Govt Responsible For The Rise In Property Prices?

[Phantom 1]

Should Ah Beng cash out his CPF capital appreciation to pay off the $2 credit card debt?

He should, but can he?

Or should Ah Beng sell off his masterbedroom at the land sales auction to settle the credit card debt?

And realize that prices have gone up so much that he buys a new place at the same price or more?

Ah Beng will realize he cannot stop working just to pay off the new loan... and realize that at the age of 55 that he will have most likely a fully paid house and not much CPF..

[TYM 0]

Ah Beng earns $100 a month, of which he contributes $20 to a reserve fund called CPF and takes home $80.

He spends $82 for that month, but his CPF invested in a unit trust by the name of GIC appreciated $5 for the same period.

Did he spend more then he earned?

Did his CPF grow?

Should Ah Beng cash out his CPF capital appreciation to pay off the $2 credit card debt? Or should Ah Beng sell off his masterbedroom at the land sales auction to settle the credit card debt?

Ok, so my maths is really bad

But at the end of the day, is HDB forgetting its role?

What choice do we have? HDB or private housing? And both are getting expensive.

[ARCHer 0]

If you look at it on a macro basis, the 'problem' is that there is a lot of liquidity in the financial markets. The liquidity is finding its way into various markets, such as China, India, Taiwan, Japan etc. Singapore is part of the 'Asian bloc' and will feel some of the spillover inflow of liquidity. The flushed liquidity is causing a surge in asset prices in many Asian economies. Should Singapore do a capital control style policy to prevent the influx of liquidity and stem the rising asset prices? Of course not. Singapore needs to have an open economy (or at least seen to be promoting an open economy). Price control measures on asset prices is likely to have adverse impact on Singapore's economy in the long run.

Edited July 13, 2007 by ARCHer

[mist 0]

I think HDB has forgotten her roles and her Vision and Mission. 18 years ago, my parents can buy a 4-rm HDB flat for $62K, today I must pay almost $300 for my own 4-rm flat (but of much smaller size). With the combined income still set at $8k (unless we take bank loans, which is another set of problems), I am beginning to wonder how much longer can the lower/middle inccome earners "afford" to buy HDB flats, no thanks to its ever-increasing prices. Recent newpaper articles already reported young couples planning to get married and set up homes may have to hold back plans due to the property prices, HDB included.

Inflation ma.. last time meepok cost only a few cents.. now its $3.5!

Ok, so my maths is really bad

But at the end of the day, is HDB forgetting its role?

What choice do we have? HDB or private housing? And both are getting expensive.

i think the mad rush in home prices are still very much concentrated in the condos and higher end markets. For HDB, although its gradually following the uptrend, it still havent spiralled beyond control. Those reports on paying 700k for a hdb are only few exceptional cases and shouldnt be taken to reflect the entire situation. and HDB on the uptrend is good ma.. the prices are depressed for so long.. its time to move.

If you look at it on a macro basis, the 'problem' is that there is a lot of liquidity in the financial markets. The liquidity is finding its way into various markets, such as China, India, Taiwan, Japan etc. Singapore is part of the 'Asian bloc' and will feel some of the spillover inflow of liquidity. The flushed liquidity is causing a surge in asset prices in many Asian economies. Should Singapore do a capital control style policy to prevent the influx of liquidity and stem the rising asset prices? Of course not. Singapore needs to have an open economy (or at least seen to be promoting an open economy). Price control measures on asset prices is likely to have adverse impact on Singapore's economy in the long run.

yar man! no price control measures! too extreme liao..

actually i'm worried what will happen when this group of foreign funds leave. And they are probably going to leave once they feel prices have gone up way too high and its not worth investing anymore. Hope the effect wont be too drastic at that time

[mist 0]

Strategically planned? To achieve what purpose?

The distortion caused to the markets affects both the foreign talents and the locals.

Foreigners are priced out of the rental markets, locals are priced out of buying their dream homes, only a few minority property owners benefit from this crunch.

Think govt also realised that this artificial shortage is no good for economy, that is why rush to release more land parcels, at the same time trying to talk down the price spikes. Problem is it takes time to put supply into the market, and short term shortage can get worse. Foreign talents and businesses will pack up and go home, while local populace will get even more disgruntled.

Multi-million $ cabinet did not planned properly, where is the helicopter vision?

yar thats the problem.. supply always lags demand.. but we can criticise now because we have the benefit of hindsight. we can look back and say govt should have done this done that etc etc.

who would at that time have thought there is a sudden huge influx of funds and that the property sector would pick up so rapidly. still remember in 2002, LTA wanted to build a hq in buonavista, and their plan was to occupy less then half, the rest rent out. there was public outcry and one of the reasons was it would depress the market further by introducing a huge supply of office space. now on hindsight, maybe the public outcry people oso not that smart after all. if LTA had not shelved the project and continued to build, maybe the place would have been ready in 2005/06, and help alleviate a little of the current situation.

[heynsl 1]

oh yes....

when the foreign fund leaves singapore...

there will surely be more "middle" fingers pointing at the gov and many more ppl hogging the condo rooftop to jump...

[icer 0]

Too bad.

People are still buying!!!

oh yes....

when the foreign fund leaves singapore...

there will surely be more "middle" fingers pointing at the gov and many more ppl hogging the condo rooftop to jump...

