Lawrence Wong: Intervention necessary to achieve a stable market

By Bong Xin Ying and Cecilia Chow / EdgeProp Singapore | November 18, 2018 1:30 AM SGT
The interests of property developers and regulators seldom align. The ninth round of property cooling measures introduced in July was proof of that. The measures were considered “tough” by property industry players who lamented that the government had prematurely snuffed out a property market still in the early stages of recovery.
Explaining the government’s thinking and rationale behind the cooling measures was National Development Minister and Second Minister for Finance Lawrence Wong. He was guest of honour at the Real Estate Developers’ Association of Singapore (REDAS) 59th Anniversary Dinner on Nov 15.
“The government cannot and will not take a hands-off attitude to the property cycle,” said Wong. “So there should not be any surprise when we intervene in the market because that’s our approach and attitude. We will not take a hands-off approach to the property cycle. I don’t think any responsible government would do so.”
Minister Wong: It is not our intention to bring property prices down. That’s not our intention. Our aim is to have a steady and sustained property market, moving broadly in line with income growth – meaning, prices moving in line with fundamentals. (Photo Credit: REDAS)
Wong added that the government “would do everything we can” to prevent a property bubble from forming and to minimize exuberance in the market. “It is not our intention to bring property prices down,” he continued. “That’s not our intention. Our aim is to have a steady and sustained property market, moving broadly in line with income growth – meaning, prices moving in line with fundamentals.”
Speculators may like large price swings because they want to “time the market” and “buy low and sell high”, added Wong. “But our own experience has shown that if corrective actions are not taken to prevent a bubble from forming, the cost will eventually be larger and more painful; and ultimately this will harm the vast majority of genuine home buyers and owners.”
Wong reminded the audience – the majority of whom are property developers, property consultants and realtors - that in the last property cycle, the government acted after a very sharp rise in prices. “The government had to intervene eight times before stability was restored,” he said. “Learning from that experience, we decided to move quickly to implement the latest round of cooling measures in July this year. Why did we do so? What was the basis?”