Sunday, December 11, 2011

Now is not the time to cool private property market...really?!

The wife and I came across this article by Mr Andrew da Roza in the forum page of The Straits Times yesterday.

Reference: Now is not the time to cool private property market

While only time will tell if the Government's latest set of property cooling measures is counter-intuitive, we felt that Mr da Roza's arguments against the additional buyer's stamp duty (ABSD) for foreigners are flawed on at least two counts:

1.   There is a fundamental difference between immigrant and foreigner. Based on several on-line definitions of the former, an immigrant is a person who leaves one country to settle permanently in another. Taking this definition of immigrant within the Singapore context, one would be referring to PRs and "new citizens", i.e. those who are prepared to sink their roots in Singapore and contribute towards the betterment of our country. This is opposed to foreigners who are just working here (because the prospects for them in Singapore are currently better than what they can find elsewhere, but they will not hesitate to move once the situation changes) or foreign investors (who are moving money into Singapore because it currently offers the best returns/stability, but will pull their money out at the first sign of change ).
The new set of property control measures already allow PRs and Citizens to own at least one property without having to pay the ABSD. This should help fulfil the aspirations of home-ownership for these two groups of people living in Singapore. And should they wish to purchase additional properties for investment (read: profit) purposes, the Government has no obligation to help them.
As far as foreigners who are working or investing in Singapore are concerned, they are mostly here under the notion of "greener pastures". And once the economic situation deteriorates, those who can find alternative employment/investment elsewhere will move - a fact acknowledged by Mr da Roza.
Given such, the wife and I question the wisdom of trying to "attract" foreigners (and their money) into Singapore by providing them with a level playing field for private property purchase.

2.   Mr da Roza also mentioned that "even China and Hong Kong have relented in the face of imminent global recession and are moving to lift their property cooling measures". The wife and I are particularly interested to know where he gets his facts from. The information we have gathered suggests that both China and Hong Kong are still very determined to keep property prices in check, but they will consider relaxing their property cooling measures if the global economic situation starts to affect local property prices adversely. We believe this is the same stand that our Government will adopt. The whole premise of the ABSD is not to crash the property market, rather to prevent a property bubble from emerging.

And contrary to Mr da Roza's final comments, if something is not done to rein in the sky-high property prices that are still prevalent despite the economic problems that have surfaced around the world, potential buyers such as Ms Lim and Ms Yang are more likely to be left holding negative equity in their new matrimonial homes should they decide to plunge into the property market now...



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