Straits Times: Resale HDB for Citizens Only

[Mustank]

Mr Han, I salute you for having the guts to speak out for citizens!!! Steady!!! Respect!!!

 

http://forums.condosingapore.com/showthread.php?t=15547

 

Avoid feast and famine in housing

 

Better to have stable supply of new homes every year than try to predict

property cycle

 

By Han Fook Kwang

 

 

When I bought my first property, I didn't know I would still be living in it

27 years later. I had bought it soon after getting married after a year of

house-hunting.

 

I don't remember it as being an eventful year for property then and I don't

recall being particularly anxious about whether we were buying it at the

right time in the property cycle. We needed a place to call home, we liked

what we found and the price was within our budget.

 

As it turned out, it was not a bad buy. The house has appreciated in value

about 10 times since, which works out to an increase of about 9 per cent

every year compounded over 27 years. I can't think of anything I have bought for owned which has risen as much in value or as rapidly.

 

As an individual, this must count as a good thing and a source of some

satisfaction. In fact, my experience is not untypical of many in my

generation and I would think those who bought around the time I did would

have seen similar appreciation in values, some more, others perhaps less,

depending on location.

 

Singaporeans have generally felt good about how property prices have moved over the years, barring the occasional dips in every economic cycle.

 

Until quite recently, that is.

 

There has been a discernible shift in public attitude towards ever-rising

property prices over the last few years and it is important to understand

why this is taking place and what can be done about it.

 

For a flavour of the negative views being expressed, here is a recent

sampling from the Internet:

 

Low property prices favour citizens as they help everyone have a roof over

their head. High property prices favour only developers and rich people as

they can make super normal profits and collect rent instead of working hard

and creating value.

 

The Australian government takes care of citizens and imposes strict

restrictions on property purchases by foreigners, for example, when they

leave, they have to sell, when they sell, they have to sell only to locals,

etc. Why doesn't the Singapore Government take effective steps and also

contribute to raising property prices?

 

The property owners of today are only raiding the future earnings of the

next generation. How? Well, all these gains in property prices must come

from somewhere. It will come mostly from the next generation. But this will

net the wealthy much more as they own many more and higher-value properties.

 

These online comments are in response to recent news that some executive

condominium units had been sold for more than $1 million. As with many Net

postings, they are often not logically argued and are laced with an extra

dose of negativism. But the sentiments they represent are real and shared by an increasing number of people here.

 

Indeed, rising property prices were an issue at the general election last

year. In response, the Government introduced several measures, mostly

increasing the supply in both the public and private housing markets.

 

Prices, however, have yet to come down.

 

According to the latest data reported last week, private home prices rose by

0.6 per cent in the third quarter, while the Housing Board resale price

index climbed 1.3 per cent.

 

This public sourness over property prices is a relatively recent phenomenon

given the history of rising prices here, which has been generally welcomed

by the public.

 

It shows there is a point beyond which resentment sets in, even if the

majority see the value of their homes going up.

 

They worry whether their children will be able to afford these prices in the

future, and whether they themselves will be able to upgrade.

 

Worse, they perceive it as largely favouring one class of people over

another.

 

It used to be said that property prices cannot rise by too much, otherwise

who would be able to afford them? In other words, prices cannot run too far

ahead of income levels.

 

This link between prices and incomes is, however, broken when the market is

open to foreigners whose salaries have no connection to those of

Singaporeans.

 

When rich Chinese, Indians, Indonesians and Malaysians account for a

significant number of the purchases here, prices can run away from the local

population's ability to pay.

 

The Government's recent measure to make it more expensive for foreigners to buy property through the additional stamp duty was aimed at cooling the

market.

 

But the Government has never made clear if this will be a permanent feature

of its policy on foreign purchases and the extent it will allow them to

influence prices.

 

There is clearly a tension between wanting Singapore to be a global city

attractive to foreigners (which includes how open it is to them buying homes

here), and preserving the link between home prices and Singaporeans' income levels.

 

Getting this balance right is critical to having a successful property

policy which is politically acceptable.

 

How much should the Government protect local buyers from the purchasing

power of foreigners?

 

This is an especially important issue with so much surplus money flowing

round the world after so many rounds of loose monetary policies, with

central banks printing money to stimulate their domestic economies.

 

Should Singapore go the way of Australia, for example, and force foreigners

to sell property back only to citizens?

 

One word of caution though about the Government's ability to get the

property market right. Its track record of trying to match supply to demand

has in fact been patchy.

 

In the early 2000s, it was saddled with a record surplus of 25,000 unsold

HDB flats when it overbuilt and demand collapsed following the Asian

financial crisis in 1997.

 

And the sizzling market of the last two to three years in both the public

and private sectors was clearly the result of it underestimating demand,

which rebounded after the slump of the 2008 financial crisis.

 

Governments, and not just in Singapore, are often behind the curve when

trying to read the market.

 

This being the case, the better approach is to aim for a stable supply of

new homes every year and to not try to predict too closely the ups and downs of the property cycle.

 

There is a steady underlying demand for homes from new households being

formed every year, and even when it falls because of an economic downturn,

the pent-up demand will likely return in subsequent years.

