Monday, March 16, 2009

F1 to F9......where are we headed?!


This video interview of Leong Sze Hian highlights a number of problems with healthcare, housing and transport faced by ordinary Singaporeans. If you have been reading my blog for the past few years, these problems have been highlighted here many times with the hope that the PAP govt will do something to improve the lives of ordinary Singaporeans. However, little has been done and it is not where we have gone but where we continue to head that worries me most. Why isn't the PAP govt motivated to solves these problems? Why is it so hard for the PAP govt to solve these problems? It is not possible for the PAP govt to be unaware of these problems ...then why have things been allowed to deteriorated so badly in the past 10 years...? Lets go through the root cause of each of these problems and I will show you a consistent pattern behavior and thought of on the part of this govt.

Housing. HDB continues to insist that housing is affordable even as more people default on their HDB loans. Among the solutions being explored to make housing "more affordable" is to put Singaporeans in no-frills housing or downgrade to smaller flats. If HDB flats are truly affordable, how did we get here? Rightfully, the rise of HDB prices has to be kept in line with the household income and the sustainability of this income but this is hardly the case as the rise in HDB flat prices have outstripped the rise of median income. HDB claims that it merely priced its new flats relative to the resale market. But how did the price of flats escalate to such levels? Is market price simply the reflection of demand and supply? There were 2 things that resulted in the escalation of housing prices - the 1st is the liberalisation of CPF for housing[research paper : Link] which caused a large jump in housing prices sometimes termed euphemistically by the PAP govt as 'asset enhancement'. The 2nd is the lengthening loan tenure and expansion of household debt to keep the property price rising - HDB flats used to be paid up in 7-8 years now they take 30 years to pay up. The end result is insufficient funds for retirement and a high household debts that make Singaporean households vulnerable during recession. But who are the prime beneficiaries of high housing prices? Housing loans are wildly profitable for banks, our govt land sales to HDB rake in billions which go into Temasek Holdings for investments and big developers. Our housing market is hardly healthy due to the high levels of debt incurred by Singaporeans for a roof over their heads. During the boom times, people who need a home have to take on huge debts as prices go up and when recession comes, defaults mount and a large number of people get into trouble with the bank.....and Singaporeans have to go through these gyrations 3 times in the past 10 years.


Healthcare. If you're asked to design a healthcare system for Singapore, would you learn from the number 1 healthcare system or the number 20 healthcare system in the world? Before I answer that question lets take a look at the rising cost of healthcare in Singapore. We have been told that cost of healthcare will rise and keep on rising fast so we have to purchase insurance to cover ourselves and set aside sufficient funds should we get sick. Have you asked why healthcare costs have gone from highly affordable to barely affordable -read about the case of the cancer patient needing to raise hundreds of thousands[link] because her insurance only covers $30K of her $400K treatment. Some people who have not had relatives or close ones who got sick still thinks that serious illness can be treated for around $50K- that is just not the case. You sometimes wonder what happens to people who cannot afford to pay up - the hospital will hire debt collectors to chase after these people for payment - some have to take up bank loans or sell their homes to pay for treatment.

Singapore aims to be a medical hub and the goal is to attract 1 million medical tourists by 2012 [link][Link]. This ambition to be a medical hub for rich arabs and millionaire Indonesians have strained our resource tremendously because it caused private hospitals to expand to serve these medical tourists and the pay packets of specialists and surgeons to escalate. There is a case being fought today involving healthcare provider Parkway and one its ex-employees whose job was to market medical services in middle-east and Europe [Link to be provided] - he is suing for $2.2M in commissions for bring patients to Singapore. When it comes to medical services, Singaporeans now have to compete with pocket books of millionaires from around the world. The govt remedy to all this is to make us buy insurance. However, if you listened to Leong Sze Hian's interview carefully, an insurance based approach leaves out hundreds thousands of Singaporeans who cannot be covered or cannot afford the insurance. To find out where we will be in a few years we just have to look at the US which has a similar system. Such a system is prone to cost spirals in which medical costs go up causing insurance premiums to go up. Such a system has also left millions Americans uninsured and the cost of healthcare per American has escalated to be among the highest in the world as the profits for insurance companies and hospitals went up. What we are beginning to adopt is a healthcare system that promises to generate higher and higher profits for various businesses and passes the cost to Singaporeans who become sick.

