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Thread: Property measures: Keep them guessing

  1. #1
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    Default Property measures: Keep them guessing

    http://www.straitstimes.com/Review/E...ry_495117.html

    Editorial

    Feb 26, 2010

    Property measures: Keep them guessing


    IF THERE was a party in the property market going on after the Chinese New Year, the Government would have been the party pooper. Barely a week into the new year, it introduced measures to cool the febrile-prone property market. A new seller's stamp duty was introduced, together with a reduction in the loan-to-value limit for home loans, from 90 per cent to 80 per cent. The measures came just five months after the Government implemented moves to kill innovative interest absorption home loan schemes.

    For property prices to go up is patently reasonable. After all, the property market is now seeing ample liquidity, low interest rates and growing consumer confidence buoyed by a recovering economy. That said, however, the speed at which the market is heating up is puzzling. In January, property developers sold 1,476 units - a figure treble that of the preceding month. Prices have increased at a faster rate compared to rebounds from the troughs of previous property cycles. Mortgage lending has also increased steadily by about 12 per cent year-on-year through the whole of last year. Market watchers can only surmise that the strong demand could be coming from either pent-up demand or buyers flush with cash from collective sales.

    Typically, official measures to cool the market are inevitably late, given that they occur after the fact. But thankfully, they do not come so late as to fail to pre-empt any speculative bubble. In essence, the Government is doing what it has been adept at doing - precision targeting to put a brake on speculative demand before it spirals out of control. The stamp duty will hit short-term speculators, while the bank loan limit will affect buyers at the margins.

    The most powerful weapon in the Government market-cooling arsenal, however, is not the series of measures already announced, but those yet to be. This is one of the oldest tricks in the book, be it in fields as diverse as nuclear strategy, politics or an endeavour as earthy as property: to receive pain in one big dose is bad; to get the same pain in small but discrete instalments is worse, but to have no certainty as to when the dose will come is the worst. As one industry watcher noted, if the Government can enact the measures so fast and without warning, it can do something 'faster and more painful' if prices continue to head north. Here, in essence, is the nub of the Government's pre-emptive strategy that will keep property developers and speculators awake at night: keep them guessing.

  2. #2
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    Default

    There was a similar article which appeared in April 1981.

    I get a very strange nondescript feeling reading it. Do you?

    Here are some extracts:

    "RIDICULOUS PRICES. Are rising property prices really good for Singapore? QUEK PECK LIM discusses in FOCUS tomorrow the recent ridiculous prices in office space and residential properties ..."



    "FOCUS PROPERTY SPIRAL. The larger fool theory begins to operate here ..."



    "Madness. We have yet to reach the heights of madness achieved in Hong Kong ... But, when one-bedroom bachelor pads sell for $240,000 or more in less choice areas like East Coast Road , we are getting dangerously close."



    Singaporeans, in general, would prefer to bring their children up (all two of them) with a bit of grass in their very own front (or back) garden.

    With prices of terrace house and semi-detached houses now topping $300,000 even in the more remote corners of the island, many middle income people must be wondering if it is worth the effort slogging it out in Singapore.

    At some point, we may lose some of the bright young people who are the hope of our future prosperity.

    Read in this light, do we need prices that are out of this world?


    With what feelings did many of us look upon million dollar apartments (replete with gold keys )?

    Million dollar apartments got gold keys?
    I have been cheated by the developers !!!

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