View Full Version : Is property investing stifling enterprise here?
buttercarp
08-10-12, 08:45
http://www.todayonline.com/Business/EDC121008-0000008/Is-property-investing-stifling-enterprise-here
by Richard Hartung 04:45 AM Oct 08, 2012
Property investment has become so attractive to so many people here, it seems, that it may actually have reached the point where it is increasing risk and crowding out other investments that could be better for the Singapore economy.
In many countries, income from investment in residential property is a blip in overall economic indicators and a small percentage of GDP. Deutsche Bank noted in its Real Assets report, many private households in other regions "mainly hold residential property for owner-occupation".
While home ownership is high here too, residential property investment is so large that it has its own line on GDP data from SingStat called "ownership of dwellings" and individual investors' returns from those investments account for more than 4 per cent of GDP.
Even at that high level, there's a thirst for more. The latest Asia Property Market Sentiment Report last month - prior to last Friday's property market cooling measures - showed that 62 per cent of Singaporeans polled want to buy another property in the next six to 12 months.
As one blogger on Singapore Watch put it, many people will buy an HDB flat as their first property and then slowly save up for their second property. Friends talk about properties they are investing in and the gains they expect, so owning a second property starts to seem like the norm. Many investors, then, aspire to investing in property rather than in the next Google or LinkedIn.
LESS MONEY FOR INNOVATION?
Investing in real estate is not necessarily bad. Research by University of Sydney Professor Maurice Peat, for example, showed that including residential real estate in a well-diversified portfolio can generate significant diversification benefits.
As Prof Peat also found, however, too much focus on real estate and a relatively undiversified set of investments can create additional risk.
One challenge of the focus on property, then, is that a large swathe of Singaporeans may become too dependent on residential property for their financial security. If anything negative happens in the Singapore property market, that security is at risk. The aftermath of the housing bubble in the US shows how severe the risk can be.
Putting so much money into residential property investment may also stifle entrepreneurship and innovation.
Private investors may prefer to put their money into property rather than new ventures. One economist here noted, although data is limited, that capital may be diverted into being landlords rather than business owners or inventors. Private capital that could fund start-ups or business growth may go into real estate instead.
What funding there is for new ventures often comes from younger investors, who may have less money for investment in the first place.
Angel investors in Singapore tend to be younger than in other locations, the Angel Investment Network (AIN)here noted, with the majority being 25-34 years old. And young or old, AIN noted, Singaporean business angels tend to invest more often in the retail and hospitality sectors than in technology.
TWO NECESSARY SHIFTS
For Singapore to be able to grow into the entrepreneurial hub of technology innovation that it aspires to, a shift in focus by investors may be needed. Making that shift happen may involve at least two fundamental changes to shift investors' aspirations.
One change is to orient investors towards a more diversified portfolio. Education could help make this shift occur. Organisations like SIAS or the Singapore Exchange, for example, could do more to educate investors about diversification or provide new avenues for investments other than property.
Given the long-ingrained focus on real estate, however, less popular options like policy shifts to reduce the attractiveness of property investments may be a more viable option.
A second change is then to shift some of the money that would have gone into property into funding new ventures or business growth. It is not necessarily easy to create the buzz about investing in start-ups or business expansion that exists in Silicon Valley. Education could again be a first step, with organisations educating investors on investing in new ventures. Again, though, policy or fiscal shifts may be more likely methods to make change happen.
While there is no harm in some property investments, it is the magnitude here that creates potential imbalances. Admittedly, shifting peoples' aspirations from owning a second or third property to becoming the next big investor in a business growth story like Google is not easy.
If nothing changes, though, Singapore could gradually move towards becoming a nation of landlords, especially at the upper end. It seems better to start shifting now than never, even if change may take a long time to happen.
Richard Hartung is a consultant who has lived in Singapore since 1992.
Buttercup, I must have pissed u off. Sorri. Ok, today I good mood. Share some info. Key is to know
When to get off the bus. Understand.
This applies to shares as well.
Oops, I changed your name. Hope u don't mind.
very nice article. hit the nail on the head. nation of landlords, I like that. from never owning the land during sang nila utama days to being landlords, well it's a step up I guess...
very nice article. hit the nail on the head. nation of landlords, I like that. from never owning the land during sang nila utama days to being landlords, well it's a step up I guess...
Bro, u see something I don't leh. What's so nice about the article? This whole thing will take years to evolve leh. And some of the things will never happen.
