Keep foreign bidders out of housing.
Consumers in Singapore have raised a ruckus over paying high prices for milk powder, a situation attributed to an imperfect market dominated by a small number of suppliers.
Milk powder is a necessity and parents have called on the authorities to step in and not just allow market forces to prevail to determine prices since buyers and sellers are not on the same level playing field.
Property is another product where buyers have not much power to call the shots and where one recent disturbing development - if not checked, I feel - has the potential to stir a lot of unhappiness too.
I am not alone among property watchers in noting that cash-rich foreign developers have put in arguably over-exuberant bids to clinch residential plots released under the Government Land Sales (GLS) programme.
My friends and I are perturbed by the impact of this trend on, for example, the ability of our children to move up the property ladder in the future, given the knock-on effect on selling prices.
Private property values have fallen by 11.2 per cent since a peak in the third quarter of 2013 because of cooling measures in large part, the media reported in January.
But sentiment has since turned a corner, with recent launches doing well and land sales registering a surge in the number of bidders.
My friends and I have noted with some alarm the aggressive bids put in by Chinese and Malaysian developers.
On June 1, the media reported that a Chinese developer had offered 22 per cent more than the next highest bidder for a landed property site in Lorong 1 Realty Park.
Last month, Hong Kong-listed Shenzhen developer Logan Property Holdings and Shandong-based Nanshan Group jointly clinched a sizeable plot in Stirling Road in Queenstown with their offer of $1.003 billion.
It was the first time that a residential site breached the $1 billion mark in the history of the GLS programme. The price is equivalent to $1,051 per square foot per plot ratio.
The bid was 8.3 per cent higher than the second-highest bid of $925.7 million from MCL Land.
The top bid is very bullish as it is 20.6 per cent higher than the price of the land acquired by MCC Land in June 2015 for a condo project. Called Queens Peak, it was launched last November at $1,580 psf.
Prices could be pitched above $1,780 psf when the Stirling Road project is launched in the middle of next year.
In April, 24 bids were submitted for a residential plot in Toh Tuck Road. Malaysian developer SP Setia International's bid was the highest at $265 million, or about $939 per square foot per plot ratio.
This exceeded property consultants' expectations of the highest bid at no more than $750 per square foot per plot ratio.
So, should tenders for land - for projects in the heartland that target mainly Singaporeans - be open to foreign companies which, with their deep pockets, could "distort" the market that serves a purely local need?
It could be argued that people need not choose to buy if prices are high, but the property market is not exactly full of options for the consumer since supply is dependent on land sales, and residential land in Singapore should not be an asset for outsiders to make money from.
Worse, a much higher selling price also creates a new benchmark and lifts the prices of resale of older properties in the area, further harming the aspirations of Singaporeans to move up the property ladder.
It is fine if prices rise in an orderly manner supported and sustained by healthy factors such as the general well-being of the economy.
But things could get out of hand and breed anger if prices climb steeply only because foreign developers with deeper pockets and a desire to break into the market have taken advantage of the country's free economy to wade in.
Singapore must remain a free economy but there must be exclusions to the general rule, especially when Singaporeans' interests are at stake.
Excluding foreign players from tenders of heartland sites does not mean that local players - for Singapore is not short of them - will have an easy ride and pay artificially depressed amounts in the absence of competition.
The Government is not bound to accept any bid if it falls short of estimates based on prevailing trends and past transactions.
Some may argue that it is not a given that the foreign developer must raise selling prices despite paying much more for the plot.
But astute buyers will know that while prices can still be capped below, say, $1 million, something must be sacrificed - the size of the unit.
Which means there is an impact on the quality of life for the buyer who is unlikely to get any apartment above 600 sq ft if the selling price is $1,650 psf.
While no developer wants to pay too much for land, it is clear that the recent winning bids are arguably over the top.
On average, investors have paid 29 per cent more for residential sites over comparable sites sold in the past five years.
Sales of new private homes in the first four months of this year reached 4,696 units - more than double the 2,220 in the same period last year, no doubt helped by launches in plum areas and tweaks of some cooling measures.
The robust recovery can only encourage foreign investors to make bullish bids for land in Singapore.
While developers may also be hurt if economic conditions deteriorate down the line and incur penalties if they cannot sell all their units within a stipulated timeframe, it must be remembered that those who bought the homes at high prices will be affected too.
You could say it's "let the buyer beware" but, as I pointed out earlier, the property market is not a perfect one. If foreign companies want to bid aggressively for land to build shopping centres and office complexes, most Singaporeans would have no problems with that since they are making investments in the country.
But a condo is a short-term project with only one aim for the developer - to sell the units for a profit and then move on to another project.
My friends and I believe that some tinkering of the GLS rules may be in order before things get further out of hand.
Adapted from: The Straits Times, 11 June 2017