The biggest speculation that most people can make in their lifetime is in property. This is a big transaction that takes 5 to 10 years of their earnings. If they get it right, they are rich. If they get it wrong, they have to pay for this mistake over many years.
Many took this decision out of fear that the price of a home will become more expensive in the future. Some speculate out of greed, to make money while the bubble continues. In most cases, the losers are the consumers who are ignorant of market trends and economic forces, have to depend on gossips, and can be exploited by the property agents and developers.
The property market in many countries have gone through cycles of boom and bust. They are the results of greed, fear and exploitation. This is not a fair market. It is an exploitative market. Many do not realize that it is a big speculative gamble - because it is clouded by the false belief that they are "making an investment".
A good government can shelter its citizens from the exploitation of the market by regulating the market. It can manage the economic forces to ensure that property prices bear a fair multiple to the average wages of a country. Each working person should be required to set aside a certain percentage (say 25%) of their earnings for a decent home. They should not be required to be exploited and pay more (say 35%) for this cost of living.
If a government has control over most of the land, it can set a benchmark for the market to follow. If the government allows the speculative forces to set the market price and then use it to justify its own pricing, it will contribute to instability in the property market - which is harmful for the economy.
It does not matter whether the people are buying or renting a property - it is more important that the cost is fair. I am referring to a decent housing at a fair rental or purchase price. If any person is willing to spend more for a larger house, it is their personal decision.
Many people have clamored for "affordable housing". It is an important role of a good government, especially one that has control over the cost of land.
Tan Kin Lian
- ► 2013 (314)
- ► 2012 (1270)
- ► 2011 (1873)
02/14 - 02/21
- Accountant interested in Pro-Investor
- Good response to rechargeble torchlight
- Talk at Pasir Ris Library - Financial Planning in ...
- Increase in motor insurance premiums
- Shared bicycles at University of Indonesia
- Affordable housing - 3 years of average income
- Products at Internet Shop
- Get compensation from distributor
- Biggest speculation of a lifetime
- Insurance brokerage and conflict of interest
- TKL Intelligence Quiz Vol 3
- Social insurance
- Giving up an existing investment-linked policy
- Switching to a new policy with special benefits
- Home: our planet Earth
- SCMP: Government may compete for insurance. Govern...
- Difficult to cross Singapore roads
- Toxic products and traffic control
- Switching between guaranteed and investment linked...
- Watching EPL in 2010
- Resort World Sentosa
- Gift for mothers of new born babies
- Financial Planning book available at bookstores
- Draft letter to MAS on Mini-bond settlement
- Draft letter to Trustee of Minibond
- Fee to swap counter party on Mini bond
- Needs and Wants
- Logic9 (pocket size Sudoku)
- Switching to a limited payment whole life policy
- All in the Family
- Economic strategies committee - real change or jus...
- Cut working week to 21 hours
- Alex Tan's talk at Speaker's Corner
- Slow start for Integrated Resort in Sentosa
- Minimum wage and cost of living
- Speaker's Corner - Singaporeans vs Foreigners
- Minimum wage and cost of a maid
- Welfare in Singapore
- A nice name for big gambling
- ▼ 02/14 - 02/21 (40)
- ► 2009 (1655)
- ► 2008 (2105)
- ► 2007 (1803)
- ► 2006 (696)
- ► 2005 (159)