What NZ could learn from Singapore's housing crisis
A Kiwi economist based in Singapore says our Government could learn from the island nation about how to deal with a housing crisis.
Property prices in Singapore rose 40 percent between 2009 and 2013, but the Government has since managed to cool the market down.
"Demand for apartments is down, so we expect vacancies to increase," says Savills Singapore senior director Alan Cheong.
Singapore is smaller in size than Auckland, but with four times the population, and four years ago it faced a similar problem.
"There was an under supply of private residential properties and there was a surge of demand going into the market," says Mr Cheong.
Singapore-based Kiwi economist David Skilling says the Government acted quickly.
"The Government got concerned that the property prices were unaffordable. They began to step in to try and address what was looking like a property bubble in Singapore," he says.
As well as taxing people who tried to flip properties, they started tightening loan-to-value ratios, ramping up the stamp duty for foreign buyers and imposing a strict debt-to-income ratio for home loans. They addressed supply by releasing more land onto the market and ramping up construction.
By the second quarter of this year, house prices had fallen more than 9 percent.
Some say the Government's housing supply measures have actually been too successful, with construction showing no signs of slowing down and thousands of new private residential units flooding the market, and supply is now outweighing demand.
"In a sense it's probably a good problem to have - supply ahead of demand as opposed to the other way round, which is where they were three, four years back, and is where we are I think in New Zealand," says Mr Skilling.
Mr Skilling says our Government has been far too slow to react, and could learn from Singapore's approach.
"We're pretty quick to say, 'Well, Singapore's completely different; Denmark's completely different; there's nothing we can learn,'" he says.
But Housing Minister Nick Smith says the places are not comparable.
"It's a very small country. You've got more people than New Zealand in an area the size of Lake Taupo, so that makes it quite different," he says.
Dr Smith says like the island nation, the Government here has ramped up construction and is still considering other measures.