MAS admit they have screwed the SG Property market.

[Kubes.SG]

Yes dear readers, MAS have finally admitted that their gutless policy of record and artificially low interest rates while the world drowns under excess liquidity are the primary reasons for the property bubbles developing in SG.  They even acknowledge that the property bubble is not sustainable.

They have admitted the understand the problem and its implications.  The MAS have also announced what responsible actions they will they will take to reduce the problem and maintain a stable economy and property market.

They will do NOTHING AT ALL, except watch the disaster unfold.  

Nov 25, 2010
MAS YEARLY FINANCIAL STABILITY REVIEW
Property prices may go up

SINGAPORE'S central bank said low borrowing costs and excess liquidity globally may push the island's property prices higher again, setting back government efforts to cool the market, reported Bloomberg news.

There is a risk that financial institutions may ease lending standards and extend more loans to make up for narrowing interest margins, the Monetary Authority of Singapore said in its Financial Stability Review on Thursday.

Buyers may also take on 'excessive leverage' amid expectations of a sustained period of low rates, the central bank said.

The government in August increased down payments for second mortgages and imposed a stamp duty on property held for less than three years to curb speculation.

After leading 36 markets around the world in property-value changes in the second quarter in a Global Property Guide survey, government statistics showed price gains slowed in the three months to the end of September.

'There is a possibility that transaction activity and prices could pick up again given the current global conditions of flush liquidity and low interest rates,' said MAS.

'The government will continue to be vigilant in monitoring developments in the property market, and if necessary, adopt additional measures to promote a sustainable property market.'

Private residential prices rose 2.9 per cent in the third quarter from the previous three months, when they climbed 5.3 per cent, according to Urban Redevelopment Authority. Singapore's government forecasts economic growth of 15 per cent this year and expansion of 4 percent to 6 per cent in 2011.

[Vulcanl]

Kubes,

What I see here is confirmation that you were WRONG about SG prop prices this year.

Man up, bud - no shame in admitting your mistakes.

[QueenElizabethII]

Oh, so it's the MAS's fault that the US is screwed and is flooding the world with freshly printed dollars? That makes PERFECT sense. You are right Kubes, the MAS should have fixed the global excess liquidity problem ages ago

[Dr. Phil]

Yes, the time for increasing interest rates is long overdue.

We must control consumption.

We must control inflation and not tolerate any bubbles; in UK some newscasters gleefully associate property price rises as a good sign of economic recovery!
Consumption, consumption and consumption.

We must also defend our currencies and bring some order back to the financial markets.

In UK we may even have to restrict property purchase to UK residents; this would punish the Estate Agents Provocateurs....  
And give young couples a chance to own their own homes once again. As things stand, the young represent a potential "lost generation of home owners" destined to rent for life.

But most of all we must protect our jobs.  

This global economic collapse into unprecedented debt is not simply a banking error associated with property.  

From the moment we allowed the USA to bully us into supporting a Free Trade Agreements with countries like China and India, (did they call it our global village concept?) large populations of cheap labour, our MNCs abandoned the last vestiges of domestic or national support and migrated, knowing they could manufacture cheaper in Asia and still get top dollar for their cheap toxic goods in Europe and USA.
This allowed huge production, consumption, pollution... low manufacturing costs due to low wages, no benefits, no healthcare, no training, no QA, no anti-pollution..... just cheap goods entering our domestic markets causing domestic job losses at home, resulting in borrowing by governments to pay the bills and cover up this folly.

We must reinstate our import tariffs and our borders.

Nothing will change until we do this.
This FTA situation is simply one massive transfer of wealth and power from Western democracies to Asian countries which are not.
And if indeed, never the twain shall meet, we will have orchestrated our own downfall.

I dont ever remember voting for this, but our MNCs hold the strings which move our political master who remain undeterred.
What scale will Cameroon use to measure my happiness?  

[Kubes.SG]

Kubes,

What I see here is confirmation that you were WRONG about SG prop prices this year.

Man up, bud - no shame in admitting your mistakes.

V:  It is looking like SG Govt, MAS, speculators are more insane and in greater denial than I ever expected.  Though we have a 5 weeks to go this year, it does look like my prediction of last year is at risk.  I do concede that I have been wrong on the timing, but not of the forecast.  The crash will come.

[Kubes.SG]

Oh, so it's the MAS's fault that the US is screwed and is flooding the world with freshly printed dollars? That makes PERFECT sense. You are right Kubes, the MAS should have fixed the global excess liquidity problem ages ago

No question, QEII that you go to lots of parties with free grog laid on.  If you are sensible you don't drink 3 bottles of sherry and 12 G&Ts and then drive the Bentley home.  You certainly don't blame your host when you happen to run over 5 of your corgies.

