This article explains the difficulty faced by the Obama Administration in reviving the housing market in America. If a country allows its property market to build into a big bubble, it will be difficulty to reverse the situation. This is a lesson for Singapore to avoid.
http://www.cnbc.com//id/45021347
http://www.cnbc.com//id/45021347
But Singapore is different. Not only a country but also a homogeneous urban city state and with a limited land area of only 700 sq km. Can you find any part of Singapore where property can be cheaper by a few times, like some big countries like Australia or USA?
ReplyDeleteAnd the housing market is dependent on the flow of money and people, or rather the number of people, and which the government can easily control through immigration policies.
And money flow into the country can can be achieved through financial and economic policies by making foreigners feel safe and good to park money here, whether as cash or property. This will stimulate the economy through the banking and financial sector.
And now we even have a booming casino sector to be proud of.
So there you are, the housing market will be stabilised easily in Singapore. It's all about money and people.
Of course, there may be a political cost to all these, but so far so good, as PAP can still maintain 93% of seats in Parliament despite whatever perceived problems described above.
And this is another plus factor for foreigners to park money here as there is political stability and social peace.
I am more optimistic. This deleveraging which has been going on in Europe and US for the last few years is making people more prudent about their financial planning. I believe American and European have more saving now than before 2008, or at least they have less debt. Banks around The World have purged their bad debts during this time.
ReplyDeleteAsians need to keep an eye on their spending, otherwise we will repeat the same mistake of 1998 financial crisis.
@ ANON 8.03am
ReplyDeleteHmmm. You have a point there.
It does seem very easy to manage Singapore's economy.
No doubt Singapore's economy will be able to continue to "tolerate" more Opposition members in 2016.
Towards a 1st World Parliament in 2016.
Something to think about:
ReplyDeleteE.g. If the price of a property goes up by 20%, but the prices of energy and commodities increase by 30%. Has the value of that property risen?
Be wary of thinking in nominal terms. As governments tinker with the monetary system, we need to value assets wisely.
Jokes
ReplyDeleteHow many Law Ministers does it take to change a light bulb?
Answer:
Law Ministers cannot change light bulbs. They can only acknowledge that the old light bulb is failing. And parts of the room is now in darkness.
How many Prime Ministers does it take to change a light bulb?
Answer:
One. But Mentor Minister has just declared darkness to be the new standard.
@ anon 4:58pm
ReplyDeleteit doesn't make sense to compare property against commodities, esp in singapore where the correlation is inexistent. even in australia where the economy is geared towards commodities, the correlation is tenuous at best. anon 8:03am correctly pointed out the determining factors. and may i bring out one more point. we all know how small Hong Kong is, hence the limited supply and faith in the property market. but singapore property market is way smaller, granted 70% are HDB and can't be invested by foreigners. besides, a Renminbi 1mil property will rent for about RM 1500, whereas a S$1mil property can fetch 4-5k rental. Now, tat's the reason why chinese r parking funds in properties here and chasing the attractive yields, besides the fact that the funds r prob safer in singapore granted hk is part of china.
It is just as difficult to burst the property balloon. In today's papers, Shanghai home owners who bought theirs at the top of the market, vented their outrage at the developer's office when the latter reduced their selling prices of remaining units by 20%, destroying the showroom in the process and demanding refunds.
ReplyDeleteWe should make the same demands should it happen in Singapore.
If Singapore is different in the context of a collapse of the property bubble, and continues to inflate the bubble, does it mean it will never burst at all, because everyone argues that land is scarce.
ReplyDeleteThe only way plausible way to do that is to increase the CPF contributions relentlessly, and that is well nigh impossible.
Sure, foreigners are bringing in tons of money, but what happens if, after speculating and cashing in, they decide to move out. Then we are in deep shit if we think we can just depend on hot money fueling the spiral.
Right now, the Government surely will not be so eager to depress the market too much, because life savings are invested in the housing market, and doing anything untoward will wipe out all those savings in a flash.
The saying is that the Government has ridden a tiger and now cannot find a way to dismount. That is basically the problem. But to ignore it and let the spiral continue is just kicking the can further down the road, and will make it even more painful and disastrous for the people when the crash comes.
It is not a question of whether it will, but when?