WHILE it is appropriate for the government to continue monitoring the situation in the property market, the question is whether pre-emptive measures should be taken sooner rather than later to prevent a bubble from forming. It is instructive to consider the actions of the Reserve Bank of Australia (RBA), which has largely managed to keep the
country out of a recession.
Prior to the sub-prime crisis, central banks in several countries (notably the US and the UK) had helped to pump up property bubbles with low interest rates which were accompanied by easy mortgage terms. By contrast, the RBA resisted cutting rates and chose instead to talk down the property market. As far back as 2002, the RBA, feeling that property prices were escalating dangerously, decided to commission housing market reports to show that prices were unsustainable. Looking at affordability, bank lending standards and collating data on home loans as well as errant marketing ploys, the RBA went on the offensive with its then governor Ian Macfarlane saying: ‘I’m using a certain amount of moral suasion to try and get . . . to investors, to make them sit back and think again.’ Interestingly, his comment mirrors that of Singapore’s National Development Minister Mah Bow Tan, who said last week that home buyers ‘need to think carefully, think long term, think about the unexpected’. Continue reading
Lush Dream Home 