Wednesday, September 23, 2009

The cause of HDB resale price surge....

In my 3 July 2009 blog posting[Link], I wrote:

"In 2008, our population grew by 5.5% to 4.84M[Link] that is an addition of roughly 250,000 people. There were 100,000 newly minted PRs and citizens in 2008 and these people become eligible to buy resale HDB flats. Even in this severe recession demand is up possibly because of new immigrants".

A commenter Kojakbt posted a link to a chart that shows this big surge:

HDB prices its new flats based on the resale market price. The demand for housing, be it rental or purchased homes, has surged due the 400,000 foreigners coming here in the past 3 years. HDB builds 8000 flats a year[Link] and this is insufficient to meet the new demand. I'm not even sure 8000 flats is even enough for Singaporeans getting married and upgraders let alone the big surge in foreigners coming here. It is strange the govt & HDB did not plan for this. Now it spends all its time and effort telling Singaporeans that "HDB flats are still affordable"..... Singaporeans now have to pay more and shoulder higher housing debt because HDB undersupplied the market and the PAP govt chasing after GDP growth allowed in more foreigners than they can house. It is tiresome to listen to the PAP govt trying to talk its way out of this housing mess by denying there is a problem and insisting that 'flats are still affordable'. HDB's idea of affordability is you should downgrade your expectations all the way to a 2 room flat at a location you don't want when previously you could have owned a 3-room flat at a better location.....this is hardly a solution, the govt has simply passed the pain and consequences of its actions and poor planning to ordinary citizens who are already struggling with the high cost of living and facing a declining quality of life here.


Anonymous said...

Guinea pigs and rats are used for experiments. To check the limits, tolerance levels of new drugs, processes, etc.

If they die, just get a new lot for new experiments until things work and they are still alive.

Anonymous said...

During the SARs times the population of Singapore was only 3.8M something, but now at almost 5M.

Most of those 1M new population might not be PR or Citizen but still they need to rent a room to sleep. Which has pushed the rental for more than 100% in the last 2.5 years time while the HDB price only uped for 40%...

Well, if HDB can be traded on free market, the HDB price would have raised even higher than the 40%.

Clearly when PAP pushed for their "6.8M Population" plan they didn't plan for the HDB units as well.

Or, maybe they indeed planed for the price surge.

Anonymous said...

I think the government is only interested in pocketing the profit from the sales tax and income from these sky-high prices... by allowing a floodgates of foreigners, they can drive up the prices. They don't give a damn if singaporeans can't afford it or become homeless.

Anonymous said...

The strident editorial in todays ST defending MBT and co is full of blame on the Singaporeans for being choosy and always we are at fault, greedy, choosy, have high faluting ideals of equitability, and of course stoopid ( at least 66% are ) for self inflicted suffering and misery

Steven Loke said...

The ruling elite did not plan for anything. They put on rose tinted glasses at their meetings, and only hear the good things about how the GDP will grow, directly affecting their bonus.

Examples on not having the foresight.....1) they decide in one fell swoop to build 2 IRs. Everything was jacked up, from sand to building booms, to labour and materials. 2) Then someone decided that the Shenton Way strip needs to dress up, so they demolish and rebuild, causing a temporary shortage of office space in the CBD.

Needless to say, the surge in hiring of foreign labour caused a strain on our limited resources. Our MRT were built with X number of cars, and I dont think it can deal with the increase in ridership. They cannot expand becos the stations are small to fit in the number of cars.

All this building activity stretched the infrastructure, and costs skyrocketed. All this is going to flop on its belly when the building is done. Like the Palms in Dubai, all we might be left with is a beautiful skyline

PAP should play SIMCITY.

Anonymous said...

Instead of acting on the private property market, the government should have focused on the HDB market first, to protect citizens' interest against this influx non-citizens..

Let the non-citizens and the rich fight it out in the private market.

It is a case of misplaced priorities.

Fievel said...

This is a well-presented article on our housing problem, although many other articles of similar reins have been published already.

The online petition for affordable housing targets only 1000 and the signatures now numbers 931, just 69 signatures shy of the thousand mark. Looking at the numbers of new immigrants and the 8000 flats built a year, I just don't quite see how the property prices can possibly stop rising for the next 2 to 3 years. It's almost a futile effort, but let's still send a collective message to MBT and LHL.
Pls lend ur support and leave even more straight-forward and meaningful messages for MBT. Singapore belongs to us! Not PAP!

Kojakbt said...

"I just don't quite see how the property prices can possibly stop rising for the next 2 to 3 years."

Hi Fievel,

I've posted your petition link onto 3in1kopitiam forum too. Hopefully, more will register their frustrations by signing the petition.

Bro, did you know that single PRs who are siblings can jointly apply for HDB resales too? I've seen it happened. 1 PRC studied in Singapore and was given PR straight away after graduation to work. He got his sister here on S-pass working in retail. Later on, her PR was approved. Both brother and sister got HDB approval to buy a 4 rm resale. They stayed in 1 room and rent out 2 other rooms to 5 or 6 PRC students getting a good rental from them. They are, of course, very happy with the Singapore Govt for giving them a chance to make so much money which they couldn't in China. In RMB terms, they are making something like RMB30K a month!

Fievel said...

Hi Kojakbt,

I know about that. I found out about the weird ruling about 2 yrs ago when I was single and was wondering if I could buy with my brother....but when i went to HDB's website I found out that "privilege" is only extended to PRs. PRs who are single, under age 35, CAN BUY HDB RESALE with their siblings, but Singaporeans cannot.

Which is rather consistent with PAP's mantra of attracting more foreigners, I'd say. My NTU China classmates told me they get $500+ a month pocket money from our govt to study here. Their school fees were equally subsidized as Singaporeans at around $5k per year. They said it was easier to enter Singapore with their passports, than to enter Hongkong, which is actually part of China!!!