Now to the question...why did the PAP copy the healthcare system from a country that is ranked 20th (USA) instead of the country that is ranked No. 1 (France)? ....The answer is simple - the French system results in a healthcare cost that is among the lowest per person in the society in developed countries but generate little or no profits for insurance companies, hospitals (which are mostly govt owned).....the choice is obvious for the PAP....

Public Transport. Our main public transport companies (SMRT, SBS) are public listed companies with shareholders who have invested in these companies for profits. If I'm a SMRT shareholder, I would be concerned if the trains are not packed like sardines every morning and the human beings in the train actually have space to swing their arms. I will demand SMRT lower its costs by reducing its frequency so that the utilisation per train goes up and profit goes up. If I were an SMRT shareholder, for the past 5 years I would be smiling because SMRT pays out good dividends and its profits increases year after year[Link]. Last quarter they reported rising profits apparently the recession that is hurting Singaporeans does not hurt SMRT's profits.

Singapore being an island state means that there is no place to run to when cost of living escalates. Yes, our concerned govt encourages us to put our old parents in Johor so save money and they are considering the use of Medisave for overseas medical treatment because many cannot afford to be treated locally anymore. However, what the PAP will not do is change the system to lessen the financial burden on Singaporeans because our debts translate to profits for many business entities and our govt with its complex interests in GLCs and its pro-business ideology simply cannot work solely for the benefit ordinary Singaporeans. So their message to Singaporeans is work harder, work longer and never retire.

43 comments:

Aloysius said...

Hi,

Before I answer that question lets take a look at the rising cost of healthcare in Singapore.

Hmm may I ask if you can provide statistics regarding this? You provided many useful links but not on this.

This ambition to be a medical hub for rich arabs and millionaire Indonesians have strained our resource tremendously because it caused private hospitals to expand to serve these medical tourists and the pay packets of specialists and surgeons to escalate.

It may be reasonable to say, because of external demand for healthcare in Singapore, healthcare costs begin to rise. As a result of higher demand for medical services, specialists and surgeons will see their wages rise. Sounds logical.

But how did you come to a conclusion that wages of doctors constitute a significant proportion of healthcare costs, such that when wages rise, healthcare costs rise correspondingly or even more?

LuckySingaporean said...

Aloysius,

There is a good write up in the online citizen on the rising cost of healthcare in Singapore:

http://theonlinecitizen.com/2007/05
/singapores-healthcare-system-
uniquely-singapore/

Do read it thoroughly.

I do not have the reference on the exactly how much the incomes of specialists and surgeons but there is a great pull from private hospitals serving international patients that offers them very high salaries salaries. Here is a collection of articles:

http://www.geraldtan.com/medaffairs/manpower-doctors-
public_sector_doctors_leaving.html

If you look at a hospital bill for a surgery, the surgeons' fee is the highest component. If you stay in the hospital for 1 week, it is the specialist fee that is the highest component. The ward charges are still manageable - but when they do a procedure on you, the cost escalates.

Here are some other stories from my blog on medical costs:

http://singaporemind.blogspot.com/
2007/11/i-think-you-better-get-
insurance-as.html

Anonymous said...

We even have a minister who was a former surgeon. He even publicly said that you Singaporeans are getting a bargain for the million dollar pay of ministers. He earned even more when he was a surgeon! His nickname on the internet is Bargain Hen.

So you see he is saying he is really talented!!

Anonymous said...

great post pointing the top killers.
it angers me to no end that the pap is so grossly incompetent & overpaid. and greedy just like u pointed out.
but sadly most people do not realise it or just don't care.

Anonymous said...

"Why isn't the PAP govt motivated to solves these problems? Why is it so hard for the PAP govt to solve these problems?"

Simple. Because 66% supported them strongly at every election.

Also about 50% walkovers and 98% seats at every election.

That's why but why like that?

Anonymous said...

