It’s been three days since this round of cooling measures was announced, and quite a buzz has been generated already. Several responses caught our eye, prompting us to make this post.

The first thing to catch our attention, but not our surprise, is the negative sentiment towards the measures. While it was bound to happen, given the wide-ranging coverage of the measures, the justification for the negativity is blatantly short-sighted and unfounded. Yes, there will be people, whether first-time home owners or supposed investors, who will suffer if prices dip due to these measures. Those who bought at the most recent peak in property value will feel the sting most heavily.

But if we follow this line of argument through to its logical conclusion, then we will see how fallacious it is. If we are to blame the cooling measures for this group’s loss in fortune, then it must follow that if the measures were not implemented, they would have enjoyed continuously rising prices well into the future. This line of reasoning assumes that there will never be a market correction in the near-to-mid term. We don’t think that is a reasonable assumption at all; in fact, we think the cooling measures saved this group of people from a much bigger blow. A major correction would be much more likely without these measures, and its effects would have been much worse.

What’s more, the government, and Singapore in general, do not owe this group of people any consideration or sympathy. The warning has been sounded for years already, that the property market is overheated. The pitfalls of buying property without due consideration, simply because interest rates are low, have been made known far and wide, in all media. Despite this, people still willingly parted with their cash to jump on the bandwagon (or in some cases, the sky-habitat-wagon). Well, as adults making grown-up decisions, does the nation owe them anything for making a bad one?

No, this group of people should realise that it is possible to get burnt in the property market, just as in any other investment arena, if the fundamentals are not carefully monitored. If it takes a real financial loss to learn that lesson, then so be it. The market will be healthier for it. In this case, we feel the government has put forth a well-measured response to the potential bubble.

Another response we spotted was the worry that upgraders from HDB to private property would face additional hurdles imposed by the new measures. In essence, in order to avoid the 7% ABSD and 25% minimum down payment for purchasing a second property, upgraders must sell their HDB flat before taking ownership of their new private property. This small window period is inconvenient for the purposes of moving and renovating. But isn’t this what all HDB upgraders face anyway, when upgrading to another HDB unit? The measures do indeed introduce an inconvenience, but it is one that people have been dealing with all along. It’s not an entirely new problem for HDB upgraders.

We also observed the super long queues on Friday night to buy properties last-minute. Property agents seem to have whipped buyers up into a frenzy, saying things like “buy now before prices go up!” It all seemed a little silly to us. No matter how you interpret that, it just doesn’t make sense for developers to raise prices after such measures are announced. After 12 Jan, an increase of 5% to 7% in additional fees could even be absorbed by the developer, if it really wants to move units. We don’t think there will be any significant upward trend in price after the measures kick in, so queuing to lock in the deal before the 12th comes across as much ado about nothing.  With so many facts and opinions flying around, many may have reacted rashly to the unexpected pressure, irrational or otherwise.  It clearly shows how important it is to always keep our heads cool and exercise critical thinking before committing hard earned cash in a panicked decision.

Our parting words are that buying a property is a big decision that has far reaching consequences, at least financially, so it pays to be prudent by always heeding the fundamentals and not be tempted or misled by runaway market sentiments.  This round of measures may again prove to be a false dawn on more sensible prices but hopefully, any anxiety felt by buyers and potential buyers will be a lesson well learnt.

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