Slight fall in property prices won’t stop curbs

I agree with the writer of “Property price fall of just 5% shows market is resilient” (June 25). Prices are around 15 per cent higher than in the first quarter of 2008, while rentals are 16 per cent higher.

Property prices will remain resilient because of cheap borrowing costs. Singapore bank interest rates are pegged to global demand, and central bankers in the United States and Europe will keep monetary policy loose, which filters down to our property buyers.

With mortgage rates at historic lows, property is 61 and 89 per cent overvalued in Australia and Canada, respectively. Prices are rising fastest in Ireland, while London prices have risen by 40 per cent in four years, outpacing incomes.

The International Monetary Fund has warned that measures such as stringent lending criteria for banks to stem irrational exuberance in housing markets may not be enough to prevent bubbles. Singapore is no exception.

Prices are rising at a median 5.2 per cent a year in 19 out of 26 markets around the world tracked by The Economist magazine.

Therefore, the slight fall in Singapore’s property prices is a drop in the ocean, and not enough to convince the state to lift the current cooling measures, which remain a step in the right direction.