Govt keeps careful watch on property market: PM

Published November 3, 2010

Series of measures cooled sentiment but region still awash with liquidity


(SINGAPORE) Prime Minister Lee Hsien Loong said yesterday that the city- state's red-hot property market was a matter of concern and needed careful monitoring to avoid the creation of a bubble.

'Our property market has been taking off, which is causing some consternation,' he told Reuters in an interview. 'We have had a series of measures to squelch the property market but liquidity is awash, sloshing around the whole region.

'We are watching carefully. The last set of measures were announced at the end of August, they seem to have dampened sentiment some, but we will have to watch and see.'

Singapore announced restrictions to cool its residential market on Aug 30, including a reduction in the amount those with existing mortgages could borrow to buy second properties and extending a stamp duty on those selling property within three years of purchase.

Mr Lee said Singapore could define itself as one of the world's most attractive global financial centres with a less reactive approach to currently emotional issues like regulation.

'We want to maintain a system where there are adequate safeguards, but at the same time the basic principle is free market and caveat emptor,' he said, drawing a contrast with the swift legislative responses to the financial crisis in countries like the United States and Britain.

'We are trying to be stable. I don't say that we are consciously less volatile than others but I think it is good for us if we can maintain a stable long-term perspective and rise above the immediate pressures of the crisis at the moment.'

Mr Lee also said that Singapore needs US and China to work out their differences to ensure its prosperity. Singapore has interlinked trade and financial relations with both powers and feels the tensions between them keenly.

'The key, of course, is America-Chinese relations and that's very difficult because on the ground in America the mood is quite sour,' the prime minister said. 'And not just among the unions and the Democratic (Party) left wing, but even the corporates, the businessmen.'

Mr Lee said he worried that short-term thinking could lead to bad decisions. 'Nobody is speaking up to say 'please manage this with a long-term perspective',' he said.

He said he had a basic optimism about the eventual health and development of both the US and the Chinese economies, even though in both cases many years of transformation would be needed.

Beijing required fundamental structural change to drive more domestic demand and investment.

'I believe the Chinese understand this and I believe they are going to do something about it,' said Mr Lee. 'It's not going to happen overnight but over 10 years I see change.' The United States needed to transcend the difficulties of domestic partisan politics to take tough decisions on fiscal policy.

'If you look at it on a five-year time frame, you can't help being worried but if you look at it in a 20-year time frame you say of all the economies in the world, the Americans are the ones most capable of re-inventing themselves,' Mr Lee said. -- Reuters


Sources: http://www.businesstimes.com.sg