Buyers shouldn’t blame Govt for bad property investment​s

Dear Straits Times,

I refer to the 14 Aug 2011 letter by Mr Tan Tee Khoon.

Mr Tan claims that it is the individual’s responsibility to make prudent property purchase decisions and asks if it is the government’s duty to restrain an individual from spending recklessly. Mr Tan is mistaken. For most people, a property is a basic need, not a luxury item they can afford to spend recklessly on. Since most people are price takers, what choice do they have but to take the price set by developers whose mark-up includes a high price for land paid to the government? Is Mr Tan saying in order not to be reckless, everyone should postpone their marriages and delay setting up homes and wait for property prices to come down? When price of rice shoots up, does Mr Tan call for prudence and ask everyone to stop eating rice until prices come down?

Mr Tan says that the government has, over the years, intervened to ensure a stable and sustainable housing market. That is not true. There were only two episodes that required intervention, one just before 1997 and the other one in 2007. In both cases, the government failed to rein in sky rocketing prices.

Mr Tan claims that no amount of intervention can prevent exploitative prices. That is not true. Housing prices were much more stable before the government’s asset appreciation plans came along.

The failure to control prices is a government failure. If price of rice shoots uncontrollably upwards, is Mr Tan going to say it is not a government failure as well? Failure to stock up rice and to ensure adequate supply to stabilise prices is a government failure. Similarly, failure to build sufficient housing or failure to match housing to immigration is a government failure. The government is accountable for all these failures.

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