Speech by MOS Tan Kiat How at PropNex's Singapore Property Xpo'22: Real Talk with Minister
Apr 2, 2022
Good morning, everyone. Thank you for inviting me to the 2022 Property Consumer Engagement Seminar.
Buying a property is a long-term commitment, and also one of the largest financial purchases that many of us would make in our lifetime. It is important that buyers carefully consider all relevant factors before deciding.
Acknowledging recent announcements relating to property purchases
This is especially so against an uncertain economic backdrop and expected increases in interest rates.
The Government has been closely monitoring the market situation, and in December 2021, we introduced a set of cooling measures to tamper the demand for housing, alongside measures to boost supply for home-seekers.
We observed a clear upward momentum in prices and transaction volumes in both the private residential and HDB resale markets.
If left unchecked, prices would run ahead of economic fundamentals. Coupled with expected increases in interest rates as major central banks look to tighten monetary policy, property buyers may be faced with a significant increase in debt servicing cost.
This is why we decided to act despite the uncertainty with the COVID-19 situation to protect the interest of home-seekers.
The cooling measures will help to ensure that housing remains affordable for Singaporeans, and seek to prioritise housing purchases for genuine owner-occupation, especially among first-time home buyers.
For example, the Additional Buyer’s Stamp Duty (ABSD) rates were raised across the board but remain unchanged for Singapore Citizens and Permanent Residents purchasing their first residential property. This will moderate demand from those purchasing residential property for investment.
The changes to the Total Debt Servicing Ratio threshold and Loan-To-Value limit for HDB housing loans will encourage greater financial prudence. However, they are unlikely to affect most borrowers buying HDB flats. HDB buyers are already subject to the stricter Mortgage Servicing Ratio (MSR) of 30%, which was not changed in the latest round of cooling measures. Moreover, first-timers families buying a resale flat can enjoy generous grants and use their CPF savings upfront to pay for their flat. This reduces the overall loan quantum needed for their purchase.
To meet demand from Singaporean households, we will also ramp up BTO supply significantly in the coming years to 23,000 flats each year in 2022 and 2023. We have also increased the supply of private housing through the Confirmed List of the first half of 2022 Government Land Sales Programme, and will step up supply even further if demand remains strong.
We will continue to monitor the housing market very closely.
Engaging with Singaporeans on Housing Issues
Let me also take the opportunity to touch on MND’s recently announced housing policies and initiatives that have broader implications for the property sector in Singapore.
Singapore is committed to play our part in tackling climate change, which is a global challenge facing of all countries. The government launched the Singapore Green Plan 2030 which outlined a set of ambitious goals for our nation.
To achieve our goals, one of the many initiatives relating to our HDB estates is the HDB Green Towns Programme, which aim to bring sustainable living to HDB residents, and reduce energy consumption by 15% by 2030.
We are progressively installing solar panels on the rooftops of HDB blocks to power common services such as lifts and lighting. We have already done this for more than a quarter of the over 10,000 HDB blocks we have today. In total, HDB has committed to a total solar capacity of 380 megawatt-peak for 8,400 HDB blocks, and this is equivalent to powering 95,000 4-room flats with solar energy.
We will also explore the use of Light Emitting Surfaces (LES) for HDB residential block signages in our housing estates. LES is a new technology that can potentially reduce about 80% of energy consumption compared to standard fluorescent block signage.
We are also trialling the use of cool coatings on the facades of HDB residential blocks, which may potentially reduce ambient temperatures for better thermal comfort.
To reduce potable water consumption and to help towns conserve water, HDB has also developed the UrbanWater Harvesting System (UWHS) which we are piloting at selected sites in existing HDB estates. HDB has just launched the tender for the installation at UWHS at two sites, covering the harvesting of rainwater for 89 blocks.
We hope that these initiatives will improve the sustainability of our HDB estates, and enable residents to lead more sustainable lifestyles.
