The Edge: Government won’t allow a property bubble

AFTER WEEKS OF watching property prices and private property sales burgeon, the government has made its stand fairly clear. It will not tolerate a property bubble this time around. Certainly, it won’t allow local property prices to get out of hands.

National Development Minister Mah Boh Tan said today that Singapore was “monitoring the market closely” to prevent any froth and had the tools in hands to stop a bubble from developing. “I think the some of the practices and habits you saw in the last property boom are beginning to come back,” Mah said. “We will take whatever actions to prevent such a situation from happening, but it is important for buyers themselves to be aware.”

Singapore home sales jumped 9.1% in June from the previous month–the highest monthly surge ever since government began releasing such data. “I wouldn’t say there’s excessive speculation at the moment, but there is some element of speculation involved,” Mah said. “I would say that there is more than sufficient supply over the next couple of years and it’s a bit too early to say whether there is a speculative bubble or property bubble building up,” Mah was quoted saying. “I think we’ll have to be careful,” he said.

In early July, the Ministry of Finance published a consultation document on property sales tax but later clarified that the policy did not involve any immediate tightening of the current income tax for individuals who sell their properties. But analysts say the tweaking of the rules has provided the government with more tools to act decisively and quickly if things start to get out of hands.

Source : The Edge – 29 Jul 2009

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