We would remember a recent newspaper headline which announced that the government was looking at how to reduce BTO flats' prices by 30%. Wah! 30%?!What would happen to all the people who bought their BTO flats recently? Should potential flat buyers wait to buy cheaper flats in future? Are we going to see public housing prices crashing?
I just read Minister Khaw's blog on the matter and he said:
"...if we offer such a low-cost housing option, it must come with restrictions to differentiate it from the existing BTO flats...
" Obviously, if we offer such an option, these restrictions of a longer minimum occupation period, or shorter lease or no resale in the open market will only apply to the new buyers, and will not apply to existing flat owners..."
I personally feel that a tier of meaningfully less expensive public housing is a good idea. People would have a choice of whether to buy a cheaper flat which they could not sell in the open market for a profit or a more expensive flat which they could possibly make money from in future.
The motivation for having less expensive public housing made available should be to meet the housing needs of certain groups of Singaporeans. I agree that these flats should not become money making tools for their owners.
Read Minister Khaw's blog:
Sleepless over possible HDB price reduction.
Devil is in the detail. I will wait for further announcement.
ReplyDeleteHi AK71,
ReplyDeleteThis is the most Hilarious and Epic joke of the year.
Everything is based on Demand & Supply R/S and for that matters, cooling measures are imperative to mamage SG Expansionary fiscal policies.
Currently, COE prices too take a plunged as no one is purchasing due to new mandatory policies being rolled out.
Wonder if pragmatic $1.00 COE history ever happen again :)
Wonder if cyclical trend (Recession) kicks in for me to headstart a REIT portfolio like yours :)
Warmest Regards,
Ken
Hi Ken,
ReplyDeleteI don't know enough to comment on MAS' policies. However, based on the forces of demand and supply, housing prices have indeed gone sky high. So, I agree with the Minister that we should address the need for low cost housing for some Singaporeans.
As for COE prices plunging, I believe you are right to suspect that buyers have turned cautious and many have probably postponed or cancelled their purchases. This is a good thing, isn't it? :)
On your last point, I would say that current conditions are still benign for S-REITs. However, some offer better value than others. There will be opportunities to buy into S-REITs on the cheap again. Do we necessarily need a recession to drive prices down? I don't think so.
I think the government will try its best not to let the public housing prces crash... only worry is the external environment.
ReplyDeleteWhat if the interest rate move up back to the norm of 4 - 5% and loan will be much more expensive to service and significantly reduce household cashflow/purchasing power.
GE 2012 has proven that high public housing price has cost the PAP a lot of votes. If they failed to handle this properly... more votes will be lost.
They are walking on a fine line... price drop, they are in trouble.... price increase also in trouble...
Best Case will be to maintain current price and gradually reduce housing price.
Creating another class of property with more restriction but lower price is a big if..... because we do not know how well Singaporean accept these idea.
Personally i have sold my 2nd property and kept only my HDB with small amount less than 15% of valuation.
Hi Yee,
ReplyDeleteThe PAP government is caught between a rock and a hard place, I agree. It is an unfolding drama and there will be more sub plots, I suspect.
You are right about externalities, of course. Although the government wants to engineer a soft landing, if the global economy takes a turn for the worse, things could get really ugly really quickly.
This is also why, like you, I have reduced my exposure to real estate in Singapore although seeing prices going even higher from the time I sold leaves me flabbergasted.
not just those BTO buyers but us who bought in open market, will be affected. Much like the new car cost this little, you can imagine what will the 2nd hand market of that same model will be ?
ReplyDeletedouble edged sword for the gov't. While the minister has clarified, this news and the interest rate increase somewhere, send jitters down our spines.
Hi AK,
ReplyDeleteIt is okay.. we may not always be able to sell at the TOP but at least with a roof over our head and out of the market... or reduce exposure.. we can sleep more soundly at night.
I am not so positive about the external environment. Everyone talking about soft landing in China...
Being now for the past few months, the minimium wages, taxes etc are forcing a lot of small factory out of business. Bigger one are moving out to Vietnam, Cambodia, Indonesia...
Once the interest rate normalized, then we will probably see the property market crash.
Another key factor for my decision to minimize exposure to SG real estate is the pipeline of TOP and BTO come online....
