In a world awash with liquidity, a cooling property market isn't bad

SOME People's Action Party (PAP) Members of Parliament spoke out on Tuesday in the Budget debate, cautioning the government against overdoing property market cooling measures. A few things are worth pointing out in this regard.

First, one must not forget the systemic risk posed by a heated property market in the few years following the global financial crisis, before loan curbs in mid-2013 finally slowed things down. The intricate links between property prices, debt and the banking system mean that governments cannot let prices spiral out of control.

We are still living in a post-quantitative easing world. Interest rates might rise and raise mortgage costs. Yet, rates are likely to go up gradually, from a very low base. Central bank policies still remain loose in Europe, Japan and China, even while the US might begin tightening this year. Global markets are inundated with liquidity, and good assets are hard to find. Given the right opportunity, hot money will flow into Singapore property again. Private property, already not easy for most Singaporeans to invest and live in, will grow even further out of reach.