Prices of resale flats, private homes continue to rise

[hyenergix]

Well HDB has the holding power so during down times, valuation of the flats would be very low and HDB take them back low and wait till market recovers and earn back 50% more??? The idea's pretty whacky, isn't it? If HDB cannot take such risks, no one else can!

How to balance a budget like that? It will create enormous swings, and people will accuse of HDB profiteering from people during downturns (buy from people on the cheap) or upturns (sell to people for large profit). That's all from me for these issues as I'm not paid million dollar celery but somebody else is!

[chiaberry]

Well HDB has the holding power so during down times, valuation of the flats would be very low and HDB take them back low and wait till market recovers and earn back 50% more??? The idea's pretty whacky, isn't it? If HDB cannot take such risks, no one else can!

haha that's no small risk. Later KBW kena another heart attack for this.

[howgozit]

HDB even sublets its own flats directly but distances itself by getting managing agents to do it for them. Chances of preventing subletting of HDB flats has serious repercussions because a lot of lowly paid foreign workers will be squeezed if they have to rent pte properties. Companies will have to raise their salaries that will in turn pass the higher cost to the general public. Some workers will resort to crimes to support their living costs here. Old folks who depend on rental to survive will face difficulties. But pte property landlords will rejoice. You only want to benefit the people who deserve the least help?

I believe the people who needs the most help are the future generation. With policies that permit monetising of HDB flats, it has become a cash cow rather than a means of abode.

With everyone hoping to milk the cash cow to death, there is little hope that the prices will ever be a reasonable level. It can only taper or plateau.

You are right that HDB is also subletting directly. For example, 4 block of HDB flats in Bedok South went enbloc and residents had to be vacated to make way for new flats. But the flats were instead re-configured to sublet to FW. You see, even HDB wants to milk the cash cow.

In my opinion, this goes against the grain of public housing.

[ysyap]

In short, the public housing market needs to be totally transformed to account for the last 50 years of successes. Need to catch up with times!

[bargain hunter]

the poorer pple ie part of the 80% who do not live in the 20% elite pte ppty have already been allowed to use it to supplement their income. it will be difficult to reverse this. again, it might cause a lot of discontentment on the ground. afterall foreigners already competing for jobs etc, now want to cut off their supplementary income somemore? i dun think they will implement this.

Fixcat, my point is , rent out room should also not be allowed. In short HDB is for living not to make profit. Also too much rental in HDB brews a lot of social problems.
Mass condo rental will come down. 2k rent for a 3rm HDB is not normal.

[teddybear]

You want to help those who deserve more help, the low income group? Easy lah, get rid of all those lowly paid foreign workers renting HDB flats now from Singapore! Bosses have no choice but to increase pay of the low income groups and they will benefit tremendously! Why should the bosses keep all the profit and become big fat cats? Construction workers and maids' accomodations are provided by bosses directly so they won't be renting HDB flats.
My understanding is many of these low-income foreigners working in Singapore are working in service sectors which can't be shifted overseas and hence the jobs should rightly be reserved for citizens! All the talks about don't let them employ foreigners they shift overseas are bullshit! Ask them to shift their restaurants, hospitals, clinics, retail shops, service centres overseas lah!

HDB even sublets its own flats directly but distances itself by getting managing agents to do it for them. Chances of preventing subletting of HDB flats has serious repercussions because a lot of lowly paid foreign workers will be squeezed if they have to rent pte properties. Companies will have to raise their salaries that will in turn pass the higher cost to the general public. Some workers will resort to crimes to support their living costs here. Old folks who depend on rental to survive will face difficulties. But pte property landlords will rejoice. You only want to benefit the people who deserve the least help?

[westman]

You want to help those who deserve more help, the low income group? Easy lah, get rid of all those lowly paid foreign workers renting HDB flats now from Singapore! Bosses have no choice but to increase pay of the low income groups and they will benefit tremendously! Why should the bosses keep all the profit and become big fat cats? Construction workers and maids' accomodations are provided by bosses directly so they won't be renting HDB flats.
My understanding is many of these low-income foreigners working in Singapore are working in service sectors which can't be shifted overseas and hence the jobs should rightly be reserved for citizens! All the talks about don't let them employ foreigners they shift overseas are bullshit! Ask them to shift their restaurants, hospitals, clinics, retail shops, service centres overseas lah!

I agreed with you on this....