Dear sage, can enlighten me?
isn't it obvious I said that because I am also a landlord?
the writer is richard hartung who has lived in spore since 1992 perhaps if writer was richard han who was born in spore in 1972....he would feel differently...:cool:
phantom_opera
08-10-12, 09:23
it is too late, the moment they allow CPF to buy properties, all hell break loose
the road of no return
and we are still lagging behind HK in terms of madness
:tongue3:
bottomline
super kiasu mentality is what is driving people you have i want...if i dont buy i will die...everybody que i also must que....so people will buy and buy and buy....we have come to a stage where NO investment is more important than property investment...can you blame the average joe...with all the publicity in the media about spiralling prices...etc etc how people have made millions thru property for many many people this seems like the only way UP and honestly now i think govt is AIMING at sectors of the market where they foresee there could be a problem later like older buyers OVER leveraging(unfortunately i fall in that category):cool:....anyway we can talk till the cows come home but people will still buy...memory is short all past crisis have been forgotten..we looking at 6M population...maybe 7M 8M who knows where would you want to put your money besides in property...:cheers1:
hartung 虾桶 is bitching about being forced to be a tenant?? lol
depend on whether it is a 'needs' or 'wants' :)
hartung 虾桶 is bitching about being forced to be a tenant?? lol
maybe his landlord just up d rental...:D:D:D...tak boleh tahan:D
maybe he been renting since 1992...now he thinking knn if i bought in 1992 i can retire liao....:banghead::banghead::banghead:
but he never bought so must continue writing these kind of stories...:D
it is too late, the moment they allow CPF to buy properties, all hell break loose
the road of no return
and we are still lagging behind HK in terms of madness
:tongue3:
i am sure if never allow cpf 70 to 80% of population cannot afford to buy:cool:
buttercarp
08-10-12, 10:11
Buttercup, I must have pissed u off. Sorri. Ok, today I good mood. Share some info. Key is to know
When to get off the bus. Understand.
This applies to shares as well.
Oops, I changed your name. Hope u don't mind.
Nevermind about the name, bro :) .
You sound much more pleasant in your good mood.
Thanks for sharing.
Yup, nowadays no bus conductor to chase one off the bus if one misses the stop.
Buttercup, I must have pissed u off. Sorri. Ok, today I good mood. Share some info. Key is to know
When to get off the bus. Understand.
This applies to shares as well.
Well for property not always u want to get off u can straight away get off... there are other passengers at the door also. blocking u.
depend on whether it is a 'needs' or 'wants' :)
now pile there are a lot of wants. if needs.. a HDB will do.
Amber Woods
08-10-12, 11:14
it is too late, the moment they allow CPF to buy properties, all hell break loose
the road of no return
and we are still lagging behind HK in terms of madness
:tongue3:
You see! The CPF and your HDB flats are the two instrunments the govt has to tie the people in Singapore. We had a problem of Singaporeans migrating to other countries in the 80s' and that was real problem. Don't you realise that all Singaporeans are either "tie down" with your CPF saving or HDB flats or both? So most Singaporeans do what makes sense by investing their CPF in properties and equities and their future are more or less tie to the state.
Well for property not always u want to get off u can straight away get off... there are other passengers at the door also. blocking u.
Bro, i really hope you dont need me to spoonfeed u, hor. I already very nice give you tips.
Kane already gave the answer in one of the post. You need 3 to begin the play.
phantom_opera
08-10-12, 11:22
You see! The CPF and your HDB flats are the two instrunments the govt has to tie the people in Singapore. We had a problem of Singaporeans migrating to other countries in the 80s' and that was real problem. Don't you realise that all Singaporeans are either "tie down" with your CPF saving or HDB flats or both? So most Singaporeans do what makes sense by investing their CPF in properties and equities and their future are more or less tie to the state.
I agree .... dark side of the force is very strong ... HK is the same ... but ruling class who own multiple properties can diversify ... Emperor Papatine
"Everything is proceeding as I have foreseen."
―Palpatine
Bro, i really hope you dont need me to spoonfeed u, hor. I already very nice give you tips.
Kane already gave the answer in one of the post. You need 3 to begin the play.
Don't agree that need 3 to play. What if you fully paid one? Too simplistic ANALogy
Don't agree that need 3 to play. What if you fully paid one? Too simplistic ANALogy
We can take this off line. You pm me your reason and I will give you mine.
i am sure if never allow cpf 70 to 80% of population cannot afford to buy:cool:
If CPF was never allowed to be used do you think the property price would be so high?
