Property prices in Singapore are at the "higher end" now but this does not mean a property bubble forming, said Senior Minister Goh Chok Tong.
While he noted that the property market is active, he said the government is "not too worried" and is watching the property market closely.
Mr Goh said this in an interview with CNBC, when he was asked if a property bubble seems to be forming in Singapore.
"Property bubble is short-term. I think the property market is active, but at this stage, we are not too worried. The prices are at the higher end. We watch very closely," he said in the interview, aired on CNBC today.
"Prices for the middle-income and for the HDB heartlanders are still quite affordable for Singaporeans in general. So, my worry will be where do we go from here? It's a longer-term worry. It's not a short-term worry. It comes back to my point about talent. For Singapore to grow, you need talent, talent from Singaporeans or within Singapore and talent from outside."
Private home prices have shot up across the board in Singapore because of the property boom, robust economy and influx of foreign capital. The continuing rising trend has raised concerns that the property is getting overheated.
Estimates released by the Urban Redevelopment Authority (URA) earlier this week show that private property is on a dramatic upswing with plenty of momentum. Prices for the April to June period rose 7.9 per cent - the biggest jump since the third quarter in 1999, when the market staged a brief recovery before sliding into a lengthy slump. The increase comes on top of a 4.8-per-cent rise in the first three months this year.
The Senior Minister said some MNCs have complained about the rising rental because of the property boom here but they are not staying away.
Mr Goh was interviewed for a CNBC special marking the 10th anniversary of the Asian financial crisis. He was then Prime Minister of Singapore when the financial meltdown swept the region, bringing several Asian economies to their knees. Singapore was not spared either, and was forced to cut 20,000 jobs, wages and CPF contributions.
Asked if rising costs could put Singapore at risk again of another crisis, SM Goh said: "I myself do not think a financial crisis is going to happen. The stock markets in Asia, of course, are very lively. Share prices are generally at an all-time high, but the banking structure is strong. In Singapore, we are resilient and have hardly any non-performing loans which we need to worry about.
"We have separated the non-financial activities of the banks from the financial activities. Banks running hotels, for example, and other non-financial activities have been taken out. So, in Singapore, we are less concerned about another financial crisis. But in the region, I think we need to watch that. But generally, my sense is that the banking industry in the region is also resilient."
SM Goh, who is chairman of the Monetary Authority of Singapore, also made this point in an earlier interview yesterday with the BBC, saying that while Singapore's buoyant stock market may suffer a correction, a financial crisis is not on the way. He also said that the government should not interfere in the stock market.
Asked again by CNBC if rising costs - not just business costs but cost of living as well - could put Singapore at a disadvantage, he said this is a worry and the government is monitoring inflation.
He added: "Costs are always a factor, but generally, you do want the standard of living of Singaporeans to go up. And a higher standard of living means more income in real terms, in the real sense. We do monitor inflation.
"Costs - we do worry. But that means you've got to move into higher value-added industries, like biomedical services and financial services, education, health and so on. We cannot be doing things which we were doing before 1997, where China and India will become much more competitive. So, costs are always important, but we are not going to allow costs to prevent us from growing. Just move into the right sector."
Has this kept any MNC from setting up base here or setting up plants here?
SM Goh said: "We are seeing quite a few of these - not so much in the manufacturing side but MNCs in the sense of international financial institutions - more wealth management, hedge funds and other such regional head offices are being set up in Singapore."
On the biggest lesson from the Asian financial crisis, Mr Goh cited having a strong financial sector as a key factor to withstand such a shock.
"We realised very much earlier that the financial industry is a global industry and, therefore, you've got to be more aware of what?s happening in the world and in the region, in particular. So you've got to set up, not just internally but also externally, a system of regional surveillance of the financial performances of banks outside Singapore too. In other words, it requires cooperation from other countries as well."
Just as Singapore has learnt a lesson from the financial upheaval a decade ago, he said other Asian economies are also "very much more acutely aware of the importance of bank supervision and good corporate governance."
"Our neighbours' own banking sectors - as far as you can see - are also much more resilient today than during the financial crisis or just before that."
Edited transcript of SM Goh's interview with CNBC.