[CCR]

From all your posts I come tone conclusion.... It's a big mess by MBT... Now big problem... Don't know where to solve this.... If KBW can solve it I will really respect him... The problem is multi faceted man... If you act on one area the other other burst... Just
Ook atbthe 40% LTV... Now all buy OCR property coz down payment too big for CCR properties... Leadin to big bubble in ocr properties... Big big headache man.... Then look at 16% SSD leading to hdb up graders not wanting to move coz afraid to be tied down... Then no supply in resale market and the hdb cov keep going up.... Unintended consequences.... Troubled times indeed....

[ysyap]

I've always mentioned that some of those old policies that no longer work simply have to go. No point holding on to them. That's the problem with some gxxx sectors. Always so eager to introduce new policies but forgot to review old ones. Always have this mentality that more is good and better!
The income ceiling review is long overdue.
Coming down hard on erring housing agents as well as project models, diagrams, etc are also long overdue.
Coming down hard on profiteering by developers must also be reviewed.
BTO flats must be removed according to seasons. Now is the season to build build build.
DBSS no longer serve its purpose well when so much profit has been made from public housing so must also be removed.
Plus many other policies...

[chiaberry]

It's difficult to control profiteering by developers. They are in the business to make profits. As long as there are people willing to buy at the ridiculously high prices they will continue to launch at higher and higher prices. What Govt can do is to make it harder and harder for people to buy at high prices. For example raising the LTV further for 2nd and subsequent properties.

[ysyap]

It's difficult to control profiteering by developers. They are in the business to make profits. As long as there are people willing to buy at the ridiculously high prices they will continue to launch at higher and higher prices. What Govt can do is to make it harder and harder for people to buy at high prices. For example raising the LTV further for 2nd and subsequent properties.

Agreed... therefore I've always advocated that
1. either the objective of public housing be honoured, so public housing should not be given to developers to make obscene amounts of profit from the 'poorer' Singaporeans (poor or not is another thread of argument altogether) or
2. the objective of public housing be reviewed and amended to allow developers to make profits.

Agreed that other policies can be reviewed. If want to whack hard hard, then legislate that 2nd property must be paid in full with no bank loans... I'll stay in my humble HDB then... hahaha!

[devilplate]

implement too much tightening measures now....later downturn how?

ppl will blame on govt cooling measures instead of global crisis

[ysyap]

Any amount of cooling measures will be met with some form of complaints by our new generation of home owners/buyers so its a futile effort. No CM also will have complaints de. Mr K is in the hot seat. Super hot seat!!!

[fclim]

From all your posts I come tone conclusion.... It's a big mess by MBT... Now big problem... Don't know where to solve this.... If KBW can solve it I will really respect him... The problem is multi faceted man... If you act on one area the other other burst... Just
Ook atbthe 40% LTV... Now all buy OCR property coz down payment too big for CCR properties... Leadin to big bubble in ocr properties... Big big headache man.... Then look at 16% SSD leading to hdb up graders not wanting to move coz afraid to be tied down... Then no supply in resale market and the hdb cov keep going up.... Unintended consequences.... Troubled times indeed....

Agree. The traditonal economic laws of Supply & Demand does not always work in property. When you try to tamper with Demand, Supply gets affected as well.

Why? Because those who form the demand group are also the ones to create the supply. It is not so simple as a car maker creating supply and the car buyer forms to demand. That's why it is so difficult to solve the problems.

[ysyap]

Agree. The traditonal economic laws of Supply & Demand does not always work in property. When you try to tamper with Demand, Supply gets affected as well.

Why? Because those who form the demand group are also the ones to create the supply. It is not so simple as a car maker creating supply and the car buyer forms to demand. That's why it is so difficult to solve the problems.

Also, the time lapse involved for most other supply and demand equations are relatively short and manageable but for houses, it can take well over 3 to 5 years of construction. Very difficult to manage!

[devilplate]

Also, the time lapse involved for most other supply and demand equations are relatively short and manageable but for houses, it can take well over 3 to 5 years of construction. Very difficult to manage!

as i had always emphasize, demand can vanish overnight even for HDB BTOs

we can never control demand....unless follow china.....stop at 2....sounds like control birth rate....but jus imagine the side effect.......hehe

[fclim]

as i had always emphasize, demand can vanish overnight even for HDB BTOs

we can never control demand....unless follow china.....stop at 2....sounds like control birth rate....but jus imagine the side effect.......hehe

So will supply. It can vanish overnight too.

