I READ with interest the letter, "Let market decide land prices" (my paper, Nov 4). I disagree with the writer's view
that the Government should not move lots of land meant for sale to the reserve list to reduce supply.

I am neither a civil servant nor a pro-government individual, but I think that the Government had done the right thing. Over the past decades, it has been proven that some level of government intervention is helpful in stabilising the markets and ensuring long-term, sustainable growth.

Imagine if the Government had not come up with anti-speculation measures to cool the then red-hot property market in 1996.

Singapore would have taken a hard fall in 1997, as Hong Kong did.

From 2003 to 2005 when cashback deals were rampant in the HDB resale market, HDB valuation prices rose very fast, and many home buyers back then did not have sufficient income to service their loans.

Had the Government not acted to stamp out those types of deals then, we would have ended up with a Singapore version of the sub-prime crisis. Last year, when the private- property market was red-hot again, the Government intervened on stamp-duty payment, revised en-bloc rules and lifted the deferred-payment scheme.

As an island state where land is a precious and limited resource, Singaporeans have to accept that as the population and economy grow, property values will grow in tandem. Government intervention is needed to ensure that this
growth is stable, regular and sustainable in the long run. Any sharp movements, be they up or down, are not going
to be beneficial.

According to the Urban Redevelopment Authority, the potential supply of private non-landed properties until 2011 is estimated as being close to 40,000 units. If supply increases but demand is dampened by the financial crisis, a sharp fall in property values may follow.

If the fall in property values is too sharp and prolonged, bankruptcy and foreclosures may follow. Banks will suffer loses and tighten credit.

Unemployment will follow and a recession will not be far away - does this sound familiar-

Real estate constitutes not only a big part of an individual's assets, but also a big chunk of gross domestic product.
Given the current market conditions, it is only right for the the Government to put a halt to supplying land until the markets return to normal.

Mr Chua Thiam Siew

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