If people couldn't "afford" high prices due to CPF money not being available to buy property wouldn't the market force prices to a level people can afford it with what they have?
Isn't this the similar as subprime ninja mortgage days where high loan quantums allowed more money to chase the same properties.
Seems to me that allowing the use of CPF has left many of us to retire property rich and cash poor - which is why we have all this minimum sum and annuity nonsense now.
You can live in a 1 million dollar HDB but you can't eat your toilet!
If CPF was never allowed to be used do you think the property price would be so high?
If people couldn't "afford" high prices due to CPF money not being available to buy property wouldn't the market force prices to a level people can afford it with what they have?
Isn't this the similar as subprime ninja mortgage days where high loan quantums allowed more money to chase the same properties.
Seems to me that allowing the use of CPF has left many of us to retire property rich and cash poor - which is why we have all this minimum sum and annuity nonsense now.
You can live in a 1 million dollar HDB but you can't eat your toilet!
Sell and move to smaller unit lor. They will 'help' you do just that.
buttercarp
08-10-12, 12:39
If CPF was never allowed to be used do you think the property price would be so high?
If people couldn't "afford" high prices due to CPF money not being available to buy property wouldn't the market force prices to a level people can afford it with what they have?
Isn't this the similar as subprime ninja mortgage days where high loan quantums allowed more money to chase the same properties.
Seems to me that allowing the use of CPF has left many of us to retire property rich and cash poor - which is why we have all this minimum sum and annuity nonsense now.
You can live in a 1 million dollar HDB but you can't eat your toilet!
The appreciation of the home you bought is likely to be many times the interest the OA gives you when you retire.
Although we may be asset rich and cash poor on retirement, we have to option to downgrade and cash out on it.
You can still eat if there are people willing to pay to use your toilet.
If CPF was never allowed to be used do you think the property price would be so high?
If people couldn't "afford" high prices due to CPF money not being available to buy property wouldn't the market force prices to a level people can afford it with what they have?
Isn't this the similar as subprime ninja mortgage days where high loan quantums allowed more money to chase the same properties.
Seems to me that allowing the use of CPF has left many of us to retire property rich and cash poor - which is why we have all this minimum sum and annuity nonsense now.
You can live in a 1 million dollar HDB but you can't eat your toilet!
What would you suggest CPF to be use for?
If CPF cannot be use than half of the private property will be own by FT,PR...
We are way behind subprime, we just wake up to what US have been doing.
Those who have only a fully pay HDB can only eat their toilet. Whereas those who manage to cash out their HDB and buy private property can eat in the food court.
buttercarp
08-10-12, 13:10
You can live in a 1 million dollar HDB but you can't eat your toilet!
Hi, now I am a bit blur.
Please clarify.
To eat one's toilet means to eat one's own poo, eg guinea pigs do that.
Did you mean "but you can't eat in your toilet"?
Secretariat
08-10-12, 13:13
If CPF was never allowed to be used do you think the property price would be so high?
If people couldn't "afford" high prices due to CPF money not being available to buy property wouldn't the market force prices to a level people can afford it with what they have?
Isn't this the similar as subprime ninja mortgage days where high loan quantums allowed more money to chase the same properties.
Seems to me that allowing the use of CPF has left many of us to retire property rich and cash poor - which is why we have all this minimum sum and annuity nonsense now.
You can live in a 1 million dollar HDB but you can't eat your toilet!
That's the reason of subprime crisis? :confused:
Read "The Long Short"...
there's a reason why after you take out "i" from "toilet" it becomes "to let"
Long long time ago, my father tell me he don't believe in buying property in Singapore because during the Japanese occupations, property mean nothing.
It than start to remind me not to have too much tied to property.
I have been using this to ensure all my property is own by bank and not me.
In the event something goes wrong, they can look for the bank.
In the event everything goes right, I will be around.
So, how much have you tied to your property? Do you understand why people are buying like no tomorrow.
phantom_opera
08-10-12, 13:37
"Everything is proceeding as I have foreseen."
―Palpatine
___________
But you know at the end PAlPatine betrayed by Darth Vader and died
A lot of people still do not know what is the diff btn CPF OA paying 5-6% interest vs lowering CPF OA to 2.5% and allow you to buy properties ... it is a grand plan of PAlPatine :p
Bro phantom,
CPF PAL PIN
Ring any bell?
buttercarp
08-10-12, 13:45
"Everything is proceeding as I have foreseen."
