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Hot on the heels of my last blog post on property prices in Singapore and whether more cooling measures are on the way, I came across an article in TODAY which reported that HDB slammed PropertyGuru for inaccurately reporting that it is more affordable to buy a private property than a resale HDB flat.
I am not really interested in their squabbles since it has no bearing on my life.
However, I am interested in the last three paragraphs of the article, especially the last two which should put to rest any doubt about the government's intention of driving down the prices of residential property in Singapore.
"One cannot deny the fact that in the last five years, income has not increased at the same rate as property prices," he (PropNex Realty chief executive Mohamed Ismail) said. "However, all property prices are subject to cycles and a correction is likely when the affordability ratio widens."
The HDB felt the rise in HDB resale and private property prices in recent years "is not sustainable".
"That is why the Government has been intervening with both supply and demand measures, in order to correct the imbalance," said the HDB. "The market has moderated considerably."
With all newly-wed first-timers "largely assured" of access to a new flat, the HDB said it would focus on helping second-timers this year. "As we assist second-timers in getting a new HDB flat, the impact will be felt in the HDB resale market," added the HDB.
"Meanwhile, URA (Urban Redevelopment Authority) will continue to push out land supply for new private property development, to match the demand. The affordability of housing in Singapore should further improve in the months ahead."
Source: TODAY, 24 March 2012.
PropertyGuru report misleading: HDB.
Related post:
More cooling measures on the way?
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Weekend Comment Mar 23: Flight to REITs as volatility returns
Friday, 23 March 2012
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29 comments:
Hi Ak71,
The last sentence deserves a doubt from the general public. How exactly affordable is the affordability of housing? To a rich person, a HDB is nothing more than a cheap concrete toy house. But for a poor person earning $1k per month, to say affordability of housing is a far stretch, despite the spotlight shiny head's plea. :)
Hi INVS 2.0,
For sure, everything is relative. However, one thing is for sure. The government is determined to see lower housing prices in time to come. :)
Housing is affordable when compared to HK, Tokyo although it is definitely less affordable than our parent's time.
I am happy that the govt is cooling it down although I'll be happier when they cooled it when I bought my first property - a resale HDB.
For all those who complains that resale are not affordable are people who want to buy in hot areas just as TPY, AMK, Tampines. That can only mean Govt is not developing the country uniformly across. Places like Jurong West and Woodlands continue to be much cheaper so if those who cannot afford should consider these areas.
Hi Ray,
I like CCK. Less crowded, lots of greenery and lower cost of living. Flats are also less expensive although prices have been heading north in the last couple of years.
Far East Organisation's Tennery above Junction 10 set a new high for 99 years condo prices here though. $1,400+ psf! Now, they have Hillsta which is asking for $1,100 psf! Wherever Far East goes, prices go up. Grrrr...
You are right to say we buy what we can afford to. We might want something but if we cannot afford it, look elsewhere. :)
Hi Ak71,
I like Far East for its transparency business model that allows viewers to take pictures of its concept homes at their showrooms. This is after a minor brawl between me and a security guard who forcibly confiscated my phone for taking a photo of a concept room. :(
...continued
in other developer's showroom. Hint: the developer who is currently advertising one of its condos on the half-height MRT platform doors.
Hi AK,
I beg to differ - if you read the exact words that the HDB used, it makes absolutely no mention that it wants property prices to go down - "the rise in HDB resale and private property prices in recent years is not sustainable. That is why the Government has been intervening with both supply and demand measures, in order to correct the imbalance. The market has moderated considerably."
http://sg.news.yahoo.com/propertyguru-report-is-based-on-incomplete-data--hdb.html
The government merely wants to reduce the rate of increase of resale/pte prop. It has chosen its words smartly so that those of us who are hoping for lower prices may "read between the lines", but in actuality, the government has no intention to bring prices down.
If it does happen, it will be due to an external shock such as lower demand (immigration/household creation), increase in mortgage interest rates or economic crisis.
Hi INVS 2.0,
Er.. whether a developer allows me to take photos of its showflats doesn't really matter to me. I am more concerned about the selling price. ;p
Which is the other developer you are referring to? I don't take the MRT. So, please oblige. :)
Hi Serendib,
"Meanwhile, URA (Urban Redevelopment Authority) will continue to push out land supply for new private property development, to match the demand. The affordability of housing in Singapore should further improve in the months ahead."
Don't have to read in between the lines. Just read the line. ;)
I believe that making housing more affordable is one of the important post election tasks the PAP government has taken upon itself. Losing Aljunied GRC was a wake up call.
An external shock might send property prices down faster within a shorter time but the cooling measures and increased land supply for residential projects would most likely see prices drift lower in time to come.
Hi Serendib,
I also remember reading sometime last year of how HDB actually reduced the selling prices of new flats to make them more affordable.
I did a quick search online:
19 June 2011: Last week’s BTO launch became a headline not just for its size but also the reduced prices of the flats released. The indicative selling price (excluding grants) for five-room flats started from S$274,000 in last week’s launch, compared to the S$335,000 starting price in May’s launch.
