Mr Simon Cheong on Wednesday questioned the need for Government intervention to stop private residential prices from rising.
The Ministry of National Development (MND) issued a statement on Thursday to say it 'disagrees totally with his view'.
MND said the government's objective is to maintain a steady and healthy property market where price movements are supported by economic fundamentals.
'This is important as a stable market matters to the well-being of Singaporeans and the economy. A property market bubble, if allowed to form, may not only impact housing affordability but also severely impact the economy when it bursts,' it said.
In his speech at the launch of a new price index for private homes in Singapore on Wednesday, Mr Cheong highlighted the results of two recent government land tenders to illustrate the 'conundrum and the dilemma' developers face in bidding for such sites.
Rebutting this, MND said 'it is arguable if awarding the two sites at the low bid prices in 2008 would have moderated property prices or simply allowed the bidders to achieve a higher profit margin'.
Secondly, it said that the reserve price has not deterred the successful sale of sites under the Government Land Sales (GLS) programme.
Also, the yield of the two sites is small - estimated about 800 units - and is questionable whether the added supply from these sites in 2008 would have affected prices today in any way.
MND also said that the Government also has a duty as the 'custodian of state land to ensure it obtains a fair market price for a site'.
'The Government had awarded sale sites in the past even when the top bid was below the Reserve Price.
'However, for the two sites cited by Mr Cheong, the Government was not convinced that the bids represented fair market value rather than opportunistic bids, as there were very few bids for the sites, and the bids were exceptionally low.'
SPEAKING at the launch of a new price index for private homes in Singapore on Wednesday, Mr Simon Cheong had said: 'As the supply side of the development equation is managed by the public sector, market forces are often not wholly free to respond to demand.'
'During periods of high volatility, it is not able to respond quickly enough to real-time changes happening in the marketplace,' he said.
Mr Cheong, who is also chairman and chief executive of developer SC Global, cited two recent government land tenders to illustrate the 'conundrum and the dilemma' developers face in bidding for such sites.
A single bid for a Tampines site was rejected in June 2008 for being too low but was awarded in March at $421 per sq ft per plot ratio (psf ppr), or 3.6 times higher.
A Ten Mile Junction mixed-use site also had a failed bid of $162 psf ppr in April 2008 but went for $437 psf ppr, or 2.7 times higher, in February.
'Had the two sites (along with other tenders) been awarded back then at 'market prices', the current demand-supply mismatch scenario in the residential market may have been more smoothened and price increases for such mass market projects more muted overall,' said Mr Cheong.