―Palpatine
___________
But you know at the end PAlPatine betrayed by Darth Vader and died
A lot of people still do not know what is the diff btn CPF OA paying 5-6% interest vs lowering CPF OA to 2.5% and allow you to buy properties ... it is a grand plan of PAlPatine :p
But there is no option.
The interest rate of the OA is 2.5%, period.
phantom_opera
08-10-12, 13:54
But there is no option.
The interest rate of the OA is 2.5%, period.
sigh, sister buttercarp ... you already joined the dark side but you still do not understand the dark side
http://1.bp.blogspot.com/_JgtgLJIVBw4/SWcWuyL0cyI/AAAAAAAABUc/64f9TnKr_9A/s400/CPFRates.JPG
now, under the Jedi, CPF OA was decent for retirement and Jedi Council will invest for you and no you can't use it to buy properties ... but after Darth Sith Lord took over .... he wants to ensure everybody joins the Dark Side ... the rest is history :scared-5: now they even pass the suggestion to peg CPF SA/MA to SGS 10y yield + 1% which is 2.4% right now
buttercarp
08-10-12, 14:11
Hi bro phantom......
What I meant was that CPF OA interest is 2.5% and we can't negotiate.
So have to make full use of it and use it to buy property rather than let it sit there untouched.
If CPF gave us an option, ie if we do not use it to buy property prior to retirement and they give us a higher interest, then some of us may just leave it there and watch it grow.
Secretariat
08-10-12, 14:17
But why deployed the CPF when its interest rate is 2.5% :confused:
buttercarp
08-10-12, 14:39
But why deployed the CPF when its interest rate is 2.5% :confused:
I know what you are saying is that why use the CPF OA when interest rate is higher than the home loan interest rate, right?
But what if the amount of home loan if not sufficient, so we need to utilise the CPF.
phantom_opera
08-10-12, 14:58
Hi bro phantom......
What I meant was that CPF OA interest is 2.5% and we can't negotiate.
So have to make full use of it and use it to buy property rather than let it sit there untouched.
If CPF gave us an option, ie if we do not use it to buy property prior to retirement and they give us a higher interest, then some of us may just leave it there and watch it grow.
Aiya, if u are Cpf why give such pathetic rate? It is because they dun want to take responsibility of investing for u so u dun have a choice but to buy properties or shares, check out calpers, their return over years
Secretariat
08-10-12, 15:01
I know what you are saying is that why use the CPF OA when interest rate is higher than the home loan interest rate, right?
But what if the amount of home loan if not sufficient, so we need to utilise the CPF.
No resources, then bo pain lor.
But I thought that we are speaking of property owner. Until Aug 2010, there was opportunity to swap cash/CPF deployment. Now still can but a lot more calculations to make la :D
It was a matter of positioning for the rally.
buttercarp
08-10-12, 15:09
Hi bro phantom and bro secretariat, thanks for highlighting this CPF thingy.
Yesterday I learned about equity loan.
Today I learned about the dark forces and CPF.
This forum is not only fun, it is so informative.
Lately I have been watching Naruto.
You both are so expert - Jounin ninja.
I am just a Ninja Academy student.
http://www.naruto-kun.com/ninja-ranks/
Hi bro phantom and bro secretariat, thanks for highlighting this CPF thingy.
Yesterday I learned about equity loan.
Today I learned about the dark forces and CPF.
This forum is not only fun, it is so informative.
Lately I have been watching Naruto.
You both are so expert - Jounin ninja.
I am just a Ninja Academy student.
http://www.naruto-kun.com/ninja-ranks/
What about equity loan, care to share? Cos I'm still thinking whether to get it from my PC to hoot another one. Thanks!!!
property investing doesn't have to be exclusive. you can concurrently do other enterprising stuff.
phantom_opera
08-10-12, 17:51
property investing doesn't have to be exclusive. you can concurrently do other enterprising stuff.
this is because if property is so ex, failure is not an option, of course if you have HDB and your biz go bust, banks cannot touch your HDB
the thread starter does have a point .. also if you can make tonnes of $$ doing non-productive stuff, why work hard? Just like big 4 US banks are currently front running the US Fed to feed them $$$ ??
property only appear profitable in the last 7years. the 7years before that, it was a real drag.
phantom_opera
08-10-12, 17:59
still better than France:
AFP writes: "A flood of top-end properties are hitting the market as businessmen seek to leave France before stiff tax hikes hit, real estate agents and financial advisors say. "It's nearly a general panic. Some 400 to 500 residences worth more than one million euros ($1.3 million) have come onto the Paris market
:banghead:
Allthepies
08-10-12, 18:09
Stocks, properties, bankers, fund managers, traders are some of the non productive part of the economy. But no choice these are things or occupation where easy money can be made, where big money can be made.
