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Launch of BTO units to be tapered off to prevent housing glut

SINGAPORE — While housing demand here has eased with increased supply over the years, the Government has to be mindful of a housing glut that would have a negative impact on home prices and affect Singaporeans, National Development Minister Lawrence Wong said yesterday.

Build-To-Order (BTO) flats at Sembawang. TODAY file photo

Build-To-Order (BTO) flats at Sembawang. TODAY file photo

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SINGAPORE — While housing demand here has eased with increased supply over the years, the Government has to be mindful of a housing glut that would have a negative impact on home prices and affect Singaporeans, National Development Minister Lawrence Wong said yesterday.

Speaking in Parliament over the debated budget for the Ministry of National Development (MND), Mr Wong said the increased supply of 18,000 new Build-To-Order (BTO) flats this year was to accommodate recent policy changes, but his ministry intends to gradually taper off the launch of such units to achieve a more sustainable level over the medium term.

He noted that applications by first-time home-buyers have stabilised at a rate of about 1.6 over the last year (which means most applicants could obtain a unit on their first or second application), and there are now requests for more flats to cater to other groups, such as third-time home-buyers.

However, he said: “To allow a third bite of the housing cherry for all is not sustainable, and we have to be realistic. Our land is limited and our financial resources are finite.”

Mr Wong acknowledged that Singaporeans might prefer to live in mature estates, but it is harder to get a place in those areas and there is a limit to the number of homes that can be built there, so he urged couples to try newer areas.

Resale flats may be an option for those who prefer specific locations, he added, noting that prices are more affordable now — resale home prices went up by 35 per cent while median household income increased by 44 per cent between 2009 and 2015.

For those who are single, he pointed out that more two-room flats have been launched to meet demand, and application rates for BTO units have improved from 30 in 2013 to 7.7 in the February exercise this year. Given the strong demand from singles for homes, he said it would take two to three years to fulfil the current need.

He added that the MND would not be easing property cooling measures on the market even if they have been effective so far in stabilising the market, saying it is “too early to declare victory”. Any relaxation of the measures now may risk a market rebound, he warned, assuring the House that the ministry is closely monitoring the situation and would respond where needed.

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