Well no surprised here. We all know that Sg govt is pro business coz of Temasek and GIC.

In the ordinary Singaporean's mind: A government is created with the sole purpose to serve capitalists and not ordinary citizens. Majority of Singaporeans aim to be rich, failure to do so they will just commit suicide.

In the rich Singaporean's mind: PAP is the best! The best condos, best schools, best shopping experience, best healthcare, low crime rates. The poor and untalented are just plain dumb and jealous.

So what can the poor and neglected Singaporeans do?

Cheers
Economist with a heart :)

Anonymous said...

Hi Lucky

I am a baby boomer, married with a teenage son.

It saddens me when I read your article cos it is so hard for the ordinary folks to survive comfortably here till their old age.

My niece & her husband signed for a brand-new 4-rm HDB flat at $429,000 last month. She's a 29-yr old grad with an annual income of $67,000+ and does not plan to have more than 1 kid cos she feels that expenses will be v high. When we had our first 5-rm flat in the same location in 1990, it was $99,200 !

Healthcare : my husband had a transplant in mid-90s for leukemia. The bill hit $100,000+ in a short span of 9 months. We were fortunate in that his employer (an MNC) took care of all the medical expenses and paid him full salary for 1 year. We've since been covered by medical and hospitalisation insurance to the brim; for a family of 3, it comes up to $3,000 annually. It IS expensive but I see no other alternative.

Anonymous said...

and Lucky, thank you for writing.

Onlooker said...

From the way that the situations are being handled by the "Elites" F9.
On HDB, the price is speculated by foreign agents who do not care for our country.Even now when the price is bottoming they still thought it is a good speculative device.
Unfortunately with that effect and the "Upgrading" to increase the value of properties here artificially ,had already caused some of the foundation to crumble.
Healthcare,What can I say. The basic of healthcare is to provide the populace a mean to recover from ailments and accidents.
Yet unfortunately the governance of such altruistic endeavor is subjected to "Commercialization" and thus lost it's basic value that is to maintain the productivity of the populace it support. (partly due to the ease of discarding local citizens who must serve NS or be charged in a court of law for cheaper imports that were not checked for quality)
And as for public transport: It is a F9 with a big fat capital F.

Clear eyed said...

The reason for such a state of affairs here is our government is not made up of public servants or leaders who govern for the good of the people and the country. It is instead made up of mercenaries who are driven to make as much money and as soon as possible for themselves and their cronies. Our only hope for change for the better is to have a change of government.

alvin said...

i am wondering abt something. when the HDB launched those new 50 storey flats in Tanjong Pagar at what are arguably new record prices for HDB flats, are Singaporeans doing themselves in by being eager to buy them, hence lending credence to HDB's oft heard response that the flats are good value? Afterall when people write in to question the pricing, the HDB trotted out figures to show that these flats are oversubscribed. I think we can deliver a big slap to the government by buying cheaper flats elsewhere and letting those grand 50 storey blocks stand empty like white elephants. this, i think, will make HDB at a loss for words.

with regards to public transport, I believe the issue is that current measurements to gauge quality are wrongly set.

when u set the wrong benchmarks, u get the wrong results; edward deming, the late quality expert, is of this opinion.

edward deming by the way, is responsible for teaching QC methods to the Japs after WW2. The Japs respected him greatly, imbibed his teachings and improved on them. today we see plainly the outcome of the japs' quality drive. if u visit any of the Singapore car forums, u will often read how the "tomyam"(Made in Thailand) Toyotas are not as good as the "sushi" (made in Japan) Toyotas.

I think there's a lot more concrete citizen activism which can be achieved despite the environment we are in. there are many ways to deliver a slap to the govt.

rookielim said...

Lucky, thanks for the points you have raised that are close to the hearts of most Singaporeans.

I would also like to point out that those who CANNOT afford 400K+ HDBs that are "strategically" located either in good central districts or near the MRT, are usually also those that cannot afford to buy cars. They are the people that are hardest hit in this economic crisis. They have no choice but to take to "public transport" and rely heavily on feeder services.

