Continued from Is There Going to be a Property Bubble Burst Soon? Part 1
While many people did not see this as a warning sign as many investors kept believing that the property prices will still continue to rise, the government had been doing subtle things which should have served as warning signs for the general consumer. First of all, the My First Home Scheme which was used to entice first time home buyers into the boiling property market had a short term benefit to buyers, but long term disadvantage with the added interest. Many people thought that this is a good scheme without looking at the total interest rates that have to be paid with the higher loan involved with the high loan value.
Then there was another scheme which proposed to extend the loan for two generations. A two-generation loan system was in place in Japan, mostly due to the culture of Japanese companies which preaches about loyalty and the possibility of having sons and daughters joining the same companies as their fathers did upon graduation. There had been a guarantee of income with the Japanese culture, which cannot be found in other countries in this world. However, even the Japanese culture is going to change eventually. A two-generation loan system may encourage the purchase of a new house or an apartment for sale by younger families but many of us knew that we would prefer not to have this type of loan because it puts a burden on our children even before the children had a chance to enjoy childhood. As parents, we may even put more pressure on our young children to study and perform better in school as we worry about their abilities to repay the loan we had gotten for them when they were still toddlers.
When this internal boost cannot really bring too much new purchase due to the high price of houses in the country, the government is working outwards, looking for foreign buyers into the market, luring our neighbour Singaporeans to invest in the properties. It might be a good effort, to get the support of foreign buyers to actually continue boosting the property market with their new purchase and perhaps help to sustain the market price a little longer before the economy picks up again, making the bubble burst less impactful than what could have been.
What are your thoughts about the real estate market in the next few months? There may still be some buyers in the market especially those who genuinely need a place for personal residence, although investors are actually taking a mixed position about this. Some thinks that it’s time to stop, while others decide to continue with it. What about you?