It is a great loss to the advancement of mankind when you see many capable engineers or scientist quit to join the dark side of banking or finance sector.
still better than France:
AFP writes: "A flood of top-end properties are hitting the market as businessmen seek to leave France before stiff tax hikes hit, real estate agents and financial advisors say. "It's nearly a general panic. Some 400 to 500 residences worth more than one million euros ($1.3 million) have come onto the Paris market
:banghead:
those that over look the river and notre dame would be pretty nice.
buttercarp
08-10-12, 18:21
What about equity loan, care to share? Cos I'm still thinking whether to get it from my PC to hoot another one. Thanks!!!
You go to this thread and read post #528 onwards.
http://forums.condosingapore.com/showthread.php?t=15128&page=53
But why deployed the CPF when its interest rate is 2.5% :confused:
Leverage.
http://www.investopedia.com/articles/mortgages-real-estate/10/increase-your-real-estate-net-worth.asp#axzz28hY2ZhUd
Sell and move to smaller unit lor. They will 'help' you do just that.
sell 1 mil hdb then buy 100k studio got 900k to play play...:D
those that over look the river and notre dame would be pretty nice.
http://www.irealtytimes.com/articles/2806/20121007/france-housing-market-outlook-2013-european-crisis.htm
phantom_opera
08-10-12, 18:33
http://www.irealtytimes.com/articles/2806/20121007/france-housing-market-outlook-2013-european-crisis.htm
Hosay liao
"Nobody until now (in France) believed that the capital gains on shares would be taxed so high."
The preferred destinations of those leaving are London, New York and Geneva, as well as Canada, Israel and Singapore, said Laurent Demeure, head of Coldwell Banker France.
Secretariat
08-10-12, 18:40
Aiyah, these people have been sleeping la :sleep:
While Singapore has completed Marina FC :cheers1:
The appreciation of the home you bought is likely to be many times the interest the OA gives you when you retire.
Although we may be asset rich and cash poor on retirement, we have to option to downgrade and cash out on it.
You can still eat if there are people willing to pay to use your toilet.
Seems to have sparked some discussion!.....
Appreciation only happens because everyone is doing it. That is why it will probably give a better return than the OA. however it does have a negative side affect of pushing our retirement problems onto the next generation.
Thats ok as long as you don't have children and care what kind of problems are created for them in future, actually even then it doesn't really seem OK to me.
Downgrading is just cashing in on this. As was the comment of eating your toilet (though that's if you stay & don't downgrade). Strange that someone thought of eating from the toilet and eating poo....... Good to know how some people think. :scared-5:
The subprime comment was also geared towards this end... Excess money, in this case borrowed, chasing non productive housing.
The original discussion point was if we weren't so hung up on property would our investments better help the productiveness of the Singapore economy. Would our savings be channeled into more productive ventures or allow us to diversify investments into other areas.
Many other countries take this approach so when you retire you have actual money or liquid investments to use rather than having it locked up in bricks and mortar.
It would be interesting to find out figures how many Singaporeans fall into this category - ie have to use pledge property to minimum sum.
the slight difference is subprime is based on dodgy credit checks. like when they don't have stability in the sort of income declared.
the slight difference is subprime is based on dodgy credit checks. like when they don't have stability in the sort of income declared.
Correct, not exactly the same source of money which is why I used the word similiar, not same. But a similar outcome on prices occurs.
More money chasing same supply with the same demand.
Obvious what is going to happen to the price.
The real question is - how productive is this use of capital.
LKY made a famous statement back in mid 1990's when property was running at 15% a year on how productive 4 walls and a roof are.
I know this is a property forum & so most people here have been drawn to the allure of capital appreciation of this asset class. But it's not the only game in town.
I would think that demand is actually expanding due to population size. Buying developer sale is like equity IPO, you provide capital for more economic activity. For property, you stimulate the local economy. For equities, it depends on where the activities from the use of proceeds are conducted. Buying from the secondary market though does little to the economy in both instances.
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