[for the dingbats:  the analogies above are:  party=post GFC stimulus;  free grog=near zero interest rates;  driving really pissed=letting free money/loose monetary policy inflate bubbles;  squashed corgies=SG property crash]

And, yes QEII is the US's quantitative easing mark II.

------

Of course I don't expect that the MAS could or should fix or influence the insanity in the US.  But they should be acting responsibly in SG protecting SG's interests, where they do have influence.  They should start fixing things immediately by tightened monetary supply and raising interest rates.  Instead they try to control inflation by letting the SGD rise - just idiotic.  They should raise interest rates aggressively, up to 5% or 6% for mortgages.  BUT THEY DON'T HAVE THE BALLS TO DO IT.   Sure it is a bit of a blunt instrument, but it will help stabilize the economy, and shake out the shonks.

Seriously, they need to get an education from the world's best managed economy.  One that has been on a growth trajectory for nearly 20 years (no recessions vs SG's 4 in that period).  Solid and enforced banking regulations and  independent Reserve Bank that has already raised interest rates 8 or 9 times over the last 14 months.  That is the action of a mature and sensible Monetary Authority.

[Kubes.SG]

Doc, FTAs are like democracy.  They can be painful, there are winners and losers, and there are alternatives.  But for all the negatives, they are better than anything else.

[Vulcanl]

Kubes,

This is not just a Singaporean problem.  The piece below takes a more comprehensive (and responsible) view of the situation.  Give the SG Gov't credit for threading a needle in attempting to manage a balanced policy (where your beloved 'free market' is allowed to function and yet the interests of "greater good" are pursued):

SINGAPORE (Reuters) - Asia's property markets are set for a continuous drip feed of tighter regulations in coming months as authorities try to take the froth out of surging home prices without triggering a crash.

Last week Hong Kong announced its fifth set of measures this year as it struggles to curb speculation in its property markets. China, Singapore, Taiwan, Thailand and Malaysia have also unveiled more stringent regulations in recent months.

But Asian investors' appetite for property seems far from sated with prices continuing to climb. That will likely prompt governments to raise mortgage requirements again, increase land supply and - in the case of China - impose property taxes.

"My baseline scenario is we will need more measures - the current set worked but their impact is transitory," said Tim Condon, head of research at ING Financial Markets in Singapore.

Authorities' ability to curb speculation is hindered this time round by the abundant liquidity in the market and central banks' reluctance to raise interest rates too fast amid a patchy global economic recovery.

Many investors, particularly at the luxury end, are coming to the market flush with cash, meaning measures such as putting a cap on mortgages relative to the value of a property aren't as effective as usual.

Hong Kong luxury home prices are now above the peak they reached in 1997 before the Asian financial crisis struck, fuelled in part by rich mainland Chinese buying flats in the city.
Read the newspapers in Singapore and you'll see a string of stories showing new condo developments selling all of their flats on the first day of asking.

"We're entering into unchartered waters because just one set of the measures introduced so far this year would have worked in previous times - but what we have right now are markets filled with liquidity and historically lower interest rates," said Donald Han, vice chairman at Cushman & Wakefield in Singapore.

Residential prices in Hong Kong climbed 25 percent from mid-2009 to mid-2010 while those in Singapore rose 37 percent, according to property agency Knight Frank.

LESSONS LEARNT?

Asian policymakers know the dangers of property bubbles all too well. The 1997 financial crisis began in Thailand's real estate markets and led to a crash in property prices across the region, while the U.S. subprime mortgage meltdown and ensuing financial market chaos dragged much of Asia into recession.

In the aftermath of the 1997/98 crisis Asian authorities led the way in designing "macro-prudential measures" to curb credit growth for housing long before the term became the buzzword of regulators in the west.

These included the use of loan-to-value ratios to cut the size of mortgages people could borrow compared to the value of their house, and limits on foreign currency borrowing.  But despite this experience observers say authorities are still struggling to keep up with pace of the price rises this time round.

"They'd like to think they have learnt the lessons of previous crises but the way the price rises have gone over the last 18 months or so show that even in a command economy such as China you can't always control prices as much as you'd like to," said David Green-Morgan, head of Asia Pacific research at DTZ in Sydney.

"In hindsight, the authorities should have started releasing more land for construction in 2008 but that was during the global financial crisis when it wouldn't have been an obvious policy choice," he added.

Using regulation to control property prices is notoriously tricky because of the spillover effects such moves can have on the rest of the economy.

Federal Reserve Chairman Ben Bernanke argued against measures to rein in the U.S. property market in the years preceding the 2008-09 financial crisis, saying it could have a negative impact on the rest of the economy.

