Today, news from National Development Minister Khaw came, regarding the ramp up in the supply of new flats. He acknowledged that it is not sustainable. The rationale rests on the basis that the backlog of flats are gradually being cleared and hence the demand should be able to move back to steady state. Family formation ranges around 15, 000 per year. The rate has lately been ramped up to 25, 000 units per year rate. A total of 52, 000 Build to Order flats were launched in 2011 and 2012 as the HDB sought to satisfy the backlog of demand from first and second time buyers. It is obvious that the government is trying to avoid a steep price drop from oversupply. "We cannot be building up a glut because a glut doesn't help problems and creates new types of problems and people may get hurt." So the best guess is that the government is trying to engineer a "soft landing". Maybe not a deep slide.. but a gradual one that is sustainable. The government does have weapons in its disposal to combat this record high price but it really depends on its will to overcome such problem.. where different groups of its citizens have different and varied interest. The stage is set for containing this to as little a variation in the price as possible, while waiting out the events in macro environment.
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