Singaporeans are uneasy and foreigners are fretting. But their concerns about the frothy property market may be unfounded for now, according to the Republic’s Senior Minister.
Mr Goh Chok Tong, who as then-Prime Minister presided over the cooling of the 1996 property fever, is losing no sleep over the current surge in prices.
“Property bubble is short-term. I think the property market is active, but at this stage, we are not too worried. The prices are at the higher end. We (are watching) very closely,” Mr Goh said in an interview with CNBC telecast on Friday morning, which discussed the 1997 Asian financial crisis.
He was responding to a question on what his biggest domestic worry was, and whether it had to do with a property bubble that seemed to be forming.
“Prices for the middle-income and for the HDB heartlanders … are still quite affordable for Singaporeans in general,” he said, adding that his bigger, long-term worry for the city-state was its talent pool, which is essential to economic growth.
Although tales of fear-driven home-buying and sky-high asking prices continue to make the headlines — leading the Urban Redevelopment Authority to issue two cautions in the past week against over-hyping the market, and to stress the upcoming supply of sites for residential and office space — Mr Goh’s view on the real estate market is shared by pundits.
Jones Lang Lasalle research head Chua Yang Liang, for one, noted there had been no widespread speculative buying across all segments of the market.
Colliers International’s research director Tay Huey Ying said: “It’s only when there’s not enough information or people buying for speculative purposes that there’s artificial demand, which will then raise prices artificially to perhaps a level that is not supported by economic fundamentals.”
Last month, National Development Minister Mah Bow Tan had said he was “comfortable” with the broader property market’s pricing, and that Singaporeans ought not to panic.
Mr Goh said he has heard multinational companies complain about climbing rentals, but that has not deterred them from opening offices here.
“Costs are always important, but we are not going to allow costs to prevent us from growing. Just move into the right sector,” he said, listing higher value-added industries such as biomedical and financial services.
As for concerns about the rising costs of living, he said: “Costs are always a factor, but generally, you do want the standard of living of Singaporeans to go up. And a higher standard of living means more income in real terms … We do monitor inflation.”
The Senior Minister’s bigger concern: The future. “Where do we go from here? It’s a longer-term worry. For Singapore to grow, you need talent, talent from Singaporeans or within Singapore and talent from outside,” he said.
During the interview, Mr Goh also reflected on the 1997 crisis and how Singapore emerged from it with lessons learnt, one of which was the need for a strong financial sector. He also reiterated his confidence that another such crisis would not happen again in Asia.
Source: Weekend Today, 07 July 2007