This is an example of how the government has set lower prices for public housing.
With regards to private housing, the government has simply put in measures which would see prices weaken in time. It has taken the necessary steps and market forces would do the rest. ;)
Hi Ak71,
Err, don't want to get sued by the developer but if you decide to take MRT one day, maybe due to rising fuel prices, then you will spot the clue. Haha. :)
Btw, I found this article that argues about the HDB's theory of affordability. You might want to read it.
http://politicalwritings.wordpress.com/2012/03/25/hdb-doesnt-get-it/
Actually BTO continue to be affordable enough. The only complaints we have (valid ones anyway) are that BTOs are not enough because too much demand, too little supply. So the young couples flood the resale sector and have to fight with the large influx of PRs who are eyeing the same resale flats.
Now I see the releasing of BTO becoming faster and faster and I'm sure resale will be impacted by that. I don't think valuation will decrease but COV will not be as high as 2 years ago.
I believe BTO prices will remain largely the same after factoring in inflation.
all being said, if HDB are indeed affordable, then why subsidies like 1st timers, near parents etc are needed? a case of raising the prices high, then give you a "discount".
Hi INVS 2.0,
The thing about driving is that one gets "addicted". I doubt very much that I would stop driving even if petrol were $4 a litre. ;p
Yikes! I hope you did not provide a link that is likely to get my blog gazetted. ;p
Hi Ray,
I think BTO flats are priced more fairly now. Mah Bow Tan was one greedy fella who was out of touch with the common people. I never liked him.
Having said this, I believe that the PM had to take some responsibility too since he is the leader of the cabinet. Anyway, bygones. Khaw Boon Wan is doing a better job now.
I remember a long time ago HDB flats were sold at valuation and sometimes even below valuation. Could we see days like those again? With ample housing supply, both public and private, coming in the next 3 years, it could happen.
Hi SnOOpy168,
I actually like the idea. We help people who need help. Those who do not need subsidies pay higher prices.
Redistribution of wealth. :)
Saw this?
A movie: The Iron Lady.
We can't have everyone paying the prices that the poorest buyers pay.
The following is actually old news but I think it is good to remind ourselves of the numbers and the reality as seen through the eyes of the Minister for National Development:
"Sharp property prices increases cannot go on forever," Minister Khaw wrote.
Calling it his "duty" to alert property buyers, he listed several reasons why things can go very wrong suddenly.
He shared that 35,000 private condominiums and landed properties have already been sold, though still in construction and there are an additional 45,000 private units waiting to be built and sold.
He also pointed out that due to a strong demand from developers and property buyers, the Urban Redevelopment Authority announced a Government Land Sale Programme where a further 8,000 private residential units will be introduced into the market. In total, there will be some 53,000 private residential units on sale over the next couple of years.
In response to this, netizen Melvin Lee commented that "53,000 private apartments in the pipeline looking to rent out would not be easy. Most expatriates are finding Singapore to be expensive to work here."
He understands that some 16 per cent of private properties are bought by foreigners and a significant amount of private units bought by Singaporeans are rented to foreigners who are here in Singapore to live or work.
He explained that when a drop in demand happens at a time when there is a substantial increase in supply, the impact of such a scenario is serious.
Real estate analyst from PropertyGuru, Tejaswi Chunduri told Yahoo! Singapore that she agrees with Minister Khaw's views.
"With such abundance in the supply of residential units, there are chances of a potential downturn waiting to happen in the coming years."
10 Jun 2011, YahooSG News.
Well AK, I'll be happy to be proven wrong on that point :-) as for the reduction in BTO prices, here's an interesting analysis of it:
http://www.iproperty.com.sg/news/4219/Comparing-the-September-2011-BTO-&-SBF-HDB-Flat-Pricing
AK
redistribution of wealth is already happening all the time.
This thingy called tax. the higher your income, the higher you pay. subsidies, distorted the real cost of hdb ownership. seriously, most complains I've heard are those who wanted prime or near prime areas. usually, beyond
their abilities as a salaryman & already with a family burdens.
living within means, somehow, got lost as a virtue these days.
Hi Serendib,
A large number of Singaporeans would be happier with lower housing prices. After all, a vast majority are not wealthy enough to invest in properties and to benefit from a booming property market in terms of realised capital gains or rental income.
As for being wrong or right, I don't think there is a wrong or right here. Nothing is set in stone. It is just how we read the government's signals so far. :)
Hi SnOOpy168,
Taxing the rich more and utilising some of that money to help the underprivileged. I rather like that idea.
Giving subsidies to the underprivileged? I like that idea too.
The more abled should be more generous and shoulder greater responsibilities. This is for the greater good of society.
We don't want resentment to build up. Remember the Bastille? ;p
We will always want the best things for ourselves. It is natural. Being able to control our emotions and be more practical in our choices is, however, not as natural. Thankfully, I do not have any urge to keep up appearances. ;p
AK
A property investment guru once share this with me: Life is a balance of Wealth, Health, Family, Self and Society. By giving, you will gain more. :)
Hi meesiam,
I agree with you totally. A contented and happy people will create more wealth for the country. It is in the interest of the rich to keep the less privileged happy. ;)
Singapore property investors are now moving across the Causeway in search for new opportunities.
