RECENT PROPERTY COOLING MEASURES CRUCIAL TO PREVENT REPEAT OF 1990S CRASH
15 September 2010
The recent property cooling measures are important to prevent a repeat of the market crash of the late 1990s.
That is according to the National Development Ministry, as it addressed critics against the measures in Parliament on Wednesday.
The property boom of the 1990s was partly fuelled by what has been dubbed the 'upgrading fever.'
That saw more people take on bigger loans in pursuit of new and bigger flats.
According to the National Development Minister, it's a grim reminder of why the latest measures are necessary.
"When prices were at their previous peak in 1996, many flat owners took bigger loans and upgraded to bigger flats. When prices fell sharply the following year during the Asian Financial Crisis, many were caught and ended up with negative equity," said National Development Minister Mah Bow Tan.
"I think we still see a number of cases relating to that in our Meet-the-People sessions, and I hope we don't see this scenario happening again," he added.
The new rules include a longer minimum occupation period, from three to five years.
Another key change which raised concerns is that it is now compulsory to sell off your private property within six months of buying a HDB flat.
While there is no data available on how many people are affected by this new ruling, the ministry estimates that before the measures were introduced, there were about 24,000 people who owned both HDB and private properties.
This is about 3 per cent of all HDB flat owners.
Mr Mah said the measures reinforce the idea of HDB flat as a long-term occupation, not as a mode of investment.
"I do empathize with the concerns of those who wish to sell their private property, and move to an HDB flat. But I wish to say that the rules do not deter them from doing so. They can still downgrade to a smaller flat, provided they don't own both at the same time," said Mr Mah.
"We want to ensure that those who are in urgent need of resale HDB flats would be able to buy them, such as young couples. There would be some who would be inconvenienced, but I hope the (public) can understand there is a need for these changes."
The ministry also played down the influx of new immigrants as a reason for rising prices.
It said the overall economic sentiment was a big driver too.
Info courtesy : Channel News Asia