It's not hard to see why many economists now argue that was the wrong approach, but Asian authorities are still likely to tread carefully.

"If China is aiming for around 10 percent annual GDP growth, a big part of that depends on a healthy property market," said Han at Cushman & Wakefield.

"So rather than taking a sledge-hammer to the market governments will be issuing new measures on a bi-monthly or quarterly basis to weed out excessive speculation," he said.

FURTHER MEASURES

So what measures should investors expect and where?

Singapore, Hong Kong, Taipei and various cities across China are highlighted as the areas still most vulnerable to a build up of pricing pressures.

Hong Kong has already gone in hard and is now expected to give its latest measures some time to take effect before going back for more some time next year.

Singapore has hinted that it's likely to implement further measures, and is likely to release more land into the market as well as introduce more measures that curb speculation such as higher rates of stamp duty for people who sell properties soon after purchasing them.

"Those who are buying multiple properties, those who are buying for investment, are the investors who are on a higher risk of facing more regulatory measures," said Cushman & Wakefield's Han.

China faces an even tougher policy balancing act due to the huge regional disparities across its property markets.

An analysis by Standard Chartered shows that cities such as Shanghai, Shenzhen and Chengdu are still facing huge upward pressure on prices while some "second tier" towns such as Dalian and Tianjin could see homeprices fall as a host of new supply comes on to their markets.

This means authorities are expected to roll-out property taxes they've been recently piloting in cities where the markets are still frothy, while refraining from any fresh measures elsewhere.
That, though, is likely to be easier said than done when authorities are still struggling to keep up with what's actually happening in the markets they're trying to control.

"Introducing such a tax is strewn with technical and political difficulties," said Standard Chartered's head of China research Stephen Green in a recent research note.

A recent property tax proposal by Shanghai was reportedly turned down by the State Council because Shanghai had not done an adequate survey of all the apartments involved, a task that would take months, if not years, he added.

Authorities are still expected to press ahead with these taxes but at a fairly low level, setting progressive rates of between 0.3 to 0.6 percent of market value per year.

But the bottom line though is that while most Asian property markets have managed exchange rate regimes and relatively low interest rates, authorities will struggle to control the market via regulation alone.

"Until and unless you fix the undervaluation of currencies the pressure is always going to be there - in that sense, these property measures will only deal with the symptom and not the cause," said ING's Condon.

[Vulcanl]

Kubes,

"...it does look like my prediction of last year is at risk.  I do concede that I have been wrong on the timing..."

Cool...you haven't totally gone over the deep end

"...but not of the forecast.  The crash will come..."

Here's the problem with this:  You have been predicting a massive crash for years now and it just hasn't happened.  People who had followed your advice since 2005 have left a LOT of money on the table as a result.  Even a broken clock is right twice every day.  If the property crash does happen you cannot honestly claim to be correct at that point!

You lose this one, Kubesy.  Still love you, man 

[TheWrathOfGrapes]

MAS have finally admitted that their gutless policy of record and artificially low interest rates while the world drowns under excess liquidity are the primary reasons for the property bubbles developing in SG.

The world drowns under excess liquidity - therefore low interest rates are natural and logical, and not artificial.  So, Kubes wants the MAS to artificially ramp up interest rates so that the whole world's excess liquidity will pour into Singapore and blow up the property bubble even bigger and in the process, drown Kubes in excess liquidity.

Talking through both sides of his mouth, as usual.

[Admitit]

Yes Kubes, the only thing that is certain is uncertainty itself. Globally and local, the signs are everywhere, and becoming clearer, except to those still in slumber, many. One yardstick. When big time developers are saying all is well, obviously in their own interests, now desperate,  it signals all is not well. I always take a guarded angle of what these crafty developers say. The recipe for a collapse are all there. The perfect storm is approaching. Personally I am looking at about 30 percent drop, or even more, in the value of my assets.

[Admitit]

Vulcan.......what is a massive crash??
Know of a case. This guy bought a prop in Osaka more than a decade ago at sgd 8m and it plunged to a low of 2m. Last heard still stuck with it.

[on the up]

Its "on the up" .  The landlords will be rubbing their greedy paws and whacking up the rents as we speak after reading that. 

Just what we need really (not) 

If there was a crash out in asia it would be mayhem. 

But will there be a crash ? 

Most likely not. 

More of a levelling off/cooling off but probably not a crash.

[Vulcanl]

"...Vulcan.......what is a massive crash?..."

Decline of 20% or more

[Admitit]

If 20 pc is massive then be prepared for 30 pc slide.  Even as recent as a few years ago when there was a reversal, resales dropped by around 30 pc. Now prices seem to be stagnating. On the ground, there is no rush for new offerings. What's your take?