What a joke we have become, my fren.

Kojakbt said...

"Their school fees were equally subsidized as Singaporeans at around $5k per year."

Hi Fievel,

You might be interested to know that our Govt subsidizes more than $5K a year for PRs/FTs:

SG: Total tuition fee is $26,000. Govt pays $19,000. SG pays $7,000 (27%)
PR: Total tuition fee is $26,700. Govt pays $19,000. PR pays $7,700 (29%)
FT: Total tuition fee is $29,500. Govt pays $19,000. FT pays $10,500 (36%)

SG: Total tuition fee is $33,020. Govt pays $26,400. SG pays $6,620 (20%)
PR: Total tuition fee is $33,690. Govt pays $26,400. PR pays $7,290 (22%)
FT: Total tuition fee is $36,330. Govt pays $26,400. FT pays $9,930 (27%)

SG: Total tuition fee is $107,160. Govt pays $88,200. SG pays $18,960 (18%)
PR: Total tuition fee is $109,060. Govt pays $88,200. PR pays $20,860 (19%)
FT: Total tuition fee is $116,640. Govt pays $88,200. FT pays $28,440 (24%)

Von Hayek said...

I believe the PAP has lost so much in their stock market casino (nobody except PAP know how deep is the hole) that it need to fleece us.

Also I believe everyone notice that PAP is fanatically cashing out many fix asset on SG.

I think its time for LKY to go.

Von Hayek said...

Those older generation of Singaporean voted for PAP. Many are simply merceanary caring only about their HDB upgrade, asset enhancement bla bla.

Only few bothered to care about their offspring.

PAP is here because of collective will of us.

Those who visited other countries can never failed to realised how selfish, greedy, bragful and unkempt Singaporean are.

We deserve all these.

Goh Meng Seng said...

Hello Lucky Tan,

There is a missing part on your reasoning.

Increment of foreigners in Singapore does not affect HDB prices directly. The problem lies in the number of PR and citizenship granted.

Once these foreigners are granted PR, they will look for resale flats. However, most Singaporeans bought their HDB flats for their own use and not speculation. Besides, they could not possibly buy more than 2 flats at any one time.

Thus, while the demand increases, the supply is stagnant or even limited. Thus the rise in HDB resale flat's prices.

HDB price NEW HDB flats hedged or pegged with the HDB resale flats. Thus, ALL Singaporeans are affected by the influx of Permanent Residents. HDB couldn't possibly "plan" for the increase in PR as they do not sell directly to PR. PR could only buy resale flats.

There are ways to get around this problem and I will be writing about it in my blog about this topic soon. ;)

Goh Meng Seng

DanielXX said...

Some reform has to be done to HDB. They're confusing their mission to provide Singaporeans with affordable housing, and now claiming their mission is to support housing prices.

LuckySingaporean said...


You're right...look forward to your article.

When they get PR or citizenship, it is direct demand. However, even if they don't become PR or citizens, they will need housing. This boosts the rental market and this creates indirect demand...for example, it can boost the private property market and that pushes some people who from private to HDB resale.

Anonymous said...

Hey Lucky,

Apprently we are not ready to know the investment returns or the size of sinking funds of our town councils, according to our "transparency for the sake of transparency is not reason enough" Minister. Actually what us residents want is to find out how well our town council is performing as debt collectors. We want them to effectively squeeze those who don't pay. Can anyone tell me how the call for accountability ended up being a call for how arrears are collected.

Anonymous said...

Hey Lucky

U want equality rite?
Why are u complaining?
You are getting equality.
All SLAVES are equal.

Dunno why u complain Ah Gong out of touch either.
the fact is Ah Gong admitted that we are not attractive/lousy. Few foreigners wanted to be slaves here. Especially during a recession.
Or so they tot.
So they were caught by surprise when the FTs decided to sign up en masse. so that they can stay longer (to look for jobs) in event they get the chop. sama for HDB. How they know dumb 2nd rate FTs so fast realise they can pay using CPF instead of precious liquid cash?

look on the bright side.
Both Man U and Liverpool are winning.


Kojakbt ( said...

Hi Goh Meng Seng,

Yes, it's true that the people who can buy HDB resales are the PRs and not those on work passes (FTs). At least, this is the current HDB ruling. However, as you know, our Govt is very "shy" about disclosing the number of PRs. They always lump them with Singaporeans and call us together as "Singapore Residents" or "Local Residents". Indeed, the stats in our Dept of Statistics do not reveal the number of PRs separately.

However, we can safely guess that with the increase in foreigners, there would also be a corresponding increase in PRs. I understand that FTs can take a year or less to get PRs.

Goh Meng Seng said...

Hi Lucky Tan & Kojakbt,

Actually I am keeping this issue as my "secret weapon" because I will be contesting against... you know who lah! Well, that is if everything goes well according to my plan. ;)

I have spotted this problem 6 months ago but since there were rumors about election coming this year, that is why I have held back the issue. However, it seems that the rumored early elections will not happen after all.

Since both of you have raise this issue, I think I will have to address it soon. Will write about the folly of HDB policy very soon. ;)

Goh Meng Seng

Kojakbt said...

Dear Goh Meng Seng,

Do not be shy about championing the rights of Singaporeans. We have been undermine by the huge influx of FTs. Don't get me wrong, I'm not against FTs per se. But I think even a 3 year old can detect if PAP is over-doing it. It think NSP should quickly make a stand on this issue. Do not be worry, the people are behind you guys on this issue.

Here's another proof that the increase of HDB resale prices is linked to increase of FTs especially in the last 2 years:

Goh Meng Seng said...

Ok, done. Written on this one:

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