Archive for the ‘Property fever’ Category

Land scarcity

August 24, 2007

At the end of the day, the property price disturbances we have experienced of late merely goes to show how scarce land is in Singapore. When a choice location like Tiong Bahru becomes fully developed, it leaves little room for more housing to be added there. What that means is that even though there may be potentially thousands of resale flats available in Tiong Bahru, in practice, only a handful would be up for sale because for most people, a home is a home rather than an investment vehicle to be encashed in times of good prices. So high property prices merely reflects land scarcity.

What Mr Mah has done is to make the alternative, a home in a far flung corner of Singapore, more enticing and alluring. More land near to areas of frenzied demand have also been set aside for flats. I think these are probably the best the govt can do at the moment. We can only hope that in a few years time when these projects come to fruition, they would go a long way in alleviating the shortfall that is being experienced now.

Hopefully when the time comes, we do not see even greater numbers of foreigners that would again outstrip the available housing.

Bigger say for heartland folk

August 11, 2007

Referring to the interview by Ms Lynn Lee (ST, 10 Aug 2007), Minister of State Grace Fu explained why the government cannot just build 20,000 new flats for 20,000 new couples because there would be old folks who passed away and whose flat would then have no takers and hence no resale value. But one parent could have passed away while the other lives on and have no wish to sell the flat. Even if both parents pass on, they may have unmarried children living in the same flat who also may not wish to sell the flat. The best way to see if death leads to a new flat becoming available would be to see if there are other occupants in the same flat. Such information should be readily available and can be used to improve housing demand forecast.

In any case, the number of couples tying the knot and the number of deaths each year have not been beyond our expectations but the number of immigrants have spiked suddenly by about 20,000 each year for the past two years. Was Miss Fu’s good ministry given ample time to build new houses for these new immigrants before they actually came on board?

Miss Fu also mentioned that places like Toa Payoh and Tiong Bahru are quite full and new couples have to settle for new places like Sengkang, Punggol or Sembawang. However, there are many bungalows in the Holland – Bukit Timah district that do not maximise the use of these land areas. Each bungalow occupies a plot of land that can be turned into a point block HDB that would in turn house 75 families instead of just one. The sudden unlocking of value from these land plots would be tremendous. 75 families paying $300,000 each easily beats one bungalow paying $10 million. If instead of an HDB, we build a condominium, the value unlocked would be even greater. Besides contributing greatly to government coffers, many more families can enjoy homes at convenient locations than can possibly be attained now and ease the shortage of good housing locations.

Miss Fu also mentioned that as Singapore gets revalued by investors, HDB price should go up. But do foreign investors value HDB when they are not even allowed to buy or sell them? Investors only get to value private property because that is what they are allowed to buy and sell. So there is no reason why we should allow investor’s revaluing of private housing influence the price of public housing. As a matter of fact, HDB is the only valuer of new HDBs. Furthermore, HDB instalments are huge burdens for ordinary folks so higher HDB value means greater liability for us.

Miss Fu also said that we cannot short change HDB owners or insist that the values of their homes remain stagnant. But if it were true that people have an overridding wish and concern for their HDB flats to rise in value, shouldn’t we see them eagerly realising this value by selling their appreciated homes in the current market frenzy and moving to cheaper places? Do we see many of such people? Pamphlets promising $750,000 for their flats go straight into the dustbin. What does this show? Most people couldn’t care less about property appreciation. For them, a home is nothing but a home.

So how can we short change people for things they don’t even seem to be bothered with? The only plausible reason I can think of for the overiding concern for HDB price to go up is that HDB would make more money. That is the most logical reason why it is in the government’s interest to keep HDB prices high but not so high as to lose votes.

Finally Miss Fu mentioned that many who bought flats in 1996 are still under water so does that mean we should inch our way back to the levels of 1996? The prices of 1996 have proven to be too high which is why they plummeted subsequently. Should we go back to 1996 without worrying that we might fall right back?

Big hike but still 21% lower than 1996 high

July 28, 2007

It seems standard practice these days to compare property price hikes with those of 1996 as though the latter is the correct price against which to benchmark. But the peak of 1996 was followed by the plunge of 1997. Since the prices of 1996 couldn’t be sustained and suffered a sharp correction thereafter, are they not too high to begin with? What could be our purpose for comparing with the unsustainable prices of 1996? To see how close we are to the trigger point for crashing? To see how far prices can stretch before snapping back?

So perhaps the correct price to benchmark against is not the peak of 1996 but that of 1997 and thereafter. From the benchmark of 1997, we can then ask ourselves how much higher can the price of 2007 sustainably climb up to.

Many property pundits cite the booming property prices around the world as evidence that what we’re experiencing is nothing alarming nor extraordinary. But we only have to look at the United States to see that what comes up must go down. Do we need to go through the up and down cycle like everyone else?

Property prices can be controlled as long as we balance demand and supply. We know our marriage rate, which follows a predictable pattern. We also know how many work permits we issue each year. Surely we would also know how many extra houses are to be built to accommodate any increase in demand due to increase in talent inflow?

You ain’t seen nothing yet

July 8, 2007

Mr Mah said in an interview with Straits Times (29 Jun 2007) that Singapore can comfortably accomodate a population of 6.5 million without any compromises. Over the years, as our population has grown, our flat sizes have correspondingly shrivelled while our neighbour’s flats have gotten nearer and nearer so much so that we now have front row seats for viewing our neighbours’ daily activities. Is this Mr Mah’s so called ‘not compromising on quality of life’? Is that comfortable? Is it really bearable? So what if it is not bearable? What choice do we have except to migrate?

