National Development Minister Khaw Boon Wan has said that while the property cycle cannot be completely eliminated, the government can try to keep housing bubbles “less bubbly” by intervening.
Writing on his Facebook page on Monday, Mr Khaw said that is the right thing to do, even if it may make some developers and home sellers unhappy.
Ireland’s property prices peaked in 2007 in tandem with a booming economy.
But according to an article in the New York Times last weekend, prices have fallen by nearly 50 per cent since, as the country’s housing bubble burst.
Referring to the article, Mr Khaw said that a housing bubble and its inevitable bust typically brings huge misery to many.
And he added it is right for the government to intervene or “take away the punch bowl when the party is getting hot”, even if it makes some unhappy.
In Singapore, some property analysts said a slew of measures to cool the property market in the country have helped to moderate such runaway prices.
Donald Han, managing director of Chesterton Singapore, said: “If there had not been any measures, definitely I think the pace of acceleration in prices will be more pronounced, that is, we (will) definitely (be) seeing double-digit numbers on a per annum basis.
“But because measures have actually come out fast and in a variety…in the last three years, I think that helps to keep in check any price increases.
“That segment (developers and home sellers) really understands why measures are important and how important it is to have a stabilisation of property prices, because we’ve seen prices shooting themselves out of the fundamentals in the West, and when it comes to a halt in economic growth, then you see prices sliding down and that can cause in some cases bankruptcy, in the form of banking failures.
“So I think in Singapore it’s a little bit more stable, it’s better to even out the peaks and the troughs so while it may not be an exciting market, but at least you keep the whole market in place.”
Observers said one of the most effective measures was the Total Debt Servicing Ratio framework introduced in June.
They said that with Singapore’s property market stabilising and possibly heading for a correction soon, the government could consider relaxing some of the measures it has introduced, in particular, the Additional Buyer’s Stamp Duty and the Seller’s Stamp Duty.
Eugene Lim, key executive officer at ERA Realty Network, said: “At the end of the day, the economy is growing and there is no reason to artificially cause property prices to deteriorate.
“Property prices should move in tandem with the rate of economic growth in Singapore, and so I think it could be a right time in the coming months to perhaps review some of the measures to give the market a booster; because if you look at the volume of transactions, it has dramatically slowed down and it’s not healthy comparing it with the state of the economy.”
But analysts have also cautioned that any relaxing of measures will also have to be well calibrated.
Source : Channel NewsAsia – 23 Dec 2013