Is the fap prepared to deal with potential housing crisis it created?

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An honorable member of the Coffee Shop Has Just Posted the Following:

IS THE GOVERNMENT PREPARED TO DEAL WITH POTENTIAL HOUSING CRISIS?

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14 Oct 2014 - 10:31am








SingaporePropertyCycle
Recent global events may trigger a correction in global stock markets and property markets.

Back home, the increase in housing prices has never been due to an improvement in the economy but artificially low interest rates.
Likewise for the stock market.(US DJIA)


How long will the circus continue is anyone’s guess but a sharp fall is only a matter of time.

During the 1997 Asian financial crisis, the property market experienced a severe correction of about 45%. Property prices tanked and buyers literally disappeared overnight. Banks were forced to allow buyers to hold on to their ‘underwater’ property because there were just too many homes with negative equity.

Although the government had implemented property cooling measures, they were insufficient as it had also opened the floodgates to foreigners.

(This is similar to the current situation where foreigners have been snapping up properties and even 6-figure COVs were not an issue. What’s worse, the current high property prices is also due to the government allowing foreign property developers to bid up land prices. This was not evident more than a decade ago.)

The government controls both the demand and supply of housing but had made the ‘mistake’ of allowing property prices to increase by more than 200% within 7 years. To cover up the colossal mistake, CPF rules were bent backwards to allow the use of Special Account for mortgage payments in 1999.







The current situation mirrors the situation before the 1997 collapse where cooling measures have also been implemented since 2009 and have not really worked.

The relentless rise of global stock markets is also a cause for concern. The US DJIA has more than doubled from 2009 solely due to historically low rates. Will a collapse in housing prices be precipitated by a stock market crash?

Where CPF and bank rules had been bent backwards to support housing prices in 1997, is the government prepared to deal with the impending crisis?

Phillip Ang
*The author blogs at http://likedatosocanmeh.wordpress.com


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