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Address root cause of housing issue

The need for government intervention to smoothen out market overshooting, for stability and sustainability, is not what is being questioned (Sustainable property market benefits all, by the Ministry of Finance, Ministry of National Development and Monetary Authority of Singapore; July 17 ).

Rather, the concerns are the unintended consequences of the Government's cooling measures, which may just result in a wild swing to the other extreme.

One must understand the key factor that is fuelling demand and the mismatch between supply and demand.

Almost every fresh development over the last decade has been made up significantly of shoebox units targeting wealthy global investors riding on cheap money and seeking yields, even in traditional suburban residential areas.

How does this benefit the majority of local residents, including families seeking to upgrade, whose concerns the regulators claim to be seeking to address with the latest intervention?

Would developers bid excessively for land and existing developments for their new projects - jacking up overall prices as a consequence - if there were stricter guidelines to ensure that shoebox units make up only a small percentage of all developments, if at all, the way it was until about 15 years ago?

Does it make any sense to continue increasing land sales when the content of fresh developments has not changed?

It is obvious that existing guidelines on unit sizes are outdated, and swift changes are necessary.

According to reports, the number of unsold flats in the private property market is expected to rise from the current estimate of 30,000 units, on top of the growing vacancy rates for sold apartments.

Yet the authorities continue to persist with their land sales programme without fixing the inherent problem, while dampening market sentiment with a heavy wet blanket.

Toh Cheng Seong

A version of this article appeared in the print edition of The Sunday Times on July 22, 2018, with the headline 'Address root cause of housing issue'. Subscribe