Property curbs help the average Singaporean

Members of the public viewing models of housing projects on sale in the sales display area of HDB Hub on Aug 24, 2015.
Members of the public viewing models of housing projects on sale in the sales display area of HDB Hub on Aug 24, 2015.PHOTO: ST FILE

While property developers, property agents and even MPs such as Mr Christopher de Souza have called for the Additional Buyer's Stamp Duty (ABSD) to be removed, I do not think that the average Singaporean is supportive of it ("Do property curbs help or hurt?" by Mr Russell Lee Pynn; Monday).

The exuberant increase in property prices from 2009 to late 2013 affected many home buyers.

While some enjoyed profits from flipping and owning several properties, many home buyers had to pay exorbitant prices for their homes, which consequently affected the HDB market too.

The key causes of the property price boom were the low interest rate environment and speculation by property investors.

The ABSD, along with other cooling measures, such as restrictions on loan tenures and total debt servicing ratio, finally cooled the overheated property market.

While property prices have softened, removing the ABSD now can risk a market rebound and result in another exuberant increase in property prices.

The current rising interest rates are merely a market correction, as it was clear that the low interest rate environment was not sustainable in the long run.

Rising mortgagee sales are a consequence of these property owners not being able to afford their mortgage payments.

Perhaps they should not have invested in multiple properties in the first place; removing the ABSD will not help them.

ABSD is also a source of income for the Government, and the impact is felt more by wealthier individuals who can afford more than one property.

The average Singaporean would rather see a subdued property market where prices are affordable, and not one where property prices are running ahead of the growth of household incomes.

The time will come to review cooling measures such as the ABSD, but it would be premature to remove them now.

Jag Kuo Soon Yong

A version of this article appeared in the print edition of The Straits Times on April 14, 2016, with the headline 'Property curbs help the average Singaporean'. Print Edition | Subscribe