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Monday, September 13, 2010

Need to stabilize property prices

A country can be prosperous when the property prices increase, reflecting confidence of the citizens and foreigners in the country. However, this situation can get out of hand, resulting in an asset bubble and property that became priced out of reach of the citizens. This harmful impact is recognized in China, and steps are being taken to address this problem.  Prime Minister Wen Jiabao said, "It is the key responsibility of all levels of governments to stabilize housing prices and to guarantee availability of housing”. He did not say that this matter is beyond the control of the government and can be left to the market forces.

A property bubble can also be caused by excessive speculation as the speculators made big profits at the expense of the desperate home owners.

Singapore's prosperity is also largely built on an asset bubble. We have to be prepared for the economic consequences when the bubble burst.

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