 

Better to aim for a predictable and transparent policy on how many homes to

build so as to avoid a feast-and-famine situation.

 

Fortunately, public housing is available for the large majority of

Singaporeans in a market that is largely protected from foreign funds.

 

These estates today enjoy some of the best facilities - markets, hawker

centres, MRT stations, bus interchanges, sports stadiums and shopping malls, and most have been upgraded to high standards.

 

Because of the convenience of having these facilities nearby, Singaporeans

are prepared to pay relatively high prices in the resale market for these

flats.

 

We take this for granted but it could have turned out completely

differently, with few takers, had they become urban slums.

 

And because the resale market is open to all Singaporeans regardless of

income levels, the prices these flats command reflect their true market

worth.

 

But there is one tweak to this market which may be needed to make sure it

remains affordable to Singaporeans.

 

At present, permanent residents are allowed to buy resale HDB flats - this

door was opened to them in 1989, presumably to make the country more

attractive for PRs.

 

But it might have inadvertently caused prices to move up and, more

critically, weakened the link between local wages and resale prices.

 

The PR numbers are in fact not insignificant - it was reported last year

that they accounted for 20 per cent of all resale transactions in 2010.

 

That's one fifth of all sales, enough to move prices significantly.

 

Making the HDB market - both for new and resale flats - exclusively for

citizens is the best safeguard for the future to ensure that public housing

prices will always remain within reach of the majority of Singaporeans.

[Littleknown]

Hdb prices down - also will have people complain one.

 

This guy's HDB appreciate enough already.

[Yewheng]

He's saying the truth, and also how such housing prices is unsustainable in long run.

 

[thumbsup]

[Sabian]

Properly price up or down only matters to those who have more than 1 property.

 

So what's the percentage of people with >1 property and those with just 1?

[Mkl22]

He is a managing editor at SPH. No wonder he writes so well.

[Sosaria]

Anybody who bought property, say, 20 years or more ago will surely profit many times over by now. In those days, prices were much more reasonable than they are now.

 

But I like what he wrote, and it mirrors my experience too. It's true that I also just bought my first home simply because I needed to have it after getting married! No thinking about whether it was the right time in the property cycle, whether it will appreciate in value or not, etc.

 

He mentioned still staying in his first property for 27 years already, and given that he is some biggie in SPH... I assume that property is not HDB?? Hard to believe a person of his status/rank still staying in HDB, so it must be some kind of landed. *edit* Ok, he did mention it's a "house" in his article.

Edited November 4, 2012 by Sosaria

[Ysc3]

just saw an ad for 5rm 104sq flat in Bukit Batok .... asking $780k !!

 

is it really worth that much ??

[Nullifi3d]

just saw an ad for 5rm 104sq flat in Bukit Batok .... asking $780k !!

 

is it really worth that much ??

 

 

Sell high buy high.

 

Come on when will the property market crash....

[Ysc3]

Sell high buy high.

 

Come on when will the property market crash....

 

when young ppl stop buying just becoz they WANT to own a property.

 

majority of the market are young ppl who can afford 30-35 years loan ... so since everyone wants to "help" push up the market, nothing the govt can do about it also.

[Mockngbrd]

Well written

[Wt_know]

will owner lower the $100k/$200k cov for citizen? don't think so leh ...

owner wants to sell high, buyer wants to buy low

Edited November 4, 2012 by Wt_know

[Ysc3]

will owner lower the $100k/$200k cov for citizen? don't think so leh ...

owner wants to sell high, buyer wants to buy low

 

that's being human.

 

[Lala81]

when young ppl stop buying just becoz they WANT to own a property.

 

majority of the market are young ppl who can afford 30-35 years loan ... so since everyone wants to "help" push up the market, nothing the govt can do about it also.

 

I don't think it's these groups causing the problem. most people my age are buying purely just to stay for marriage purposes.

 

Considering how much $ it takes just for 1 pte property or the restrictions on HDB, who can afford more?

The number of pple who can afford more than 1 property is really little. It's the late 30s to 50 yrs old who are cash rich/"valuation" rich that can really afford to speculate.

[Mcscot]

Return to the time when if you have a HDB flat, you cannot buy private! If you want to buy private property, then one should sell the HDB within 6 months of TOP of final transaction and return it to the market for people who are in need of a place to stay!

[Macrosszero]

The measures being taken to contain the bubble are ineffective.

[Yardo]

Welcome to the world of capitalism. The rich will get richer and the poor will get poorer!

[Darryn]

Return to the time when if you have a HDB flat, you cannot buy private! If you want to buy private property, then one should sell the HDB within 6 months of TOP of final transaction and return it to the market for people who are in need of a place to stay!

 

This would be largely fair.

 

HDB should be truely public housing, with even tighter control over who can buy and at how much.

 

But with a bigger group of private housing.

 

[Duckduck]

Return to the time when if you have a HDB flat, you cannot buy private! If you want to buy private property, then one should sell the HDB within 6 months of TOP of final transaction and return it to the market for people who are in need of a place to stay!

 

+100000