Dark Clouds Are Gathering

When informed that the new statutory board set up to investigate real estate miscreants had already received 150 complaints, there was something oddly lackadaisical about Mah Bow Tan's response. The National Development Minister said he was not surprised by the number. Does that mean he knew consumers were fleeced by the real estate industry all along and he stood by doing nothing? Was he in cahoots with them in ramping up the housing prices? Why has he never questioned the legality of the COV (cash over valuation) scam that arbitrarily and capriciously inflates the officially documented market valuation of a property?

The Asian Development Bank (ADB) has now promulgated that Singapore's fast-rising home prices are "worrying", as real-estate lending accounts for more than 50% of total loans in the banking system. That same statistic is as low as 2% for Korea, less than 15% for Indonesia and the Philippines, and below 20% in Hongkong and Thailand. Even in China, where famed short-seller Jim Chanos is betting his own money that the country is experiencing a massive property bubble, the number is below 20%. At 51% of advances, Singapore banking sector's exposure to property is the highest in East Asia, followed by Taiwan (42%) and Malaysia (38%).

Not too long ago, the MAS dismissed the effects of US's quantitative easing, which other countries recognised as fuel for asset bubble formation such as in property markets. And that's on top of Singapore's own unique problems of HDB construction shortfalls and competition from foreign buyers. It is noteworthy that MAS's own annual Financial Stability Review is consistent with ADB's observations: that household debt has been growing at a faster rate in recent quarters - fuelled by housing loans which account for the bulk of household borrowing. Need we add that the servicing of those loan commitments are also diminishing the CPF funds that are supposed to be parked for a retirement safety net?

Don't we have an expensive in-house "forecaster" who is supposed to scan the future for dark clouds? Mah, like the rest of his colleagues, is obviously depending on the short term memory spans of Singaporeans to erase the multiple instances of bad governance. Of the flood of complaints, he said, "I would expect this to taper off over time."