This actually is an interesting letter sent to the Editor of Business Times and published on 4 November 2008.
Open Quote:
THE just-announced government's move to suspend the sale of state land for the first half of next year 'was met with jubilation in property circles', reported The Business Times on Nov 1, 2008. The report also quoted a spokesman for City Developments as saying: 'We hope the government will continue to monitor the situation and introduce more pro-active measures to stabilise the property market.'
It is funny to read this because last year, when the Singapore property market 'became 2007's hottest global market with prime capital values increasing by 50 per cent', in six months (source: Jones Lang LaSalle, July 20, 2007), none of the Singapore developers then had urged the government to introduce pro-active measures to stabilise the property market.
The question is: should the government introduce more pro-active measures to stabilise the property market?
I don't think so. If the government is seen to always provide help to developers when their bets go wrong, then developers (and property speculators) will be emboldened to reckless risk-taking behaviour. Property developers and speculators made fantastic profits in good times.
In bad times, they should suffer the consequences of making the wrong bets. Let market forces rule. It is not the government's job to ensure that property developers and speculators come out tops every time. Let the possibility of failure and, real failure, be the necessary market discipline. Genuine buyers of property would be better served this way.
Close Quote
Since the reader posted the question, I would like to express my view too.
First of all, we should not expect any developers to release statement to hit their own toes. Secondly, the government did put up some curb to prevent the property price run away. The termination of deferred payment scheme is a good example. Next in my mind is that the government has raised development charge to slow down en bloc in 2007 too. These measures have successfully prevented the hard landing of property price, at least, up to today.
The second part of the question is: Should the government let the property developers and speculators fail?
The answer is directly link to the principle of free market with or without government intervention. This sound similar to either US government shall rescue the financial institutions or shall let them bankrupt. The academic argument can be very lengthy but without conclusion. In practical, this is not a choice. In the name of national interest, you have to do it and redo it again whenever required.
Open Quote:
THE just-announced government's move to suspend the sale of state land for the first half of next year 'was met with jubilation in property circles', reported The Business Times on Nov 1, 2008. The report also quoted a spokesman for City Developments as saying: 'We hope the government will continue to monitor the situation and introduce more pro-active measures to stabilise the property market.'
It is funny to read this because last year, when the Singapore property market 'became 2007's hottest global market with prime capital values increasing by 50 per cent', in six months (source: Jones Lang LaSalle, July 20, 2007), none of the Singapore developers then had urged the government to introduce pro-active measures to stabilise the property market.
The question is: should the government introduce more pro-active measures to stabilise the property market?
I don't think so. If the government is seen to always provide help to developers when their bets go wrong, then developers (and property speculators) will be emboldened to reckless risk-taking behaviour. Property developers and speculators made fantastic profits in good times.
In bad times, they should suffer the consequences of making the wrong bets. Let market forces rule. It is not the government's job to ensure that property developers and speculators come out tops every time. Let the possibility of failure and, real failure, be the necessary market discipline. Genuine buyers of property would be better served this way.
Close Quote
Since the reader posted the question, I would like to express my view too.
First of all, we should not expect any developers to release statement to hit their own toes. Secondly, the government did put up some curb to prevent the property price run away. The termination of deferred payment scheme is a good example. Next in my mind is that the government has raised development charge to slow down en bloc in 2007 too. These measures have successfully prevented the hard landing of property price, at least, up to today.
The second part of the question is: Should the government let the property developers and speculators fail?
The answer is directly link to the principle of free market with or without government intervention. This sound similar to either US government shall rescue the financial institutions or shall let them bankrupt. The academic argument can be very lengthy but without conclusion. In practical, this is not a choice. In the name of national interest, you have to do it and redo it again whenever required.
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