The Housing & Development Board’s (HDB) two recent policy changes may affect the market for mass market private homes, according to a report by Credit Suisse.
In an effort to make its public flats more attractive to couples looking for their first homes, the HDB announced last week that it will move away from the Build-to-Order (BTO) system and increase income ceilings for purchasing new HDB flats. The government agency will also bolster the supply of new flats in 2011 and 2012.
Analysts from Credit Suisse believe that the changes will lead to a “more balanced” supply-demand situation.
“Affordable housing for Singapore citizens, following the recent years’ surge in residential property prices, has been one of the most hotly-debated issues of the general elections,” it said in the report.
“In our view, this space is likely to see the most meaningful longer-term policy changes, especially with the appointment of a new Minister of National Development, Khaw Boon Wan.”
Furthermore, the bank sees the government striking a better balance between the quality of living for Singaporeans and the gross domestic product (GDP) growth.
As such, Credit Suisse economist Kun Lung Wu expects population growth to moderate over the medium term by between one and two percent and real GDP growth to ease to approximately four percent. However, the bank said GDP growth will still reach 6.5 percent in 2011 and five percent in 2012.
“We expect price moderation with more government supply, but prices are unlikely to slump in near term on strong economic fundamentals, strong balance sheets and low interest rates,” said Mr. Kun.
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