[CTN 0]

yar thats the problem.. supply always lags demand.. but we can criticise now because we have the benefit of hindsight. we can look back and say govt should have done this done that etc etc.

who would at that time have thought there is a sudden huge influx of funds and that the property sector would pick up so rapidly. still remember in 2002, LTA wanted to build a hq in buonavista, and their plan was to occupy less then half, the rest rent out. there was public outcry and one of the reasons was it would depress the market further by introducing a huge supply of office space. now on hindsight, maybe the public outcry people oso not that smart after all. if LTA had not shelved the project and continued to build, maybe the place would have been ready in 2005/06, and help alleviate a little of the current situation.

This is not criticism with the benefit of hindsight. Basic economics tell you that if you curb supply (freezing land sales and development) together with increased demand (opening our doors to foreign talents), it will lead to price spirals. This is a created artificial shortage.

Yes, the correct decision in 2002 would have been for LTA to proceed with building a new HQ, so another unintended mistake was made.

Our ministers are the most highly paid on this planet, surely it is not unreasonable to expect some foresight in their planning? After all, they have promised to deliver progress and prosperity to our nation.

[GnM 0]

This is not criticism with the benefit of hindsight. Basic economics tell you that if you curb supply (freezing land sales and development) together with increased demand (opening our doors to foreign talents), it will lead to price spirals. This is a created artificial shortage.

Yes, the correct decision in 2002 would have been for LTA to proceed with building a new HQ, so another unintended mistake was made.

Our ministers are the most highly paid on this planet, surely it is not unreasonable to expect some foresight in their planning? After all, they have promised to deliver progress and prosperity to our nation.

prosperity to who?

To the people on top ONLY or to the country as a whole?

I have not seen any increments to my salary in years!

So much talk about the economy doing better, yet the salary is the same even when changing jobs.

If there is any progress, I am definitely not seeing any from the ground where I stand.

[raincole 0]

I can only see my pockets getting lighter and lighter and my back getting heavier.

[Spikey 0]

No one owes me a living. If my pay / salary has been stagnant over the last few years, I don't expect someone to give me a handout. Singapore is not a welfare state. We have a system built on meritocracy...u r paid what u deserve.

In a similar vein, if you have the balls to put millions into the property market knowing full well that another SARS / financial crisis / oil shock can happen anytime and make you a bankrupt, u should be rewarded for the risk that you are taking - high risk = high payoff.

[mist 0]

prosperity to who?

To the people on top ONLY or to the country as a whole?

I have not seen any increments to my salary in years!

So much talk about the economy doing better, yet the salary is the same even when changing jobs.

If there is any progress, I am definitely not seeing any from the ground where I stand.

hmm have u thought about changing jobs leh? maybe your company stingy.. hee.

Edited July 16, 2007 by mist

[mist 0]

This is not criticism with the benefit of hindsight.

Is not meh? we are looking back and we are criticising mah. why dont we look forward and say what should be done now.

Basic economics tell you that if you curb supply (freezing land sales and development) together with increased demand (opening our doors to foreign talents), it will lead to price spirals. This is a created artificial shortage. Yes, the correct decision in 2002 would have been for LTA to proceed with building a new HQ, so another unintended mistake was made.

every1 knows basic supply and demand economics. its just the impact/extent of the supply/demand which is hard to predict. u go see property consultants' past year's projections on 2007 rental and prices, they also got it wrong, all projections not as bullish as the actual situation.

Our ministers are the most highly paid on this planet, surely it is not unreasonable to expect some foresight in their planning? After all, they have promised to deliver progress and prosperity to our nation.

yar! i agree! super highly paid man. foresight huh. lets hope the IRs and F1 is good foresight:P

[CTN 0]

Is not meh? we are looking back and we are criticising mah. why dont we look forward and say what should be done now.

every1 knows basic supply and demand economics. its just the impact/extent of the supply/demand which is hard to predict. u go see property consultants' past year's projections on 2007 rental and prices, they also got it wrong, all projections not as bullish as the actual situation.

yar! i agree! super highly paid man. foresight huh. lets hope the IRs and F1 is good foresight:P

In the short term, prices and rental will keep rising due to the supply/demand mismatch. This is despite the slew of measures introduced by govt like new land sales, publishing more details new & sub-sales data, increasing development charge, and probably some more in the pipeline.

In the mid term, when the new supplies hit the market, prices will stabilise if the economy continues to grow healthily. However, if any economic shock comes into the picture(eg, drastic China slowdown or US recession, major terrorist attacks,...), takeup rate will be low, prices could even fall below 2004/05 levels. This scenario looks very unlikely at the moment though.

No point talking about the long term. As Keynes put it, in the long run, we are all dead.

If it was up to me, I will advocate steady supplies to be added in a transparent manner (in the mold of Friedman monetarism) so that markets can anticipate and plan their activities accordingly. Constantly build all sorts of dwellings from 2/3 rooms flats to 4/5/exec flats to ECs/pte apts,/landed, fine-tuning only according to prevailing economic conditions and demand.

Micro-manage will only exacerbate the boom/bust sequences, as has been the track record of our national planners. From 20,000+ empty HDB flats to the current shortage of mass market pte apartments, and the mass release of land that looks almost desperate.

My take is that the rise will continue for the next 6-18 months, after which it should stabilise or even fall, depending on how things pan out. For those who need a place urgently,getting married, baby impending, newly landed FTs, just have to bite the bullet and pay the current market prices. For those who are not in a hurry, wait and a better deal may come along.