Govt should not help developers

http://www.businesstimes.com.sg/sub/...04051,00.html?

Published November 4, 2008

LETTER TO THE EDITOR

Govt should not help developers


THE just-announced government's move to suspend the sale of state land for the first half of next year 'was met with jubilation in property circles', reported The Business Times on Nov 1, 2008. The report also quoted a spokesman for City Developments as saying: 'We hope the government will continue to monitor the situation and introduce more pro-active measures to stabilise the property market.'

It is funny to read this because last year, when the Singapore property market 'became 2007's hottest global market with prime capital values increasing by 50 per cent', in six months (source: Jones Lang LaSalle, July 20, 2007), none of the Singapore developers then had urged the government to introduce pro-active measures to stabilise the property market.

The question is: should the government introduce more pro-active measures to stabilise the property market?

I don't think so. If the government is seen to always provide help to developers when their bets go wrong, then developers (and property speculators) will be emboldened to reckless risk-taking behaviour. Property developers and speculators made fantastic profits in good times.

In bad times, they should suffer the consequences of making the wrong bets. Let market forces rule. It is not the government's job to ensure that property developers and speculators come out tops every time. Let the possibility of failure and, real failure, be the necessary market discipline. Genuine buyers of property would be better served this way.

Adrian Ho