Tweak property policies to reduce household debt

Dr George Wong Seow Choon's letter ("Act now to adjust to brave new world"; last Wednesday) is a reminder to adjust to the new world.

For the next decade, one has to anticipate the impact of disruptive changes, such as climate change, technological advancement and negative interest rates.

It is evident that past perceptions of growth momentum created by emerging markets, commodities like oil, labour migration and globalisation must be re-evaluated.

In future, global economic cycles will be shorter and more abrupt, driven by domestic and external factors within developed and emerging economies.

The first step to adjust to this new world is to reduce household debt.

The Government should tweak some policies related to property to ensure Singaporeans do not "securitise" all their life.

First, all property curbs should remain until our economic restructuring objectives and targets have been satisfactorily achieved.

Second, foreigners who buy local property should be compelled by law to resell to foreigners only.

This is to prevent foreign speculation and excessive asset appreciation that would render property prices beyond the reach of ordinary Singaporeans and have long-term economic consequences.

Third, the total debt servicing ratio should be further refined to restrict the total loan repayment tenure for the purchase of private property to a maximum of 18 years.

This will ensure Singaporeans pay all outstanding mortgages for their first property and comply with the Central Provident Fund minimum sum requirements before contemplating a second property.

The cost of owning private property will also increase over the years, and monthly maintenance fees and contribution towards sinking funds will go up as the cost of estate management and security and maintenance staff escalates.

This will affect owners and their monthly living expenses as they reach retirement age.

Long-term employment is no longer cast in stone, and Singaporeans should not plan their future with the anticipation of more subsidies, grants or financial assistance from the Government.

Sum Kam Weng

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A version of this article appeared in the print edition of The Straits Times on May 09, 2016, with the headline Tweak property policies to reduce household debt. Subscribe