Bottom-line: The high cost of our "public transport" is especially unfair to the poor who has no choice but to stay in the "more affordable", out-of-the-way HDB.

al said...

"affordable, out of the way HDB flats" comment by rookielim.

and the more people resist staying in these out of the way places, the more reason town planners have for not developing public transport further. remember the white elephant mrt stations? not enough ridership. why? because not enough people stay there yet. why not enough people? because the mrt/transport network is not as developed yet. it's a vicious cycle.

also have u wonder why people still buy expensive hdb flats? because some of these people are looking to upgrade to private property which are more "atas". with higher resale flat value, they can better "afford" the pte properties. in fact people who buy hdb flats loves the ever higher resale value of their flats because it seems to them that pte properties are more affordable, only to find that pte properties prices also go up in price in tandem with rising hdb resale value.

singaporeans are just not good at playing the market capitalism game. if everyone held back even a little, prices will rise slower.

a good example is the COE bidding system. with open bidding where everyone can see everyone else's bid, SGD2 COE fluke still happen. if only during good times people are more rational the COE prices need not be astronomical. if we can temper our instant gratification desire, we can exert a greater influence over price than we do now.

i think one reason US property is relatively cheap (in may parts of US) because ang mohs prefer to rent than own properties. imagine a day when singaporeans are fed up with high prices and decide to rent or stay with parents instead, the demand will soften and prices naturally will follow.

Al said...

well, i am not sure if this is relevant to the post but i will share anyway. i am currently jobless and as such spending a lot of time job hunting. as i read the classifieds, i noticed a trend for recruiters to request for very specific relevant/prior experience.

case in point: one of the new IRs is hiring an accountant. the job responsibilities are normal enough but when it comes to the requirements, one stood out like a sore thumb: "prior experience in handling Cage Operations" or something like that. Now I am not so daft as to think that the cage refers to those used to keep animals or what. But I wonder over the following points:
1) can a competent Singaporean accountant without Cage Ops experience be trained for the job?
2) everyone knows the IRs are the first two of their kind, so why bother asking for Cage Ops experience? isn't it obvious Singapore won't have such people? the nearest (legal) casino either floats on the sea or located on a mountain top (Genting). Isn't the the poaching intent obvious? and how much is premium they are willing to pay to poach such a person, even if he/she is available?

i only used the example of the IR looking for accountants. if one looks carefully through the classifieds, such similar job postings abounds for engineering, management, finance and what not. the common theme running through them is this: any potential candidate better come equipped with the relevant knowledge because the company is not interested in training you. what kind of shitty thinking is this? who writes such recruitment ads?

now of course i know for some positions it is unavoidable to have specific requirements but my question is how many of these requirements cannot be met by training on the job in a few months or a year? we're not talking CEO, COO recruitment here. we're only talking about entry level, lower-mid level management positions.

compare this with the US, where companies will still consider taking u in if they think you have the aptitude for the job and can be trained for it.

JetBlue is one of the most profitable budget airlines in the US today despite being on of the youngest. it is the only strong competitor to the venerable SouthWest Airlines. when they recruited their service staff, like cabin crew, they did not ask for prior experience, ie they do not set out to poach. instead they look for defining qualities in candidates which would make them suitable for the job. i am not making this up. it is all detailed in the biography book of JetBlue.

some of the recruitment ads i have seen in Singapore, they might as well be asking for Superman to join them. Don't tell me the govt tells them to post such ads. what i want ti impress is that if individual company HR recruiters think through the job requirements more carefully, and ask themselves whether some requirements can be dropped in favour of some training, I think Singaporeans will be the better for it.

just julie said...

Hi Lucky,
I have been an ardent reader of your blog since I discovered it at the beginning of this year. Thanks for all the insights and sharing your opinion.
Great read as always!

Anonymous said...

housing, healthcare and transport are tired issues that have been discussed in forums over and over, this is what puzzled me;


"However, little has been done and it is not where we have gone but where we continue to head that worries me most. Why isn't the PAP govt motivated to solves these problems? Why is it so hard for the PAP govt to solve these problems? It is not possible for the PAP govt to be unaware of these problems ...then why have things been allowed to deteriorated so badly in the past 10 years...?"

perhaps someday when you have people with the hearts and not just brains in charge, they will be able to listen and HEAR as well. perhaps then, the welfare benefits to the pioneers of the country will be substantially improved.

