LAST Saturday’s report, ‘New rules to curb property speculation’, puzzles me. Each time the media reports on a heightened interest in the property market, such as queues for condominiums or higher prices of newly launched condos, a new rule is introduced.
A situation in which all players in the market must guess constantly about government policy is unhealthy for a stable property market.
The market is currently trying to pick itself up after a state of depression since the most recent boom in 1997.
There are still many mass market condos today where owners have been unable to break even (after factoring in interest costs) on units they bought more than a decade ago.
For every new condo launched at a record-breaking price, there are several in the secondary market in good areas transacted at less than $600 per sq ft.
However, as this secondary market is of less news interest, the general impression given is that all condos are hitting record prices and the market is out of hand.
As for loans, banks are now extra prudent following the economic downturn and Singaporeans in general are not highly leveraged.
Speculation has not reached unduly high levels and trying to attack it too early may damage the entire market, not just curb speculation.
The fundamental problem now is not a property bubble but the unrealistic expectations of buyers who want good locations and good views at affordable prices but are not willing to accept the fact that, in a healthy and growing economy, it is normal and even desirable for prices to rise steadily.
Source: Straits Times, 23 Feb 2010
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