I’ll not comment on Tharman’s CPF speech as Uncle Leong and many others have covered it. Instead, I’ll focus on a sppech he made last week congratulating himself on “cooling” the property market.
On 5th July BT reported that Deputy Prime Minister and Finance Minister Tharman ShanmugaratnamHe told a conference that Singapore had responded early enough to raging property prices with a set of cooling measures.
Err is he living in the same S’pore as I am or is he in S’pore (Roy Ngerng’s version).
Here’s what the FT reported on 30th June
Over the past four years, the Asian city state has implemented more than a dozen measures to cool its housing market and stem a growing tide of protest from locals that rich foreigners are making home ownership unaffordable.
If this sounds like an echo of popular sentiment in London, that is because these are very similar economies. A big financial services industry, paying generous wages, sustains demand for high-end housing. That, in turn, pulls up prices further down the price scale, a dynamic accentuated by the availability of mortgage finance at record low rates. Both cities are also regional hubs for wealthy foreigners, with solid legal systems and relatively open borders attracting property investment from Chinese, Russian and Middle Eastern millionaires.
Back in 2010, when Singapore began to tighten mortgage conditions, the initial moves were similarly token [Talking of recent UK measures]. Stamp duty was imposed on property sellers, and the cap on the size of a buyer’s loan relative to the value of the property being bought was trimmed from 90 per cent to 80 per cent. Every few months since then, there have been further, ever more desperate measures. Stamp duty was raised, to punish quick purchases and resales; the LTV cap was cut to 50 per cent; higher taxes were imposed on foreign buyers; and a tradition of 50-year loans was cut to 30 years. None had much of an effect.So much so that this normally politically conservative island nation has been rebelling. The popularity of the ruling PAP party – in power since the formation of Singapore as an independent state 49 years ago – has plummeted. Disaffection with rising property prices is widely cited. [Emphasis mine]
It was only recently that Singapore’s cooling measures finally had a clear impact on runaway house prices, following introduction of a new “total debt servicing ratio” – a metric that limits a borrower’s aggregate debt repayment commitments to 60 per cent of income. Property purchase volumes have duly fallen by 50 per cent. Prices are down by 6 per cent and are forecast to fall by as much as 20 per cent.
Or is he trying to entertain his audience? As he’s an intelligent, no BS person, I have to conclude that he’s out to entertain.
Isn’t his comments on govt acting quickly on property prices, bit like his jokes on inflation, wages?
BTW, according to the BT report, he raised the possibility of a further correction in property prices, “I think further correction would not be unexpected.” but added that a crash in the property market was unlikely. The PAP would hope not given that next yr is an impt yr to remind the sheep of the PAP’s good deeds in the 60s, 70s and early 80s (before PM became a cabinet minister and too bad about the late 1990s and noughties, when he was DPM, dauphin and economic czar).
And On the subject of keeping track of the market, he called for more emphasis on monitoring banks. “I don’t want to quarrel with the Basel recommendations. They are basically in the right direction; they are good for the long term. If anything our banks are over-monitored (which is why the intellectual financial stuff gets done in HK, while the commoditised trading gets done here) , not that this over-monitoring has done the “little people” any gd: ask the mini-bonders.