I wonder if he is living in a world of his own when he said that housing prices are rising at a ‘steady’, ‘sustainable’, ‘comfortable’ rate? Doubling of HDB prices in a month is ‘steady’, ‘sustainable’ and comfortable?

Is he trying to hoodwink the general public by saying that HDB prices have risen only 3 to 4 percent recently when that 3 to 4 percent includes a large number of unwanted Jurong West flats that the govt had to split into smaller units to induce buyers? Why doesn’t he show us the 100% price increases in Tiong Bahru for example?

He urges Singaporeans to look forward to the unveiling of his so-called ‘master plan 2008’ with anticipation, not with trepidation. I can only view it with resignation …

Mr Mah is also planning two more regional centres in Jurong and Paya Lebar. While these may go some way to alleviating the crowdedness in the city centre, its effectiveness is rather limited. Take the current Tampines regional centre for example, how many Tampines residents actually work in Tampines? By virtue of the fact that Tampines is only a regional centre, it cannot possibly offer the wide array of job opportunities found on the rest of the island. A biomedical aspirant would probably end up travelling from Tampines to Tuas everyday. A petrochemical worker would have to make the daily trip from Tampines to Jurong island. A financial professional would still have to travel to the CDB for that’s where the best financial opportunities are. In other words, wherever you site your regional centre, as long as it is not centrally located, it would not have a significant impact towards reducing travelling and traffic congestion.

The problem which our scholarly planners fail to see is that any family would comprise members with different interests that requires them to commute to different parts of the island for their daily pursuance of those interests. Eldest son might be a doctor at SGH and has to travel south. Second son may be a pilot and needs to travel east while third son might be an engineer working in Jurong and so travels west. Given such a situation, which is not uncommon, the best planning would be to house the masses right in the centre of the island so that whichever direction they choose to travel to, commuting time and distance will not substantially eat into their waking hours.

But what have we with our current situation? Central locations like Holland and Bukit Timah are too lightly populated with bungalows while the masses are conveniently pushed away to the far flung corners of the island. So much for planning …

Vivocity has been earmarked as the new rest and relaxation hub but it is located in the south whereas most of our new housing estates are located in the north; Bukit Panjang – Northwest, Woodlands – North, Seng Kang and Punggol – Northeast … so much for planning …

By locating recreation amenities on one end of the island and homes on the other, Minister Mah is forcing us to make the daily crisscross all over the island, compounding travelling woes and traffic congestion.

The report ends with Mr Mah declaring job satisfaction with seeing his plans materialise. I wonder how Mr Mah can derive job satisfaction when his customers, the ordinary folks of Singapore are highly dissatisfied? How can a govt that doesn’t bother about our satisfaction lead us to improve our customer service standards?

Land-use intensity: No sudden changes

July 7, 2007

According to this Straits Times report on the 6th July 2007, Mah Bow Tan said that there will be no massive change in land development intensity as there is available land to meet needs for the next 10 to 15 years.

I can understand Mr Mah’s rationale. Why would he care to raise development intensity in prime areas like Holland Road and Bukit Timah when he has plenty of land around the periphery of our island like Jurong West, Bukit Panjang, Woodlands and Punggol? Why should the masses be housed in areas like Bukit Timah, which is largely flat and under utilised when they can be housed as far as possible from the city centre?

Property? I have a bigger worry

July 7, 2007

SM Goh was reported today to have said that he is not losing sleep over the current property price fever, echoing the sentiments of Mah Bow Tan.

This should not come as a surprise to Singaporeans because at the end of the day, the problem is not theirs but those of ordinary Singaporeans. They bought their homes decades ago when prices were much lower and they earn more than enough millions to cope with any price increases.

He also said that prices for HDB heartlanders are still affordable. That is true only for flats around the periphery of our island, like Jurong West, Bukit Panjang, Woodlands, Sembawang, Punggol and Sengkang. Seems like the HDB heartland is slowly moving away from the heart of singapore. The original HDB heartlands like Toa Payoh, Bishan, Clementi, Tiong Bahru are no longer so affordable anymore. Perhaps the day will come when even the periphery of Singapore becomes not too affordable and we might be forced to live in Pulau Ubin …

His major concern happens to be talent. Why would talent be so stupid as to stay in an expensive place like Singapore when he or she can go to less crowded and hence more affordable cities?

Private home prices up 7.9%

July 3, 2007

Headline news in today’s straits times “Private home prices up 7.9% across the board”.

Two points about this report deserves highlighting.

1. Having reported significant property price jumps, ST then remarks “Yet despite the positive numbers, private home prices are still about 18.8 % below the 1996 peak”.

This is equivalent to someone saying that the SARs crisis of 2003 isn’t as serious as that of Sept 11 or the 1997 Asian financial crisis. Just because SARs didn’t cause as much damage as Sept 11 means we need not worry about SARS? In the same token, just because the current property peak isn’t as high as the previous peak of 1996 means we have no concern for it?

To say that current property prices is still below those of 1996 is to implicitly imply that the prices of 1996 are the right level against which to compare. But the fact that property prices of 1996 could not be sustained and ended up nosediving suggests that perhaps those were not the right prices at that time. They were too high then as much as they are too high now.

2. The graph shows HDB resale price index have climbed by only 2.85%. what purpose does it serve showing us an aggregated HDB price index that comprises many flats in Jurong West that nobody wants, so much so that govt has to split them into smaller units just to induce buying? We all know that HDB launches in mature estates are easily 5 times over subscribed. Surely HDB price increases in those estates cannot be just 2.85%?