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THE government is “not averse” to implementing more cooling measures on the property market if needed, said National Development Minister Desmond Lee.

He added that it was not yet time to roll back curbs that have been imposed to keep property prices under control.

Lee was responding to a question during a media interview on Monday (Jan 13) on whether the government’s efforts over the past years have addressed concerns over housing affordability.

He outlined the government’s approach to addressing such concerns in recent years – the authorities have ramped up the supply of public housing through its Build-To-Order (BTO) programme, while also implementing measures to cool demand. He called for more time to let these efforts take effect on the market.

“Let the supply and demand-side measures work their way through. We are not averse to putting in new measures if necessary, because we need to ultimately make sure that there’s no property bubble, whether it’s on the private side or on the public housing sector,” Lee said.

In the private residential market, home prices rose 3.9 per cent in 2024 – a slower pace compared with the 6.8 per cent gain in 2023.

Over the last few years, the authorities have put in place a range of measures to curb prices, both in the HDB resale and private property market.

The loan-to-value limit for HDB housing loans was lowered from 80 to 75 per cent in August 2024, as part of a move to dampen demand at the higher end of the HDB resale market.

In September 2022, a 15-month wait-out period was introduced for private home owners who wish to buy a resale flat.

In the private market, Additional Buyer’s Stamp Duty (ABSD) rates were raised in April 2023 for Singaporeans and permanent residents buying their second and subsequent properties. The ABSD rate for foreigners buying any residential property was also doubled, from 30 to 60 per cent.

Asked about the effectiveness of the 15-month wait-out period, Lee said the proportion of private property downgraders paying high prices for HDB flats has come down.

From Jan 1 to Sep 29 in 2022, this group made up about 34 per cent of buyers who bought million-dollar flats. After the wait-out period was implemented, the proportion dropped to 12 per cent between January and November in 2024.

He added that the government would lift this temporary measure when the property market stabilises, and not at this point of time.

Meanwhile, price growth in the private residential market slowed in 2024, Lee noted. The stock of unsold homes has been built up, and developers are more cautious in their bids for government land sales sites.

But prices are still higher than they were before the Covid-19 pandemic, and the government will continue to keep a close eye on the private market, he said.

On affordability, he noted that eight in 10 first-timer families who bought new or resale HDB flats could service their HDB loans using their Central Provident Fund contributions, with little or no cash payments.

Lee said the government is “very careful” about intervening in the property market, as people’s homes and assets are at stake.

“If you want to take very tough demand-side measures, you must be mindful of the economic environment and not over-correct, because that would risk causing the market downturn to be sharper than what I think most homeowners would expect,” he said.

Lee said more than 100,000 new flats will be entering the market, which would build up the stock of homes.

More than 50,000 BTO flats will be launched from 2025 to 2027, including 19,600 flats that will be rolled out in 2025.

In all, about 130,000 flats will be offered for sale from 2021 to 2027.

Noting that the property market moves in cycles, Lee urged homebuyers to be cautious in their financial decisions.

“Those who pay very high prices, especially high prices above valuation, will be at greatest risk when the market – when, not if – eventually does correct,” he said.

He also pointed out that “sentiment-driven psychology” has contributed to rising public housing resale prices.

Million-dollar resale flats, despite being concentrated in locations with good attributes and forming a small proportion of overall resale transactions, have caused sellers to believe they can raise their asking prices.

A record 1,035 flats changed hands for at least $1 million in 2024, more than double the 469 million-dollar deals in 2023.

This sentiment also causes homebuyers to feel anxious about securing a flat despite the high price, because they think that “tomorrow (the price) may go up”, Lee added.

In addition, fewer flats met their minimum occupation period (MOP) in 2024, compared with the year before, resulting in a “temporary tightness” in supply, Lee said. Many of these flats were also located in central locations, and they tend to transact at higher prices.

“There’s no doubt there’s been a psychological impact on people’s sense of affordability. But we have to look at where these flats are, their age, their youth, the attractive attributes that they come with, and recognise that they remain a small proportion (of resale transactions),” he said.

He also pointed to the new flat classification system – which sorts BTO flats into Standard, Plus and Prime categories based on their proximity to the city centre and amenities, and transport connectivity – as another measure to ensure that flats in attractive locations are affordable.

These flats – which fall under the Prime and Plus categories – come with greater subsidies and resale restrictions, such as a 10-year MOP and a subsidy clawback upon resale.

Lee was also asked about whether the new flat classification would contribute to higher prices in estates where Prime and Plus flats are located, because existing flats in these areas do not come with the new resale restrictions applied on Prime and Plus BTO flats.

He said this was “way too early” to tell, as it will be some 10 to 15 years before Prime and Plus flats hit the resale market. THE STRAITS TIMES