[devilplate]

So will supply. It can vanish overnight too.

once GLS land is SOLD, the supply can be estimated oredi

govt can possibly remove those unsold sites under confirmed list out of market during a crash(or reject a bid stating below reserved price which is not known to the public)....in a way u r partially right aso la

[fclim]

once GLS land is SOLD, the supply can be estimated oredi

govt can possibly remove those unsold sites under confirmed list out of market during a crash(or reject a bid stating below reserved price which is not known to the public)....in a way u r partially right aso la

What I meant was, if people don't buy, then they also don't sell their house/flat. This will restrict supply in the market too.

After HDB rules changed in Aug 2010, people realised that once they sell their flat, they can never buy another HDB again. So all keep and hoard their HDB. No supply in the market and COV continues to go up and up...

[hopeful]

why think so complicated?
just build more HDB flats in advance of demand.
and even if flats finished construction, remove some of the units from the market so that supply is reduced.
What is the cost of HDB? only holding cost.
That's the problem with experts. they tried to fine-tune the system so much, trying to match demand with supply. If there is an inbuilt fat or inefficiency, it is better for the overall system.
(just think of it as engineering safety factor.)

[ysyap]

why think so complicated?
just build more HDB flats in advance of demand.
and even if flats finished construction, remove some of the units from the market so that supply is reduced.
What is the cost of HDB? only holding cost.
That's the problem with experts. they tried to fine-tune the system so much, trying to match demand with supply. If there is an inbuilt fat or inefficiency, it is better for the overall system.
(just think of it as engineering safety factor.)

The engineer is speaking but I agree with your analysis. Just take the holding cost as cost to defray the cost that comes from those housing woes because of shortage of supply and the mad rush to push out land sales like crazy and to build BTO like never before.

[devilplate]

why think so complicated?
just build more HDB flats in advance of demand.
and even if flats finished construction, remove some of the units from the market so that supply is reduced.
What is the cost of HDB? only holding cost.
That's the problem with experts. they tried to fine-tune the system so much, trying to match demand with supply. If there is an inbuilt fat or inefficiency, it is better for the overall system.
(just think of it as engineering safety factor.)

its politically WRONG not to release completed HDB flats for sale.....

1st timer confirmed make noise and want govt to release to them at CHEAP CHEAP PRICE

[fclim]

why think so complicated?
just build more HDB flats in advance of demand.
and even if flats finished construction, remove some of the units from the market so that supply is reduced.
What is the cost of HDB? only holding cost.
That's the problem with experts. they tried to fine-tune the system so much, trying to match demand with supply. If there is an inbuilt fat or inefficiency, it is better for the overall system.
(just think of it as engineering safety factor.)

You can't just remove the flats from the market. What if some of the flats in that block have been sold? 25% occupied, 75% unoccupied. It will pose a security problem for the 25% residents. Remember the Jurong West extension flats opposite NTU? They were largely unoccupied for a long time.

The lesson to learn is to build more BTOs, but in relatively more mature estates to soak up current demand. Sure taken up. And maybe one or two precints in outlying areas for those who want cheap cheap. This will reduce holding costs.

[stalingrad]

You can't just remove the flats from the market. What if some of the flats in that block have been sold? 25% occupied, 75% unoccupied. It will pose a security problem for the 25% residents. Remember the Jurong West extension flats opposite NTU? They were largely unoccupied for a long time.

The lesson to learn is to build more BTOs, but in relatively more mature estates to soak up current demand. Sure taken up. And maybe one or two precints in outlying areas for those who want cheap cheap. This will reduce holding costs.

the solution is so simple. tell singaporeans that you can apply for a flat within two year after you get married. if you decide to pass up the opportunity to buy it from the government within that window, then you lose that privilege forever.

Then make planning decisions based on demographics. How many are born each year, and how what proportion will get married, and at what age?

With this system, you can estimate pretty accurately how many will apply for a flat in each year, and then build accordingly.

the problem with the current system is that citizens can apply when the wish. some apply when young, and others when old, thus making planning construction throwing a dart in the dark.

also, to make planning simple, government should tell the citizens that if you don't like what they are offered, you can wait but only until the two year window runs out. after that, buy you own property at your own expense.

[ysyap]

By Getty Goh

People who have read my articles or spoken to me before may go away with the thinking that I am a perennial pessimist. In the past few months, I have been telling my friends and potential clients to stay away from the property market.

Some reasons behind my views are: (1) Private properties are very expensive right now and good deals are not as easy to find as compared to several quarters ago. (2) Government intervention measures put in place have increased the opportunity and investment cost of owning private properties and they are not as worthwhile as before. (3) Property prices will eventually turn and those who bought at peak prices would be caught with a loss-sustaining asset when property market sentiments cool.

