Tweak property rules to achieve two aims

Tweak property rules to achieve two aims
Policies to drive foreign investment and government land sales have encouraged speculation in the private property. This drives prices up quickly, and its effect may cause irreversible damage to the economy in the event of a meltdown like the 1997 Asian financial crisis.

SINGAPORE - Despite a growing number of calls from property players for the Government to dismantle anti-speculative measures in the property market ("Too soon to ease property curbs, says Khaw"; Aug 5), such measures should remain for good.

Over the years, policies to drive foreign investment and government land sales have encouraged speculation in private property.

As a result, both locals and foreigners entered the market and pushed up prices.

Singaporeans tend to buy property to generate income. This may work if the economy is doing well, but in a global economic downturn like the 1997 Asian financial crisis, many will suffer irreversible damage.

Singaporeans are the most important stakeholders in our property sector, and their needs are the same as the Government's. So the better we manage our land, the better it is for Singapore.

A land-scarce country like Singapore could do without foreign speculation.

We have to look at tried and tested policies worldwide to discourage such speculation, and also divert domestic capital from property to value-creating activities such as entrepreneurship.

For example, foreigners in Australia can resell properties only to locals. And in Germany, there are strong laws governing tenancy so that land and property owners cannot arbitrarily be pricemakers.

If we can change the rules of the game to discourage foreign speculation and divert local capital away from property investments, it would be far better than implementing reactive policies that are supposed to be removed when the market goes down.

Ed Cheong Tuck Kuan

This article was first published on MONTH DAY, 2014.
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