PROPERTY prices are set to soften and demand will weaken as the Singapore economy slows down, Minister for National Development Mah Bow Tan said on Wednesday evening.
Private housing prices have declined by 2.4 per cent in the third quarter of this year, and further price movements will 'depend on the severity of the economic slowdown', he added.
Speaking at the 49th anniversary dinner of the Real Estate Developers' Association of Singapore (REDAS) at the Shangri-La Hotel, Mr Mah said: 'Going forward, price movements will depend on the...ability of the industry to make adjustments in response to the changes in economic conditions.'
The good news is that home-ownership rate is high in Singapore - at more than 90 per cent - and the government has an important role in ensuring the long-term stability and smooth functioning of the property market, he said.
Among the measures it should take, he said, is to guard against 'irrational market behaviour such as excessive speculation that is not in sync with economic fundamentals.'
But there are limits to what the government can do.
The government cannot, for example, dictate to banks that they should extend loans to companies or individuals with weak financial standing.
It also cannot work against market forces and try to prop up property prices artificially.
Mr Mah explained: 'Such efforts are not sustainable and will not be beneficial to the health of the property market in the long-run. Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further.
'It is in our interest to ensure that the property prices move in line with economic fundamentals, as it affects home ownership, asset values, retirement savings and other sectors of the economy.'