Interestingly, Singapore private property prices have been continuously on the rise and market observers have come up with many explanations on why this is happening. Some reasons range from the increase in foreign buyers to the low interest rate environment. I think most of them are valid assessments.

However, if I were to attribute it to a single factor, I would say that high prices are a result of an abundance of liquidity in the Singapore market. My company uses savings and other deposits as a proxy for liquidity within the real estate market as they represent monies that can be used for property deposits. They are also used as an indication of interest rates as there is an inverse relationship between liquidity and interest rates — the more liquidity the economy has, the lower the interest rates will be.

Figure 1: Money Supply in Singapore


Liquidity may have an impact on Singapore property prices. (Screengrab of MAS data)



In an interview I did with Mr. Propwise for his book Secrets of Singapore Property Gurus, I raised the point that liquidity is going to be a key driver in determining how the Singapore property market will behave in the coming months. To illustrate my point, the data from the Monetary Authority of Singapore (MAS) in Figure 1 shows that the savings and other deposits (including current account deposits) as at 2008 was more than S$100 billion. This was twice the amount that Singapore had in 1998, after the Asian Financial Crisis. In 2010, this amount increased by about 33 percent to S$136 billion.

So who will blink first?

As for the question, "Who will blink first?", I opined that as long as buyers have money for the high down payments and access to financing for their properties, properties will continue to be bought and sold at a price premium. From a cash-rich investor's perspective, it still makes sense to buy a property for rental right now. As even though the yield could be as low as 2 percent, interest rates that banks are currently giving for cash deposits are comparatively much lower.

Meanwhile, sellers will have to price their units higher to account for the additional charges brought about by the anti-speculation measures that were supposed to keep the escalation of property prices in check. In another words, as long as there is an abundance of liquidity and buyers are prepared to pay, there is no incentive for developers and property owners to lower their high asking prices.

I recently had a discussion with a friend who worked as an editor with The Economist and he wondered if high property prices will be the new norm. Seeing how some new HDB flats were almost launched at S$880,000, the environment of high property prices looks set to stay.

However, I have to constantly remind myself that the property market is cyclical. Hence the real issue is not whether property prices will eventually fall, but when it will actually happen. And when it does happen, it will likely be brought about by changing financing conditions rather than increasing transaction fees or controlling ownership.

Getty Goh is director of Ascendant Assets, a real estate research and investment consultancy firm. This article is posted courtesy of www.Propwise.sg, a Singapore property blog dedicated to helping you understand the real estate market and make better decisions.

[stalingrad]

governments can do only so much to pamper citizens. if the government bends backward to make that fat lady (with huge...) columnist in ST happy, then it will bankrupt the government.

[hopeful]

all above are details, to be tuned a bit.

for example, HDB can follow private developers marketing campaign.
sell block by block. Differentiate prices by facing and floor.

What is public housing anyway? If it is cheap, public housing. If expensive, private housing. That's the basic definition.

Always ensure a supply of finished blocks available. Assured the kan-ceong spiders that supply is aplenty. Managed public perception, a skill which I think Singapore government is sore lacking.
How to stop a bank run? For example, look at the film "empire of silver". They send stones to the bank, but the public perceived it as silver, and thus the bank was saved.

[kane]

Getty goh 's article is another fence sitter no value add article. Doesn't help prospective buyers whether they should buy now or buy later.

[fclim]

Getty goh 's article is another fence sitter no value add article. Doesn't help prospective buyers whether they should buy now or buy later.

I thought she said she is a perenial pessimist? So, it should be not to buy now.

My own take is that if for own stay, find a condo that you really like (location, views, layout etc).

1. Work out your affordability e.g 30% to 35% debt servicing ratio based on current income (not future income) and interest rate of 4% or 5%, not current interest rate.
2. Keep sufficient cash or CPF to maintain the monthly instalments for at least a year. This is to tide you over in case you lose your job and can find some time to sell off your house rather than going through a fire sale.

Enjoy that dream home because it is not easy to find. If it is a BUC, take opportunity in the next 2 to 3 years whilst the condo is under construction to build up your savings.

For investment, my own believe is to wait.

[radha08]

Getty goh 's article is another fence sitter no value add article. Doesn't help prospective buyers whether they should buy now or buy later.

all these clowns like to tcss...thats my opinion...