To reduce property prices sell more land

This was posted on Ministry of National Development (MND)  facebook page, but this newspaper article was featured in Straits Times on the 23rd of March 2013

Sell more land and sell land that is close together, and sell land that is similar in attributes, and launch all of them together is the latest strategy released by Ministry of National Development saying that’s what URA will be doing (released on a Facebook post just moments ago).  Visit the  Facebook page of MND to read more comments.

Since its post, it has received a high number of shares and comments about this strategy.

It is our experience that if the prices for the land does not meet reserve price, it will not be sold. If the land only receives 1 bid, it will also not be sold. But will this eventually lead to reduction in the prices of the property sold, we cannot say for certain, but I am not optimistic, because there are many other factors in play, given current softness in the market, only the large developers will have the funds to bolster their land banks, smaller developers will be side-lined by such a move by MND. Prices of property sold by the developer is determined by market forces not because they bought the land at a low cost. If the cost of the land is low, it will improve the profitability of the developer.

Private property prices is self determined by market forces, based on the simple law of demand and supply. If demand is high vis-a-vis supply, prices will go up. and vice versa. In Singapore, in the long run, our land is scarce and we will only have that amount of supply, and demand will without a doubt increase, so prices will surely rise. More effective ways of curbing the inflation of prices that targets the problem should be found. This way is too crude and very likely prove ineffective.

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