Hi Yee,
ReplyDeleteYes, there will be a flood of completed homes, public and private, in the next few years. How will this affect property prices?
Anyway, we act based on what information we have and what we believe is right. The rest, we can only wait and see. :)
A dream home is so out of reach! I need a 20% percent correction to afford it ;(
ReplyDeleteHi Garfield,
ReplyDeleteI feel that if prices remain where they are for the next few years, it could already be a big help because we could make and save more money in the same period of time.
Of course, if prices were to decline 20%, it would be even more helpful. :)
Housing should be about choice and not our position in society. I missed those day when with $250000 you could have the choice of buying a HDB, condominium or landed property. And my auntie who worked as a cleaner could afford a 4-room HDB flat.
ReplyDeleteHi seefei,
ReplyDeleteWell, cheap housing is never going to come back. We will just have to accept it. :(
We could see cheaper housing by 2015, however, since the current high prices are probably unsustainable. A 20% decline in prices in the more overpriced projects is not unthinkable. ;)
A blatant discrepancy in pricing is happening now between central region and those outside central like ponggol and pasir Ris. Prices at these used to be boon dock areas are selling at psf $1500 which used to be the pricing for district 9-11 areas. I suspect these high prices are supported by the high resale HDB pricing. Once HDB demand moderate and upswing in interest rate, these far flung development will be the worst affected. I hope I am wrong but the writing are on the wall...
ReplyDeleteHi seefei,
ReplyDeleteI suspect that you are right.
Even in Bukit Panjang, we are seeing prices of newly launched 99 years leasehold condominiums selling at $1,400 to $1,500 psf. What is more amazing is that these are mostly shoebox apartments.
I think resistance is building up with Far East recently offering discount for its CCK project called the Hillsta. Even so, prices start from $1,150 psf and that is for the bigger units!
I understand that the cost of building a condominium has gone up but I do not believe that it has gone up that much. I feel that $1,000 psf would be considered more reasonably priced although still not cheap.
Of course, Mr. Market does not care what I feel and is making me look stupid for selling my FH RCR 2 bedder condo at $1,500 psf more than a year ago. :(
Hi AK,
ReplyDeleteDistrict 8, Cityscape is currently ONLY selling at $13XX-$14XX psf for its 2 to 3 bedders. $1500psf is definitely a good price you'd fetched. :D
As for projects like Hillsta or Foresque which are located in ulu ulu Singapore, they try to bang on the 'close to nature' theme and use that to justify the premium pricing. Who should be complaining if buyers believe in fairy tales and buy into their narratives without realising that only big bad wolves live in the woods? LOL~
BTW, I dropped you an email last evening. Got an emailer on NAC2013and hope to get on your opinion on whether it's worth going. Not sure if you got it. :)
Endrene
Hi Endrene,
ReplyDeleteI think I got a fairly good deal in selling too. I have since put a big chunk of the money into the stock market and a RCR hut in the sky which did not cost me anything close to $1,300 psf. As always, I can only hope I did the right thing. ;p
Well, I am not made of money and can only resort to capital recycling. :(
I will check my mailbox after this. :)
Hi Endrene,
ReplyDeleteI didn't get your email but I Googled "NAC2013". Nah, this kind of stuff is not my cup of tea. I am too indolent to want to push myself to be an achiever. ;p
Hi AK,
ReplyDeleteYou paid less than $1300psf for a FH 1-bedder on high floor in RCR? Which district is that? Thought only Geylang has got such good deals! :P
Hey, at least you have capital to recycle! Judging from your track record, you certainly have many more hits than misses.
Nobody can say for sure if all our decisions are sound, except on hindsight. Just make sure that when we part with anything, we part in good faith and good things will keep coming back! :D
Cheers,
Endrene
Hi Endrene,
ReplyDeleteI believe those in Geylang are usually no more than 8 storeys high. Too close to the ground. ;p
I got a good deal, I believe, because the developer gave extra discount after another round of cooling measures earlier last year. Buying interest cooled for a couple of months thereafter. It was a small window of opportunity.
You are right, of course, and we can only do what we believe to be right. Right or not, time will tell. ;)