Friday, September 25, 2009

ERA report : More evidence price rise due to foreign influx.

Figures from the ERA real estate agency shows that PRs account for 40% of its HDB transactions this is a sharp increase from 20% 3 years ago. ERA is one of the biggest if not the biggest residential real estate agencies in Singapore so statistics from its large database should be large enough to show what is going on in market. Its data also shows that 86% of the transactions were concluded with cash over valuation (COV) which conflicts with Minister Mah's figure of 70%.

The truth is becoming very clear. The PAP govt allowed a large influx of foreigners into the country with a large number of them obtaining PRs or citizenship in the past 3 years making them eligible for the purchase of HDB flats. The HDB did not provide sufficient supply for the increase demand that is why prices were going up even when the economy was slowing down. The PAP govt has made a mistake that has impacted Singaporeans looking for homes negatively. Their response to this issue has been to insist that HDB flats are still affordable and to urge Singaporeans to lower their expectations to go for smaller flats in less preferred locations. The govt mouthpiece even went on to say that Singaporeans are obstinate, selfish and unreasonable. The PAP govt is trying to deny there is a problem and push the blame to ordinary Singaporeans. These are not the actions of a good and responsible govt. The high price of housing relative to income will result in Singaporeans shouldering heavier debt and a poorer quality of life. Many Singaporeans are already struggling to make ends meet as the cost of living has gone up faster than their income in recent years.

-----------------------------------
The report by Eugene Lim, associate director, ERA Asia-Pacific can be found here via The Business Times.

Resale HDB prices increased by 38 percent; 40 percent of buyers PR
.
Prices of resale HDB flats have shot up 38% over the past three-and-a-half years according to Eugene Lim, associate director, ERA Asia-Pacific. But what's shocking is that 40% of buyers are made up of Permanent Residents according to recent ERA's resale transactions.

"The government's target population of 6.5 million is steadily increasing the
pool of PRs; and they have to buy their HDB homes from the resale market as they
do not qualify to buy new flats directly from HDB. ERA's resale transactions
show that PR buyers make up some 40 per cent compared to 20 per cent three years ago." - Eugene Lim, assosiate director, ERA Asia-Pacific.
It is widely known that prices have risen over the past few years and that we had a large influx of new residents. But when you see these such statistics side by side, it begs to question why weren't countermeasures put into place earlier considering this happened over a sustained period of three-and-a-half years?Another statistic we found interesting in the report was how 86% of ERA's HDB recent resale transactions were concluded with Cash-Over-Valuation (COV). This number seems to come into conflict with what Mr Mah Bow Tan said recently about a third of HDB resale transactions done at or below valuation.

26 comments:

Anonymous said...

totally sick of his lies.

it is so obvious yet he is still trying to deny.

i hope people will learn how to find out facts from the internet rather then believing a propaganda sheet.

Anonymous said...

whats so shocking?

Mr Mah being economical with the truth using selective statistic sample?

Or PRs buying resale?

PRs cannot buy direct so even if HDB builds 1000000 units this year, they will still buy resale HDB cos it is "cheaper" in absolute amount compared with private.

Anti-Lucky
Last post here. I promise. Ur fren skeptic is most interesting :p

Anonymous said...

a pr divorcee cannot keep his flat if he doesn't have care and control of the children. however, if he has another single pr sibling to form a "family unit", then he can buy a hdb flat under the pr single scheme. EVEN if he has a criminal conviction.

Divorced Singaporean males in the same boat, need not apply. you've got fewer rights than a pr with a criminal conviction.

steven loke said...

Citizens who exceed the income ceiling are forced into the resale market's along with the PRs.

A thing to note is that PRs needing a HDB resale flat comes from lesser developed nations when compared to Singapore, and therefore, they are more adaptable to space constraints and even live with a higher pricing to be where they are. If they end up renting, it makes economic sense to buy, at least they can rent out rooms to subsidize or even profit from the whole exercise.

While we demand privacy, and have our kids demanding their own rooms, very often the PRs will rent out their rooms (or bed space - like 4 or 6 to a room) to foreign workers at 200 per head. I noticed this trend when flats in Jurong started this trend by commanding a higher resale amongst the HDB estates. Reason I found out was that there is a big pool of people wanting to rent.

So, when these PRs do their sums, they will buy a resale at the earliest chance, and to them the location have to be correct.

Sure, PRs buying resale with the intention of renting out the 3 bedrooms and roughing it out in the hall is common. These are the things the singaporeans are not willing to do. Its more than supply and demand, its needs and wants.

But we should not have provided them the equal means to compete in the resale market when actually our aspirations are different.

