THE property trade appears caught off-guard over the intervention measures to tamp down froth in real estate, before a bubble develops. Most developers and consultants put a brave face on the curbs, suggesting that elimination of the two partial mortgage-deferment plans would not interrupt market tempo too much. Their justification: Fewer buyers have gone for these types of loans as premiums charged by developers have been rising, by up to 5 or 6 per cent. But industry and URA sampling showed a quarter of purchasers in select launches chose interest absorption or interest-only loans. In any analyst’s book, a proportion of this size is a market mover. The Government is justified in stopping back-door market churning through the issue of these soft loan terms. Indeed, it should be alert to whatever newfangled payment variations the industry could dream up, if these work against orderly growth of the market.
A more insightful industry view of National Development Minister Mah Bow Tan’s announcement was that the measures were drastic relative to the market recovery, described by some as still tentative. Judgment must wait several months to see how the market will behave. But underlying this lament is the barest hint that, perhaps, developers had been pushing their luck, stoking the sellers’ market by raising launch and relaunch prices by Continue reading
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