The immediate withdrawal of the interest absorption scheme will only affect new projects and not those which had been offering the scheme until the announcement on Monday.
As for interest—only loans, these will be disallowed with immediate effect.
Private home prices have been rising significantly since June. Should the situation remain unchecked, Mr Mah said, a rising spiral of demand and prices could occur as more buyers and speculators enter the market.
"Property prices can potentially build up a strong rising momentum under these conditions. Such a development would make the property market vulnerable to the continuing risks in the global economy," he said.
"Should growth turn out weaker than expected, property buyers and speculators could face capital losses as the market corrects. Conversely if the recovery stays on course, interest rates will eventually rise and drive up financing costs with severe implications for those who have overextended themselves."
To avoid this situation, the government is bringing back the confirmed list of the Government Land Sales (GLS) programme in the first half of next year to ensure a steady supply of private housing. The number of sites will be decided at a later period when the GLS programme for the first half of 2010 is firmed up. Sites under the confirmed list are released for tender at a pre—determined date without the need for the sale to be triggered by a bid. The confirmed list had been suspended since the start of the year due to poor market conditions.
The government will also replenish the supply of sites on the reserve list to meet developers’ needs. But developers will no longer enjoy property—related assistance measures announced in the Budget this year when they expire. The minister said improving market conditions have rendered these measures unnecessary
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