Property's Resurgence- Reactions and Comments

The macroeconomic effect of the bubbles can be widespread and detrimental if not managed and intervened appropriately. There is no such thing as a good bubble – it is simply a temporal euphoria that can cause an uplift of market sentiments but if prolonged, the bubble can lead to irrational exuberance.

With cooling measures put in place by MND, the prices of properties are persistently testing new highs. The pervasive low interest rate regime has a great effect on buyers’ inclination. Property as an asset class become desirable as it is a good hedge and has good capital gain potential. Hot money from around Asia, Middle East and Europe looking for a safe investment can bet on the property market. The government’s intervention approach should be to curb excessive speculation where the velocity of price increase is slowed down- but does not limit where buyers’ investment direction. Since human nature are both imitative and inventive, it can be detrimental to the whole property market when prices crash. This will affect genuine buyers for owners’ occupied properties and government’s intervention is needed to ensure that genuine buyers are not sidelined to a point where prices are artificially high and out of reach to them. This will be a fundamental error in policy and property investments are not perpetual money machines – where prices move upward in straight line

Now everyone seems to suffer from what I call pro forma disease- that is taking the sharp rise in prices and projecting them endlessly into the future. So when your hairdressers and men in coffee shops start starting about investing in property, it is the start of the pro forma disease and can lead to irrational euphoria and that, in a very certain way, will lead to a painful collapse of prices. A certain intervention is needed by the government to manage the velocity of price shifts through interest rate and taxes so that bubbles do not blow up to cause asset deflations and a home over their head.

No bubble is good bubble.