CURBS on the private property market that hit foreign buyers hardest are the equivalent of a controlled demolition on a building site to remove an obstruction that had clearly become too embedded in the landscape to skirt around any more. Few expected such an announcement because the initial effect has been to add to already depressed sentiments about the economic outlook for the year ahead. The market dived as property and bank stocks were hit hard, and the industry predictably lamented the late Wednesday night body blow that had developers and property agencies alike scrambling to reassess projects and launches, and to salvage or seal deadline-beating deals. While the decision to impose an additional stamp duty on foreign buyers will have a dampening effect, the Government's move must be applauded as a bold step to address Singaporeans' continuing concerns about runaway prices and to protect against price inflation of assets like property which, if unchecked, can savage the health of any economy. Many need only recall how the property bubble collapse in Japan in 1990, and the United States more recently, have left their economies languishing.
The Government's role is not to encourage and assist developers to sell properties and secure profits. Nor is it an agent that markets Singapore as a foreign buyers' haven. It has, from its earliest days, undertaken the higher responsibility of encouraging home ownership among Singaporeans and adopted policies to enhance the value of their assets. When the situation warrants it, as is now the case, new measures must be applied to ensure Singaporeans are not priced out of the market and can have ready and affordable access, whether they are first-time buyers or upgraders. Which is why they will applaud Wednesday's move and cheer at the prospect that prices may plunge by as much as 30 per cent.
Singaporeans are right to expect that property prices move relatively in tandem with wage growth and do not get too far out of reach. That has happened with the influx of foreign property buyers. Some are genuine, but many simply want a safe and secure jurisdiction in which to park their money in assets like property for better returns given the listless state of capital markets and the low-interest-rate environments elsewhere. But by moving increasingly into the mass property market here, the head-on competition that they and their larger chequebooks pose to Singaporeans has become alarming, even untenable. Singapore will remain open and welcoming to them, but this tough and latest measure will go further in ensuring that Singaporeans do not lose their home advantage to the visitors.
Source: The Straits Times © Singapore Press Holdings Ltd
Martin Koh/ Sherry Tang