Be wary of plunging headlong into property market

I REFER to the Monday’s report, ‘Flat prices will rise but still be affordable’.

The sudden rise in HDB prices has allowed many Singaporeans to cash out and upgrade to either a bigger flat or private property. It is a sure sign of confidence in the economy and continued optimism.

But the way the housing market is heading, there is some fear that an asset bubble will form. The economy has just come out of the doldrums and unemployment is still an issue. Those who upgrade and take up a $500,000 mortgage will need to be careful.

The recent downturn has shown us that property prices will come down when the economy weakens. The situation in Dubai and Greece reveals that there could still be turbulence in the world economy.

As Singapore recovers from the downturn and things look bright again, let us not forget the lessons we learnt. It is better to err on the side of caution than plough oneself into the market with one’s eyes closed.

Gilbert Goh

Source: Straits Times, 18 Dec 2009