This is another case of the field not being flat.

Anonymous said...

More PRs, more new citizens, more grateful people, more votes for PAP.

Some more now only 4.5 million. Target is 6 million. Still got 1.5 million more to go. So price can still rise higher due to demand. As long as those PRs and new citizens can still find it affordable.

So maybe affordable means PRs/new citizens can afford, not necessarily locals. Maybe Mah Bow Tan is not wrong after all.

Kojakbt said...

"A thing to note is that PRs needing a HDB resale flat comes from lesser developed nations when compared to Singapore, and therefore, they are more adaptable to space constraints and even live with a higher pricing to be where they are....

Sure, PRs buying resale with the intention of renting out the 3 bedrooms and roughing it out in the hall is common. These are the things the singaporeans are not willing to do."

Looks like we are gradually being forced to live like those 3rd world people in their 3rd world countries in order for us to compete... is this what the Govt meant by "More Good Years???"

Kojakbt said...

The Govt keeps saying that they are protecting Singaporean interests by allowing only Singaporeans to buy new HDB flats and barring PRs from buying them. They further argue that since HDB resales are traded in the open market and are not "subsidized", it's ok to let PRs buy only HDB resales.

This is a fallacy. Like some bros here have said, there are groups of Singaporeans whose household income ceilings have exceeded the $8K limit. Most of these Singaporeans are also not rich enough to buy private housings. To most of these people, HDB resale flat is the only choice.

Then they are those who qualified for new HDBs but due to various reasons, they cannot wait for the new ones to be built. And some need to stay closer to their parents because the parents need to be taken care of. Again, a HDB resale is the only option left for them.

Viewing in this light, PRs (non-Singaporeans) are indeed competing with us over the same resource - the HDB resales. Hence, it's only right that further regulations need to be imposed against PRs, people who are obviously not making Singapore their home, so as to give more priority to Singaporeans to buy HDB resales.

Afterall, why should NS-serving Singaporeans be unfairly inconvenient in our own country by foreigners?

Anonymous said...

This is what a loan officer in a non-local bank told me: foreigners are PRs are buying up properties and taking up larger loan amounts often 90% that comes with higher interest rates. Sporean buyers tend to be more conservative. If, and when the property bubble bursts, the foreigners/PRs will default and simply leave Spore. It has happened before.

Anonymous said...

Hi Lucky,

not sure if you've read this article http://www.nytimes.com/2009/09/23/business/economy/23gdp.html. Interesting to note that this crisis has led some to conclude that the GDP growth does not translate to better social and economic wellbeing.

LuckySingaporean said...

anon 13:59,

Hi. I'm aware of these views and economist Stigliz has been saying. I think in the 1st 2 decades of our development GDP growth did deliver quality of life and the 2 were closely correlated. I believe when the rule of money in society took over and income gap ballooned...the benefits of GDP growth did not go to a large part of the population. I'll write about all these soon in my next few postings.

Anonymous said...

Depends on what perspective you are looking at.

Thanks to Mah's recent strategy of ensuring that demand will far outstrip supply, the price of HDB flats have rocketed.

HDB is now making lots of money. So are existing home-owners who are looking to sell.

To all ppl who are looking for new homes; nah nah nah nah nah nah, ha ha ha ha ha ha!

http://vonhayek.blogspot.com/ said...

I am quite pessimistic about changing SG system.

Over the years, LKY has filled middle to top positions in civil services with the most compliant, most selfish, and not very competent people. (don be deceive thinking people up there are smart just because they are scholar)

Down here, people making noise because most are not part of the system.

Do you know our civil service are paid better than private sector. An executive (not manager level) can get more than 5-6K depends on where you are.

They are inside the "1984" system and will stand to lose upon a system change.

Anonymous said...

I'm not sure, but one other reason why some PRs are willing to pay the high price of resale flats is that they intend it as an investment. Stay in Singapore for a couple of years, work, buy resale, rent out the bedrooms, eventually sell it off (at a profit), and go back to home country a rich man/woman.

The rising price of resale will perpetuate this idea with many more jumping to the bandwagon.

Are there any regulation now that will prevent this from happening?

http://vonhayek.blogspot.com/ said...

You can never heard of property inflation at European cities except maybe UK and spain. That is due to deep rooted socialism culture

In US, only cities like New York, San Jose, SF hyped up property reason being those places are sorted by the richest US citizen with population of 300 million.

Asset inflation happens all over East Asian countries. Tokyo Japan , HK, Shanghai.

For a reason, the culture of democracy is shallow. Asian is accustomed to be plundered by their own tyraniical rulers.

Anonymous said...

