National Development Minister Khaw Boon Wan said strong demand for residential property in Singapore is likely to persist, as interest rates stay low.
In a question to the minister in Parliament on Monday, MP Foo Mee Har cited the case of a flat in Queenstown which was sold for S$1 million.
Mr Khaw said from time to time, some buyers are prepared to pay way above market valuation but these are exceptional cases.
He said residential property prices are stabilising, but Singapore is not yet “out of the woods”.
Both private property and HDB resale markets showed signs of stabilising this year.
For private property, growth in prices slowed from 18 per cent in 2010, to 6 per cent in 2011, and to 0.9 per cent in the first three quarters of 2012.
Growth in the Yearly Resale Price Index (RPI) also dropped from 14.1 per cent in 2010, to 10.7 per cent last year, and to 3.9 per cent in the first three quarters of this year.
Nonetheless, flash estimates for the third quarter of 2012 show a 2 per cent uptick in the resale price index, from the second quarter.
He said the latest curbs on loan tenures are to prevent excessive speculation in both the public and private housing markets.
And this is in response to abnormal global monetary conditions that are keeping interest rates low.
The Monetary Authority of Singapore had recently announced a 35-year cap on residential property loans, and also tighter loan-to-value limits for loans that exceed 30 years.
To meet demand, Mr Khaw said the Housing and Development Board is keeping up the current pace of building new flats into 2013.
In 2011, HDB launched 25,000 new flats, and this year, the total will be some 27,000 units.
Mr Khaw said: “Every year, marriages that are involving citizens, we’re talking about 15,000 family formations a year. So 25,000 units (new flats a year) provide some buffer. But we also have additional demand from upgraders, downgraders, second timers.
“In fact, if not for other policy changes I’d be beginning to wind it (the supply) down a little bit. Other than, because now we have this new subject of catering for singles. So I have to deliberately ramp it up a little bit higher in order to cater for singles. We’re still mulling over it. Very hard to put a figure on how much should we cater for singles.”