Anonymous said...

Singaporean males, no need buy insurance one!

We PAP have NS, Reservist, IPPT and RT in place to keep you fit!

Why is NS necessary (even when Taiwan is abolishing it in 5 years' time)? To keep YOU fit so you won't get to use the medicare facilities, cos they are reserved for Arabic millionaires, Burmese generals, Indonesian businessmen, ok!

Jim said...

The boycotting of HDB flats will not lower the price of flats because the government controls the supply. Now, they only build when there is enough demand.

Similarly, the government will withhold land sales for private estate development when the demand is low.

Singapore has limited land available to sell and make profit from. Government's aim is to MAXIMISE the profit for every inch of land they sell.

Anonymous said...

Jim 3.37pm is correct.

New HDB flat prices will not be lowered even if we boycott purchasing them.

There are a few reasons:

Firstly, most Singaporeans have no other choices but to depend on HDB flats for a roof over their heads. Private Condos/Houses are beyond their reach. The Government is well aware of this.

Secondly, since the Government is the biggest landowner and controls 90% of the land, they can hold back construction of new HDB flats if supply should exceed demand, thereby controlling its pricing.

Right now, they are pushing up prices of their new flats under the build-to-order scheme. There is little margin for building in excess as in the past.

Thirdly, there is a perception that new HDB flats are priced according to how much the CPF money in Singaporean's CPF account can tolerate. Whether or not there is any money left for retirement is of secondary importance. That is why they want Singaporeans to work for as long as possible.

Lost Citizen

al said...

surely we can figure out a way out of the HDB conundrum??

charles said...

agree with one of the anonymous posts, people in power need to have more heart. everything see in dollars and cents, ultimately very off-putting and will only encourage Singaporeans to consider migration.with so many Singaporeans working and studying in Australia, UK and US, if they want to give up SG citizenship they will be a big loss to gahmen.

Anonymous said...

Cannot protest
Cannot challenge the law
Decisions are made first then discussed
NS to tame/trap?
Hints(threats?) to control new media
Why do we have people who argued or challenge(aggressively?) living abroad/jailed?

I don't know

Anonymous said...

Hi Lucky

As much as I dislike Ministar Cow, he is only half the problem. In deciding that public 9tax payer funded) hospitals should be profitable. hmm.

However, pls also consider that our much beloved ministers of education had decided many years ago that more doctors would INCREASE the cost of healthcare. Therefore only the elite of elite + a few token peasants could be doctors. Strangely, it so happens some of the elites actually wanted to be .. well something else ... but became doctors to please their families. So we had a rather high attrition rates. Of those who stay on, many became GPs. Easy money and relatively less stress.

Surely now u must have read articles about how our wonderful insurance policies ... does not cover cancer. hmmm.

As anon 10:22 discovered, the best insurance is not a good son-in-law but rather employment with a decent MNC with medical coverage. Which is why many of the older yankees are still working. For medical coverage.

Now as for housing, the median household income is probably ard $50k p.a. Rule of thumb says the average housing in SG (I believe a 5rm HDB) should be ard $250k. hmmm. now if you become the ruler of Singapore, wat can u do .. without collapsing the economy?

PS: Pls leave SMRT, SBS alone. They are now in my portfolio :-p

NoName

Anonymous said...

The convoluted NoName is back, whose only contribution here is to discredit blogging by pretending to be anti-PAP!

Anonymous said...

I have a fan! Cool! :-)

*Damn Pressure*
Run out of bullshit :-p

Maybe the esteemed Lucky Tan could tell us what would happen if property prices collapses by 50% in the short term ...

NoName

Anonymous said...

@NoName

You mean selling cheaper will collapse the economy, I didn't know it is a house of cards. so by selling high and put the citizens into debts will ensure a strong economy?

BTW i didn't know the economy is so dependent on the housing market?

I thot someone says it is the exports that is keeping the economy alive - by selling 3 times more than the local economy.

