Building And Constr Authority Govt should assess risk of property bubble, calibrate measures
Is there irrational exuberance in the local property market with the surge in new home sales, increase in private property resale prices and speculation that the collective sale market will pick up next year?

The number of unsold units has dropped for six straight quarters, while there has been a conservative slate of sites on the Government Land Sales (GLS) programme (Talk of en bloc fever flaring up again next year, Dec 23; New home sales surge 19 per cent in Nov as developers ramp up launches, Dec 16; and Private resale prices up for fourth straight month: SRX, Dec 16).

If this demand and supply mismatch persists, we might enter another property bubble.

We are not out of the woods yet from the ongoing pandemic, with a slowdown in business and uncertain unemployment situation, yet investment in the stock markets and real estate continues unabated due to an abundance of liquidity and ultra-low interest rates.

The Government should intensify risk assessment immediately, and take necessary preventive and precautionary measures now before it is too late.

If the demand is genuinely coming from people who are looking to upgrade their homes or buy a new home, then the Government should ramp up GLS in the next cycle to calm the market, especially to reassure those who are worried that they would be priced out of the market if they don't act today.

Next, the Government should calibrate existing property cooling measures and be ready to tighten the clamp should land bids, collective sale market activities and home prices start to trend upwards.

In previous property cooling policies, we were quite behind the curve. Although the red-hot property fever then has been tamed and prices have stabilised, it was a Pyrrhic victory because the prices already scaled to a new height at that time and established a new benchmark for subsequent property prices. Instead of a non-discriminatory broad-brush approach, the Government should target non-occupier property purchases and loan service serviceability to allow genuine occupier-buyers to purchase their dream homes based on their income.

The pandemic will not go away soon just because of a new vaccine. Business recovery takes time and full employment is a distant goal.

Until we are out of the woods, we have to be wary of a potential property bubble burst that will undo all our efforts to tackle the pandemic.

Ee Teck Siew

Source: https://www.straitstimes.com/opinion/forum/forum-govt-should-assess-risk-of-property-bubble-calibrate-measures

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