The money stashed away in residential property is hitting a payback of more than than 4 per cent of GDP; in many other modern economies that figure is just a blip.
The hunger for amassing property is reaching the stage where owning a second, third, even a fourth one, is talked about without batting an eyelid.
For a country whose economy is maturing, putting so much money into a non-productive sector like property will make this a country of landlords, not of businessmen and innovators.
The government is very mindful of how this property play will affect the country’s long-term prosperity.
But its hands are tied somewhat. It is caught in a classic squeeze of wanting to act decisively and not wanting to go the full hog because of a political backlash.
Home-ownership was the government’s showcase policy since it took power in 1959. Now nearly 90 per cent of Singaporeans own their homes. Down the road, this well-intentioned policy morphed into encouraging young citizens to upgrade and older citizens to downgrade.
It was to feed into the aspirations of the former and to unlock the property treasure trove of the latter so that the senior citizens will have spare cash to live their august years in retired bliss.
People who live in their first homes for a long time is a rarity with buying and selling properties a norm these days. Property conversations are almost always about how much a home can be sold for.
Singaporeans have become nomads in their own country.
In this kind of frenzy, it will be political suicide for a government to think about acting decisively to cool the market.
Since 2009, the government tried to cool the market seven times. Each action brought about a similar result. The rate of home sales went down a little, but picked up a few months later.
As Institute of Policy Studies research associate Christopher Gee has said in a newspaper interview: “Incremental measures have unintended consequences in encouraging more people to jump in because they think there will be another round coming and thus act to lock in a property now.”
That accelerates demand, which explains why the seven measures have not been very effective.
For example, sales of new private homes in June 2013 surged 23.8 per cent when compared to the figure in May.
The bigger worry is the likelihood that the interest rate regime might have a shorter life span in the coming years.
If that happens, the highly-leveraged Singaporean will face a tough time paying off his mortgages.
Ratings agency Moody’s has entered the scene ringing the alarm bell: The ratio of Singapore dollar loans to deposits hit a six-year high at 79 per cent last year.
And household-debt has risen 40.4 per cent since 2009 but monthly incomes went up only 26.3 per cent.
The agency even took the rare step of downgrading Singapore’s banking system from “stable” to “negative” because of the institutions’ exposure to loans and mortgages. The government has shrugged this off, saying the banking system is doing fine.
Mindful of the pothole-ridden road ahead, the Monetary of Singapore Authority had acted earlier by getting banks to take into account all of a borrower’s outstanding loans, including for cars and credit cards, when assessing mortgage applications. Total repayments cannot be higher than 60 per cent of gross monthly income.
It is clear that there are not that many options left for the government as citizens continue to tie themselves up in property betting.
Singaporeans will soon have to realise that, like all forms of lotteries, property is not a one-way bet.