Act now to prevent a housing bubble (31/08 – ST)

In January, as the global financial storm lashed Singapore shores, fears took hold that large numbers of cash-strapped home owners might default on their monthly mortgage instalments, as businesses went belly-up and jobs were lost. DBS Bank went out of its way to calm the jitters by offering to resurrect the interest-only payment scheme to allow borrowers to make only interest payments on their home loans, to give them breathing space to sort out their finances. Only months later, in a surprise to many, the tide turned and there was a huge revival in the residential market. The gloom lifted as confidence grew and buyers rushed back to snap up properties - despite the stress that continued to be felt in the corporate sector. The statistics are impressive. In the second quarter, 10,184 HDB resale flats changed hands - up from 6,446 units in the first quarter and 7,763 units in the same quarter last year. This, in turn, triggered a boom in lowerpriced condos, as HDB sellers upgraded to private developments.