SINGAPORE - I read with concern the report, "Rise slows, but new curbs possible" (My Paper, April 2), which stated that some property analysts are predicting that more cooling measures may be implemented here.
Among the possible measures cited was the barring of Housing Board flat owners from renting out their flats if they own a private home, and not allowing a person to own both a private and an HDB unit.
But such measures, if implemented, may lead to these scenarios:
A fall in the supply of rental flats on the market, causing the rents for flats to rise and, possibly, that of private condominiums as well, because the demand for both is interlinked. Once rents are up, prices will likely follow too.
Some owners of both types of properties being forced to sell their flats. While that may increase the supply of resale flats in the short term and help to stabilise prices, what will they do with their sale proceeds?
They will likely buy another condo unit as interest rates are too low and inflation is high. This may push prices of mass-market condos higher. And, once mass-market condo prices rise, flat prices will likely follow suit.
Alternatively, the flat sellers may invest their sale proceeds in commercial properties, pushing such properties' prices higher.
Some owners of both flats and condos choosing to keep their flat instead, and sell their condo.
They would then likely invest in commercial properties, which remain untouched by the cooling measures. This will push up prices of retail and office space.
Higher retail-space prices will translate into higher retail rents, with shoppers paying more eventually. Inflation will rise as well.The possible measures may also be seen as unfair and cause hardship for some people.
For example, some owners of both types of properties could have bought their flat on the open market without any government subsidy years ago. Why should they be forced to sell their flat, which was bought at market price? Wasn't asset enhancement the policy just recently? Why penalise such owners now?
Some owners of both properties may be retirees who rely on rental income to help support their family. Removing this income source suddenly will cause financial hardship, especially for those who might have difficulty finding work.
The several rounds of cooling measures seem to have either not worked as intended, or caused prices in areas such as commercial or industrial property to rise. This is probably because the core problem has not been addressed.
With banks' deposit rates near zero, loan interest rates slightly over 1 per cent and the inflation rate three times higher, what would people do with their money?
Until reasonable interest rates, in terms of both borrowing costs and as an incentive for saving, are achieved, people will keep putting their money in property.
Mr Alvin Chua
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