Wow if you become a minister I believe you will do a much better job than Lucky by adding more debts onto the citizens.

Wow what a clever and talented minister you are.

Anonymous said...

@NoName

BTW if property prices were to collapse by 50%, the buyers will suffer because the banks will ask the buyers to top up the loans.

The problem is to make a flat affordable all they did was to extend the loan from 10 to 20 to 30 years. I am not surprise in future the children will be the co owners because it will take 50 years to pay for a flat.

Anonymous said...

Actually having high property prices, especially for HDB type is like riding a tiger. So it is difficult to get down as you will likely be eaten. So just continue riding!!

"chi hu nan xia"

Anonymous said...

I think most people here agree that a drastic drop in house prices would cause a lot of short-term pain. But the question is whether these house prices have been kept artificially high in the first place? If the prices are showing signs of bubbling, then the high prices are certainly neither healthy nor sustainable for the long term. In the United States, house prices have collapsed across the board and this collapse has been necessary in order to purge the bubbles from the system.

A house is special because it is both an asset and a consumer good. However, I feel houses are overrated as an asset (investment class) because it leaves too many Singaporeans asset rich but cash poor. This is why many Singaporeans will be requiring the Lease Buyback Scheme to unlock the value in their houses when they retire. If we view houses as a consumer good, deflation will actually be good for the general population as it makes better houses more affordable, thus raising the standard of living.

It is inevitable that many Singaporeans who have bought houses at high prices will undergo substantial hardship should deflation occur. However, this reason is not enough for us to perpetuate a flawed system and drag future house buyers down. What we can do instead, is to look for ways to alleviate the short-term pain of house buyers stuck with high prices. In the long run, lower house prices can only be beneficial to average Singaporeans, as they will have more money to raise their standard of living through other forms of consumption, or have more money to truly set aside for their eventual retirement.

An Average Singaporean

Anonymous said...

It seems more delicate than that. The younger generation, those prospective flat owners no doubt must be wishing that the prices drop for their interests. So the older generation flat owners suffer a sharp drop in their assets, savings while cleaning toilets in the fast food chains. And that is ok?

Anonymous said...

Hi @ anon 1:17am

The seeds of the problem have been sown for some time, and a substantial portion of the current flat owners are saddled with exorbitant house prices and huge debts. The problem is compounded because many of these flat owners are asset rich but cash poor, and thus probably have to rely on unlocking the value of their houses to last them though their retirement years. If there is deflation, I agree that these retiring house owners will be hit the hardest.

Indeed there is no easy solution round the problem, because far too many Singaporeans are already affected by it. Like I said before, if house prices do fall, it is essential that something be done to help out these house owners stuck with huge debts and falling house prices.

However, the question may not be whether the govt should actively lower house prices, but whether the current trend of high prices can be naturally sustained. If there is persistent intervention to keep prices high, it will only delay the inevitable bursting of the bubble, and by then the bubble would be even bigger and even more people will be affected.

An example we can learn from is what happened in the US in the early 2000s. Mired in a recession precipitated by the dotcom bust, the US govt tried to get the economy going again by providing easy credit and encouraging a housing bubble. In the short run, the economy starts to boom and everyone is happy. But in the long run, bubbles are not sustainable and have to burst at some point, as we have recently seen.

Perhaps a middle-of-the-road approach would be for the govt to attempt to keep house prices at the current level and prevent them from escalating further, until wages and general inflation has caught up with the current house prices.

This can perhaps be achieved by controlling the supply of housing, the cost of new flats, as well as introducing more measures to discourage speculation. If public transport standards improve and the Sengkang / Jurong West areas become much more palatable to live in, it will also effectively be like adding a huge supply to the current stock of housing.

There certainly is something wrong when house prices are rising much faster than wage increments, and I feel it is a responsibility of the govt to keep houses – an essential good that everybody needs – at affordable prices.

Note: I am not as knowledgeable or insightful as Lucky, so do bear with me if my examples or arguments are poor or if I do not appear to be making sense. I’m sharing my thoughts only because I respectfully wish to learn from other’s viewpoints. =)

An Average Singaporean

Anonymous said...