Anon 18:58, you are right. Investing in a HDB to reap gains is one key reason behind foreigners taking up PR. Private properties are out of reach to most of these foreigners who are occupying mid to low level jobs.

Anonymous said...

Actually there is a huge rise in demands for sands, metals, copper and price hikes because Asia countries are all developing (for their constructions) and none toowilling to sell to us. We have to pay more to get them hence the increase in price...but not that STEEP price we are to pay now.

Even Casinos and I.R. are facing this problem as I passed by and observed today while on my way home. BTW I am an ENGINEER.

However it is unrealistic to expect us LESSER MORTALS TO BITE THE BULLETS EACH TIME THERE IS A SITUATION LIKE THIS.

WE ARE NOT GIVEN ANYTHING TANGIBLE DURING GOOD OR BAD TIMES. I mean our Garhmen is simply too STINGY in many aspects and people generally feel that the 3 things should always be taken care of namely:

HOUSING
HEALTH CARE
PUBLIC TRANSPORT

better wake up to this and not stuck to their BIG PICTURE AND FALALUTIN GOALS.

One day this garhmen will be facing a BIG CRISIS due to their doing.

Anonymous said...

I quote Kojakbt.
"The Govt keeps saying that they are protecting Singaporean interests by allowing only Singaporeans to buy new HDB flats and barring PRs from buying them. They further argue that since HDB resales are traded in the open market and are not "subsidized", it's ok to let PRs buy only HDB resales.

This is a fallacy."

And may I add to your observations?

Its not only the citizens who have no choice but to buy from the resale market who're affected by the PRs pushing up the prices of HDB.
Thanks to the warped logic of PRICING NEW FLATS at the price of NEARBY RESALE VALUES, minus a token "subsidy", even folks trying to buy from HDB direct are suffering from the skyrocketing prices.
Add to that the crazy balloting process where ones' chances of getting a good queue number is akin to striking 4D, new HDB buyers are in no better state than resale buyers!

At least 4D lets us buy more chances by paying for more tickets, unlike HDB!

Anonymous said...

Lucky Tan,
you are freaking me out with your seriousness and brutal truth. I will have much preferred your satire style so that I stay schizophrenic, and continue to live surrealistically in the make-believe world of OLD FART.

Anonymous said...

1/3 of transaction below COV not true?

You means Mr Mah actually tells lies?

OMG What shall we do?

Anonymous said...

"You means Mr Mah actually tells lies?

OMG What shall we do?"

Why do you think Mah is known as Marlboro Tan if he doesn't smoke us ?

Anonymous said...

when they indiscriminately take in foreigners and break our social fabric, they say Singaporean need to adjust to the new comer.

when they increase so many foreigners and cause the hdb to become unaffordable, they say it's affordable if you cramp into a smaller affordable unit

when the town councils lost millions, they complain resident not paying the hundreds.

when they ride on the waves, they say that why they're worth million.

when they lost billions, they said it's the market's fault.

when they reap you off for the rest of your life by increasing gst, they say they are giving you back rebate for the next few years.

when they design the hdb without thinking about the aging, they called it 'upgrading' and ask you to pay for it.

when the cost of living escalate so high, they blame you are fussy for not taking a lower pay job

when they want to help business to get cheap labour, they can't get Singaporean to accept the peanuts offered.

when they charge you double for the flat and earn so much from the interest, they say they are subsidizing you.

when Singaporean caught stealing, he is jailed or heavily fine by his standard.

when a foreigner is caught stealing, he gets a bigger fine but peanuts to him.

when Singaporean caught killing, he will be hanged.
when his maid plot to kill him, her life is spared.

when the young lee going to take over, the media blaring with reason why we need new blood.

when the same lee gets older, now they say older worker are valuable.

Kojakbt said...

Hi Lucky,

"I believe when the rule of money in society took over and income gap ballooned...the benefits of GDP growth did not go to a large part of the population. I'll write about all these soon in my next few postings."

In fact, if you look thru the Gini index, you will find that Singapore has the worst value among the 1st world countries in the world...

Kojakbt said...

"I'm not sure, but one other reason why some PRs are willing to pay the high price of resale flats is that they intend it as an investment."

Actually, if he doesn't buy the HDB, he will have to rent and rental is non-recoverable. 10-20 years later, even if he decides to sell his HDB at 10-20% loss, he would still come out better than renting for 10-20 years. This is how a PR thinks.

Kojakbt said...

"At least 4D lets us buy more chances by paying for more tickets, unlike HDB!"

Well said, bro... HAHA!

Onlooker said...

And to think all those condo are built for the FT to buy....

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