Speech by Deputy Prime Minister and Coordinating Minister for Economic Policies Heng Swee Keat at the REDAS Spring Festival Lunch on 27 January 2023.
REDAS President Mr Tan Swee Yiow,
REDAS Past President Mr Chia Ngiang Hong
Ladies and gentlemen,
I am very happy to join REDAS for the Spring Festival Lunch.
Let me start by wishing everyone a happy Lunar New Year!
We begin the Year of the Rabbit with hope, despite some uncertainty.
Hope, coming out of a few tumultuous pandemic years.
Uncertainty, given the ongoing flux in the global environment.
My main hope is that the post-COVID return to normalcy will endure.
This is the first year that we can lo hei without restrictions since the pandemic.
It is good to see the crowds returning to Chinatown; and bai nian resuming in full swing.
But normalcy as we now know is not something that is normal compared to the past.
Global inflation has dominated the headlines last year.
Global headline CPI might have peaked, but underlying price pressures remain.
So, core inflation is expected to remain elevated for some time.
The global economy has slowed.
Growth halved from close to 6% in 2021 to around 3% in 2022.
2023 growth is projected to come in even lower.
There is a possibility of a shallow global economic downturn this year
But with China exiting zero-COVID earlier than expected, there could be some uplift in the second half of the year, provided the US and other advanced economies continue to hold up.
The outlook is further clouded by global developments.
The war in Ukraine continues unabated, with global consequences.
US-China relationships are tense, and occasionally fraught.
The risk of miscalculation over Taiwan is at a high point.
To add to the uncertainties, the possibility of new variants of concern remains.
This could result in new COVID waves. So, we must remain vigilant. But amidst the global uncertainty, there is opportunity here in Singapore.
Our economy grew by 3.8% in 2022. Our labour market is well supported.
Despite high inflation, real income continued to grow, including for lower-wage workers.
2023 will likely see its fair share of twists and turns.
Singapore’s economy is projected to be in positive territory. But much depends on how the global economy pans out.
We must be prepared, and we are on strong foundations.
We must continue to double down on economic transformation and reskilling.
If we do these well, we can weather the storm and emerge stronger together.
What does the global outlook mean for the property market?
Homes are a key part of the Singaporean identity.
In fact, home ownership is a key tenet of our social compact, with around 80% of Singaporeans living in and owning their HDB flats.
We are refreshing this compact as part of the Forward Singapore exercise.
The Government is fully committed to keep public housing accessible and affordable.
More than 23,000 flats were launched in 2022. Up to 23,000 more will be launched this year.
In addition, we have been working hard to catch up on construction progress which have been delayed by the pandemic, without comprising safety and quality.
HDB has also been offering BTO flats with shorter waiting times of less than three years, by bringing forward the construction schedule for selected sites that are ready for development.
We have also ramped up the supply of private housing through the Government Land Sales Programme.
We added 6,300 units last year. And will further supply 4,100 units in the first half of 2023 alone.
Despite global uncertainties and greater supply, property prices here have remained buoyant. Demand for owner-occupied private and resale homes from Singaporeans remains strong.
We must guard against a sustained increase in prices that are not backed by income and other fundamentals. Left unchecked, this could impair affordability and lead to a destabilising correction later on.
We must also pay attention to the significant increases in mortgage interest rates.
Borrowers on mortgage packages that move with market interest rates are facing higher monthly repayments.
For example, the 3-month SORA, a commonly used benchmark for floating mortgage rates, has gone from 0.2% to 3% in the past year, and could rise further in the coming months before stabilising.
The property market goes through cycles, even with stabilisation measures in place. Right now, we must help homeowners navigate the “double whammy” of the property market – higher prices and higher interest rates.
An earlier round of property market measures was introduced in December 2021, which included tightening TDSR rules and LTV limits.
A further round of measures was implemented in September last year to cool the market.
With these in place, the pace of price increases last quarter has moderated.
Transaction volumes have also dropped.
We must continue to keep a close watch on prices and borrowing to ensure that the growth in prices do not outstrip economic fundamentals.
This is in view of the global uncertainties and higher interest rates.
Our commitment is for all Singaporean families to own a roof over their heads.
But we must enable them to do so in a financially sound and sustainable way.
Built Environment Sector
Having addressed the hopes of Singaporean households, let me now touch on my hopes for the built environment sector.
COVID-19 has been extremely challenging for the whole world and for Singapore. It was also extremely challenging for the built environment sector.
But with construction recovering, and with the easing of manpower bottlenecks faced during COVID-19, it is timely to refocus on the future of the sector.
The collective effort to transform the industry is well captured in the refreshed Built Environment ITM that was launched late last year, which REDAS was a part of.
Most pressing is to ramp up construction productivity, for which digitalisation and tech adoption are key.
I am glad that REDAS is playing an active role, from being part of the earlier Digitalising Built Environment Alliance for Action to introducing an implementation guide for Integrated Digital Delivery.
Beyond the adoption of available technology, we can also drive the development of new ones.
Urban solutions and sustainability are a key plank of our national research plans – RIE2025, for which we have committed significant resources.
The focus is not just on research discoveries, but also turning good ideas into practical industry solutions. And to do that, we will need the industry to play a key role.
Through the Built Environment Technology Alliance for example, we have supported industry collaborations.
One such collaboration is the Construction Technology Innovation Lab between Woh Hup and SIT to develop productive construction technologies.
This Lab was set up last year, and we can look forward to testing and scaling new solutions in time to come.
I look forward to more such collaborations in the future.
Another area that needs greater innovation is sustainability. There is a critical need to pivot to a much greener built environment, which today accounts for 40% of annual global CO2 emissions.
Innovative projects pave the way for the future, including NUS SDE4, the first net-zero energy building in Singapore, which I opened several years ago; and The Samwoh Smart Hub, the first positive energy building in Singapore.
These buildings show how far we can go by significantly reducing energy consumption, and maximising renewable energy production.
From productive construction technologies to net-zero buildings, there are many possibilities. Singapore can be a living lab to test and scale these ideas.
But these possibilities can only turn into reality if there is sufficient lead demand to catalyse change.
As REDAS members, you have a critical leadership role in creating the demand for transformative change and driving the transformation of the built environment value chain.
I encourage developers to work with your partners – from consultants to contractors – to strengthen technical capabilities, adopt new technologies, and experiment with new solutions. Developers play a very critical role because you oversee the whole value chain, and your leadership will be critical in bringing everyone together.
We have various schemes to enable this, such as the Growth and Transformation Scheme. But ultimately our developers must lead from the front. Buildings last a lifetime, if not more. And we must build them right not only for immediate homeowners, but for future generations.
So that over time, we can take a more productive, more digital, and greener approach to new projects in a way that benefits all parties.
Many of you and your partners also have projects overseas. With global demand for smart and green buildings on the rise, your investment in these areas can give you an edge as you internationalise.
Let me conclude. The year ahead is filled with hope and some uncertainty, not just for the global economy and Singapore, but also for our built environment sector.
The rabbit is known for its nimbleness. In the Year of the Rabbit, my hope is that all of us can confront the uncertainties ahead with wisdom, decisiveness, and speed. 希望大家能够动如脱兔，而不要留在原地守株待兔！
The built environment sector has been through some difficult years. But with the pandemic fading, it is time to refocus your collective effort on the transformation of the sector.
REDAS has played a significant role in Singapore’s built environment journey. Under Swee Yiow’s leadership, I am confident REDAS will build to greater heights.
Once again, let me wish everyone a happy Lunar New Year! Thank you.
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