A Pap smear is a screening test to check for changes in the cells of your cervix which may develop into cancer later. Looks like some body has not performed a pap smear before.

Anonymous said...

Hmm ... what emotion ... but shouldn't those feelings be directed to .. say .. the good people of Tampines?

Yo Lucky .. your hero cocks up again.

NoName

Anonymous said...

during my father's times, his 3-rm flat cost 5 digit only. 3 years ago i bought a 3-rm flat that cost 6 digits, not only that i also have to pay the seller COV (cash over valuation) of 6k. since i not a rich man's son, i have to think of a way to get that 6k cash from Post Office EzyCash which i have to pay 300+ monthly for 3 years. it is as good as having my salary cut by 300 monthly. who dare to say HDB flat is affordable, i will show my middle finger!

Anonymous said...

Anon 10.29 pm

Borrow $6K pay $300+ for 3 years?
Means pay back at least 300X12x3 = $10800 after 3 years.

Wa, the EZYcash interest is very high!!

Anonymous said...

EzyCash is legal loanshark :P

Anonymous said...

@NoName

Sad... totally cocked up with an illogical mind.

Sam said...

for those who think that we are all at the mercy of the property market, read what the comments which follow this post at Tan Kin Lian's blog.

http://tankinlian.blogspot.com/search?q=property&updated-max=2008-11-12T02%3A51%3A00%2B08%3A00&max-results=20

Sam said...

sorry, the link i last posted, while it works, does not lead directly to the particular blog post. use this instead. sorry once again.

http://tankinlian.blogspot.com/2008/11/buy-property-that-you-can-afford.html

Sam said...

to make it easier to read, i cut and paste the relevant parts from Tan Kin Lian's blog here:

"If the HBD flat buyers limit their purchase to the guidelines*, the prices will come down.

If the buyers want to chase property prices beyond their affordability limit, the prices will go up (and will only fall during a financial crisis).

In the old days (20 years ago), the government kept HDB flat prices at affordable levels. Today, the prices are based on market supply and demand. This is why the prices have gone up beyond the affordable level.

I wish to have the government of 20 years ago, because life is better for the people in the old days."

*"limit should be:

- 7 years of the breadwinner's income(one breadwinner only)
- 5 year of the combined family income (more than one breadwinner)

If one spouse is working with an annual income of $40,000, the limit should be $280,000. If both spouses are working with an annual income of $70,000, the limit should be $350,000.

I think TKL has made a strong point because over the years, people have been more and more willing to get into bigger debts in order to buy private property.

This is somewhat like the housing crisis in the US now, where people get into big debts buying more than 1 property or buying 1 which they can ill afford. When the US economy is doing well, no problem with mortgage payments however when the crunch comes, and it did, over-leveraged homeowners cannot keep up with payments and now they risk losing even the roof over their head.

Obama wants to help these "poor" home owners but there are many ordinary American folks who are disgusted that the govt is bailing out greedy people and encouraging more of such behaviour in future.

Sam said...

just now i went to 2 condo showrooms just to kaypoh a bit. wah, what i see is quite surprising. no lack of serious buyers sitting down with bankers and working out various loan repayment schemes. dunno if these people are really rich or they are over-extending themselves in order to buy private properties now at what seemed like good prices.

will property developers in Singapore become "too big to fail" also if the recession drags on? during good times property developers bid up prices for land and charge sky-high prices for pte property. in downturn, i think even if the bigger property players should go bankrupt let them collapse, govt should not bail them out. this is will put some sense back into the market.

Anonymous said...

showrooms in some countries have been known to hire hourly paid workers to appear as deeply interested home buyers, so when you see incredible queues at the next soft launch dun be too impressed or gullible.

Anonymous said...

Sham property buyers reported in some Beijing property projects As reported by Peoples Daily, some Beijing developers are cited to have hired sham
homebuyers, who are mostly retirees and elderly, and arrange for them to sign
fake purchase contracts in front of potential clients in order to boost buying
sentiment. The actors/actresses are said to be paid RMB50 a day.