Besides climate change, another key challenge for Singapore is to continue fostering an inclusive and harmonious society. With the vast majority of Singaporeans living in HDB flats, our public housing policies form an important part of our efforts to do so. For instance, through the Ethnic Integration Policy (or EIP), we strive to maintain a diverse ethnic mix in our HDB heartlands, thereby creating opportunities for interaction amongst those of different races. These everyday encounters help to develop greater inter-ethnic understanding, thus fostering our social cohesion and resilience. Today, nearly one in three HDB blocks have reached one or more of the EIP limits. This shows the relevance and importance of the EIP.
Nevertheless, we are mindful that with the EIP, some flat owners may face genuine difficulties in selling their flats when the EIP limits are reached. We have previously put in place some assistance measures, such as giving these flat owners more time to sell their flats, and even waiving the EIP limits under exceptional circumstances. However, there are limits to waiving the EIP limits, without undermining the objective of the policy.
After studying the feedback and suggestions we received on how to smoothen the rough edges of the EIP, we announced at the recent MND Committee of Supply debate that HDB will buy back flats from EIP-constrained homeowners who face genuine difficulties selling their flat on a case-by-case basis, regardless of which ethnic group they belong to.
Although the EIP buyback assistance requires significant resources to implement, we have done so because the EIP is a policy that benefits the whole society, and so we should take on the costs of this policy collectively, rather than leaving some homeowners to take on a disproportionate share of the impact.
Engaging a Property Agent
More specific to the real estate sector, we have been working closely with the industry through the Real Estate Industry Transformation Map, RE ITM for short, to uplift the professionalism of property agents and make the property transaction process more seamless for consumers like you.
I would like to talk about how you can play a part.
A good property agent can assist you in navigating your property journey and it is important that you choose an agent who best represents your needs. However, please keep in mind four simple yet important things when engaging a property agent.
First, check the CEA’s Public Register via the CEA’s website to verify that the agent is registered. Recently, there have been reports about scammers impersonating property agents to commit fraud against unsuspecting consumers. It is important for consumers to verify the identity of the property agent before transacting with the person.
Under the Transaction Records Initiative, the Council for Estate Agencies (CEA) has been working with property agencies to upload information such as individual agent’s residential property transaction records for the last 24 months. This enhances transparency and allow consumers like you to make a more informed decision when choosing the agent to represent you.
You can also find other consumers’ ratings of the agents on PropNex’s website. PropNex is one of the property agencies that adopted the recommendations in the Guide on Best Practices for Consumer Ratings of Property Agents. CEA has worked with the industry to formulate this Guide. With the ratings, consumers can better compare the agents across different platforms on three key attributes – Service, Professionalism, and Skills.
Second, if you are buying a residential property, formalise the engagement of your property agent’s services by using CEA’s prescribed estate agency agreement. The agreement states the property agent’s duties, agreed commission rate and any conflict of interest, thereby protecting the interests of both you and the property agent. The form can be downloaded from CEA’s website.
Third, while we continue to enhance the professionalism of the industry and provide more value-added services to consumers, we seek your support to familiarise yourselves with the responsibilities of a property agent to ensure a smooth property transaction. To maintain Singapore’s reputation and status as a well-regulated international financial centre, property agents are required to verify the identity of their clients in a transaction, to prevent money laundering through the property sector.
Do not be surprised by these requests for information, and we seek your cooperation when the agents approach you for some personal details during the transaction. However, if you feel uncomfortable about the details being requested, do get the agents to explain which of the CEA regulations warrant their request for the specific details.
Lastly, do note that property agencies and agents are prohibited from handling certain transaction monies related to your property transaction. This is to safeguard your interest, as there have been cases where agents misappropriate the money handed to them, thereby compromising the integrity of the transaction and putting their clients at risk. Property agents are not allowed to handle monies such as option fee and down-payment, stamp duties, deposits, sales proceeds, and monthly rentals. Valuation fees and commission are not considered transaction monies. Always make payments directly to the relevant payees, through verifiable payment modes such as crossed cheques and bank transfers, instead of passing these payments through the agents.
Conclusion
I am heartened that as the largest property agency in Singapore, PropNex has taken the initiative to engage with and educate consumers through events like this. I hope that everyone will be able to take away something from this event, and hopefully a better understanding of the various factors to consider when buying a property. I wish all of you a fruitful seminar today.