Can't ease cooling measures with China property bubble, low rates

THE local unemployment rate might be ticking higher as the economy slows, and private home prices might continue to drop. But with a potential deflation in China's property market bubble that could lead to money flowing out of China, along with continued low mortgage costs here, the government should be wary of lifting cooling measures in Singapore's property market.

Having a high proportion of satisfied home owners in Singapore is critical to social and political stability. Rising house prices in 2010 and 2011 contributed to a wave of dissatisfaction that led to the People's Action Party's lowest winning margin since independence in the 2011 General Election. Since then, and especially from mid-2013 when a framework was introduced limiting the debt borrowers could take on, moderating home prices along with an increased number of flats for first-timers have improved sentiment. This probably contributed to a significant improvement in the PAP's performance in the 2015 General Election, especially among younger voters.

The conclusion is straightforward. Prices cannot be allowed to spiral out of reach for the ordinary man on the street, who aspires to own not just a more affordable public flat but also private property, which is twice the price.