickly enough to real-time changes happening in the marketplace,'
he said.
Mr Cheong, who is also chairman and chief executive of developer
SC Global, cited two recent government land tenders to illustrate
the 'conundrum and the dilemma' developers face in bidding for such
sites.
A single bid for a Tampines site was rejected in June 2008 for
being too low but was awarded in March at $421 per sq ft per plot
ratio (psf ppr), or 3.6 times higher.
A Ten Mile Junction mixed-use site also had a failed bid of $162
psf ppr in April 2008 but went for $437 psf ppr, or 2.7 times
higher, in February.
'Had the two sites (along with other tenders) been awarded back
then at 'market prices', the current demand-supply mismatch
scenario in the residential market may have been more smoothened
and price increases for such mass market projects more muted
overall,' said Mr Cheong.