Besides using this to commemorate that my subscription of the Economist is ending soon, I have a more serious purpose: London property prices as a cautionary tale for Singapore.
A quote from the the article is in order:
Increasing inequality is bad for the city economically. Costly rents and mortgages transfer wealth from poorer people, who tend to spend whatever money they have, to richer folk, who save it. As a result there is less overall demand to support the local economy.
Decreasing diversity is another loss: if different sorts of people do not cluster together, they cannot exchange ideas and innovations so readily. In 2012 and 2013 productivity per worker fell in London, though it rose in the rest of the country. The proportion of total employment that comes from startups is falling, and small firms are currently closing at a faster rate than more established outfits.
One day I saw a much appreciated and needed stationery shop in the neighborhood disappear. It was replaced by a hair dresser. There was a hardware shop which made way for yet another hair-do enterprise. Afterward a decades old Chinese medical shop gave up which was replaced by yet another hair dresser! Elsewhere it could be something else, e.g., banks in Holland Village.
All of these are years old stories but they mimic the London experience and at a time before we moved to arrest the inexorable rise of real estate prices.
The government might from time to time be blinded by ideology but it is not stupid once it realized its mistake. The real estate sector should recognize facts on the ground before they press the government to make their lives good again. Being wishful is not a virtue in business but it also makes me wonder the sort of reprehensible relationship they might have enjoyed previously.
The quick and dirty economic growth from property bubbles are not worth it and only serves to make us poorer in the long run.