This has caused residential property prices in Johor's Iskandar region to climb almost four fold since they were launched some 5 years ago.
A bungalow in Horizon Hills which cost about RM1 million (S$400,000) about 4 years ago now costs about RM5 million.
Meanwhile, land plots for bungalow developments in Iskandar are going for around RM90 and RM100 per square foot, up from around RM20 psf about 5 years ago.
With more attractions coming up in the area, experts say demand for properties there are going to jump higher.
Singaporean Olivia Plogmann and her German husband have made a bungalow in Ledang Heights in Johor's Iskandar region their home since July 2012.
Her German husband now commutes to Singapore daily for work and she sends her two children to school at the German European School in Bukit Timah on weekdays.
http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1242069/1/.html
Singapore will make available for sale sufficient land to build about 14,000 private homes in the first half of next year, the government said on Friday.
The Ministry of National Development (MND) said this as it unveiled the Government Land Sales Programme for the first half of 2013 (1H2013).
There will be 12 private residential sites, including five executive condominium (EC) sites, and one site for a mixed commercial and residential development on the Confirmed List.
These sites can yield about 6,900 private residential units, including 3,100 EC units and 33,000 square metre gross floor area (GFA) of commercial space.
MND said most of the private residential sites, including the five EC sites, are located in the suburban areas or in the city fringe where more affordable private housing is expected to be built.
http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1242753/1/.html
Low global interest rates and large capital inflows have spurred asset price accelerations in some Asian countries, especially in real estate markets.
As a result, Mr Menon said residential property prices in Korea, Taiwan, Hong Kong and Singapore have increased by 35 per cent on average since 2009. But nominal wages have risen by only 13 per cent.
An appreciating exchange rate will not be enough to fight inflation brought on by capital inflows, according to Ravi Menon, managing director of the Monetary Authority of Singapore.
Speaking at an investor conference, Mr Menon said central banks should adopt additional measures to ward off asset bubbles. These include tightening access to credit or imposing taxes to discourage speculation.
CNA
“Developers have been trying to offer discounts, but with high land prices, and additional buyers’ stamp duty and higher mortgage rates, they will not be able to absorb it beyond a point,” Mizhuho’s Varathan said. “Supply is a very real thing, so seeing spanking new buildings coming up with no real demand will see some price correction and some pain for developers as well.”
Regulations on land ownership are also deterring City Developments. Buying land in Singapore at current high prices would be “suicidal” given the government’s requirement that new homes must be sold within two years of completion, Chairman Kwek Leng Beng said on Aug. 6.
I agree. Good luck to those greedy developers who made sky high bids in recent GLS. -.-
http://www.theedgesingapore.com/the-daily-edge/business/45463-singapores-home-sales-rebound-to-be-short-lived.html
The longest stretch of property price declines since the global financial crisis may not be enough to pull the brakes on the city’s housing curbs.
“There is some distance to go in achieving a meaningful correction, after the sharp run-up in prices in recent years,” Tharman Shanmugaratnam, Singapore’s finance minister, said in a speech yesterday.
Singapore’s private home prices fell 0.7% in the three months ended September, the fourth quarter-on-quarter drop.
That’s the longest losing streak since 2009, when the government started housing curbs with some of the strictest measures implemented last year, including a cap on debt.
“The government is signaling that the measures will be in place for a while longer,” said Alan Cheong, senior director of real estate research at Savills in Singapore.
Source:
http://www.theedgemarkets.com/my/node/166929
Hong Kong retained its rank as the most expensive housing market among 406 major metropolitan regions in the annual Demographia International Housing Affordability Survey for the seventh year in a row.
The median price of a home in Hong Kong last year was 18.1 times the median annual pretax household income, the survey showed.
While that is a modest improvement in affordability compared with 19 times in the previous year, US-based Demographia considers a score of more than 5.1 as "severely unaffordable", according to its website.
Sydney held its title as the second-costliest housing market in the world, with a median multiple of 12.2, according to the Demographia survey.
Canadian city Vancouver was the third-most expensive, while New Zealand's Auckland ranked fourth.
The following areas rounded up the top 10 least affordable housing markets: Californian city San Jose, Melbourne, Hawaii's Honolulu, Los Angeles, San Francisco and Britain's Bournemouth and Dorset.
Singapore got a 4.8 median multiple in the scoring system, which placed it in the "seriously unaffordable" band.
This is a band lower than the highest "severely unaffordable" band, for housing markets that scored 5.1 and more.
Demographia's report said that Singapore's 4.8 median multiple score was an improvement from the 5.1 median multiple in 2013, when Singapore was added to the report.
Source:
http://www.straitstimes.com/world/hong-kongs-housing-market-priciest-in-the-world-for-7th-year-in-a-row-spore-seriously?utm_campaign=Echobox&utm_medium=Social&utm_source=Facebook&xtor=CS1-10#link_time=1485175211
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