Saturday, October 24, 2009

Seah Chiang Nee : Buyers feeling the squeeze

Buyers feeling the squeeze

As foreigners with PR status compete with young Singaporeans for public housing, impacting also on private development projects, prices rise and the government limits the entry of foreign arrivals.

SINGAPORE’S public housing, which has gained world acclaim for creating a nation of homeowners, is sagging under the weight of a wave of foreign arrivals.
In recent weeks, the government has been peppered with complaints from Singaporeans — some of them newlywed graduates — about insufficient new subsidised flats despite repeated applications.

One claimed he had failed 11 times while others talked of two or three failed attempts.
The latest public offer of 2,132 new flats for sale drew 20,394 applicants, which means that nine in 10 will be disappointed.

Another 5,000 units will be launched before the end of the year.
The rejected Singaporeans who cannot wait any longer will have to turn to the dearer resale market, where they will face stiff competition from rich foreigners holding permanent residency (PR) status.
PRs made up 40% of buyers in the open market during the past five years, resulting in prices rising by 40%.
One local benefit, however, is that a newly married Singaporean couple is given a S$40,000 (RM97,121) grant to buy a HDB resale unit.
The squeeze is due to two factors: firstly, a PR population hike of 51% to 553,000 since 2004, and secondly, more citizens demanding central or mature areas.
Today’s inadequacy is a far cry from the previous generation’s when the Housing Development Board (HDB) successfully mass-built cheap homes for hundreds of thousands.
One of the earliest stories I wrote as a reporter was about the HDB’s world record of building one housing unit every 45 minutes.
The question of subsidised housing is of crucial importance to Singaporeans who are trying to cope with one of the highest costs of living in Asia.
The passion Singaporeans have for property can only be understood by people living in land-squeezed cities.
After independence in 1965, then Prime Minister Lee Kuan Yew announced the objective of creating a home-owning society.
“If every family owned its home, the country would be more stable … I believe this sense of ownership was vital for our new society,” Lee said later.
Today, 86% of Singaporeans live in HDB flats and more than 90% own their home.
It was Lee’s housing programme that endeared his party to the old generation of squatter-living Singaporeans.
Now, the HDB is facing a strong challenge, catering to a new generation with higher expectations than their parents.
“Its achievement made the PAP (People’s Action Party) one of the most successful parties in Asia; it can also bring it down if it stumbles,” said a professional, who is still paying off a 30-year HDB loan.
Critics have accused the HDB of trying to replace the social task of providing cheap public housing with one dictated more by market forces.
Government officials say the HDB is building enough flats for local needs, and applicants failed to get one — even repeatedly — because they were too choosy, not because of inadequate supply.
“We promise every eligible citizen an affordable flat, nothing about meeting his choice location,” one official added.
There are regulations against speculating on HDB flats but there is no ban on it.
As a result, many Singaporeans and PRs — including those from Malaysia and Hong Kong — have made profits buying and selling resale apartments after a few years.
No foreigner may buy HDB flats but may rent them, also indirectly pressuring supply.
However, PRs are allowed to buy resale units.
Several years ago, there were stories of Hong Kong businessmen settling here as new PRs and making a killing selling their HDB units (the second time entailing a levy on the profits).
The slow building rate is not entirely due to poor anticipation of demand — but also to shrinking living space, particularly in choice areas where prices rose the sharpest.
The older generation was happy to accept any home offered to it, but not today’s.
“Now, people want only new units in a mature estate,” an official said. “Unfortunately, such places are becoming fewer.”
The foreign influx is, of course, the biggest cause of recent price increases.
With Singapore out of recession, financial consultant Leong Sze Hian has predicted another 10% hike in resale HDB prices.
Minister for National Development Mah Bow Tan insists there are sufficient public flats for Singaporeans and prices “remain very affordable”.
Eight out of every 10 first-time applicants of HDB flats would succeed in getting one on their first try, the board said.
In a recent online poll, however, 65% of Singaporeans described HDB prices as totally or slightly unaffordable.
Three out of 10 said they were “barely” so while 5.19% found them comfortable.
The sharp price rise in public flats is generally good news for the vast majority of existing owners, allowing many to sell out and upgrade to private properties.
In a speech during the generation change, Lee likened life in Singapore to a marathon race in which the second lap was about to begin.
For all who finish this race (not merely the “winners”), Lee said one possible reward was to provide everyone a second property.
That was, of course, before the massive arrival of immigrants.
Prime Minister Lee Hsien Loong, whose priority is to contain the problem, has announced that the intake of foreigners will be slowed down.
As Singapore’s population hits five million, the space squeeze is also being felt in the private market.
In the past year, developers have been selling tiny flats of less than 46.45 sq m — the latest on offer being a 26.48 sq m “Mickey Mouse” flat.


Anonymous said...

The PAP Govt knows what is the real problem and what impact will be on their power.

If they are seen to be not doing anything much about those issues and the complaints, it means that these don't have much impact on their power. Things will hence be continued to be done the way it is.

Those issues are inevitable, to borrow MM Lee's wise words regarding the widening income gap.

Inevitable the PAP will still win big at the next election.

Anonymous said...

Singaporeans are just like FROGS. No, not frog in the well but a FROG literally. Put them in a pan and boil them slowly (Increase costs in everything at a pace they can 'Tahan') Despite all the things happening now, they are still surprisingly complacent. My guess is only a small percent of us fellow Singaporeans are trouble makers lah. hahaha.

So what do Singaporeans want??? Housing as a asset for retirement (future generations suffer the high cost) or affordable to all but people retire poorer.

But look, compared to USA and Europe, we are better off (FIRST WORLD) with so little unemployment. Kudos to PAP for having done a good job.

Anonymous said...

Seriously Lucky, why do you bother? I'm asking a serious question here. You're smart and write well; you're obviously intelligent and capable.

You sounded exasperated a few months back when the turning point arrived and Lucky Tan started feeling not so lucky anymore.

We both know that there are certain people who retain their grip on power and no matter how much the people agitate, they will not be heard.

Why don't you just leave for better places and let people deal with what is coming to them?

Over here I own two properties freehold and will never have to worry about HDB prices going up in the future or any other bullcrap coming from Singapore.

I have tried to educate others about what is happening but none of them will listen. So I have resigned myself to taking my gains and saving myself.

Anonymous said...

To Anon 22:06

This one's goes out to u;-

"First they came for the Communists but I was not a Communist so I did not speak out. Then they came for the Socialists and the Trade Unionists but I was not one of them, so I did not speak out. Then they came for the Jews but I was not Jewish so I did not speak out. And when they came for me, there was no one left to speak out for me."
- Martin Niemoeller

Maybe one day they'll come for you (since ur so oblivious and basking away in your perceived paradise) and then all ur freehold and earthly possession are taken away and then you know :)


To borrow a quote from Edmund Burke, "All that is necessary for the triumph of evil is that good men do nothing."
Thanks Lucky. For doing something.

Anonymous said...

To Anon 22:06

Calling himself Lucky Tan or Lucky Singaporean, he is being satirical. Best he explains it himself and if I am right then your 2 freehold properties and your "luck" is exactly what Lucky Tan is driving at.

You think you are a lucky Singaporean because of what you have, but in reality you are a prisoner but you do not realise it. Like a well-trained circus animal, you go through life thinking this is what you want to have unknowingly giving your masters complete control of of almost everything in your life. Well some of us and maybe Lucky Tan thinks otherwise, hence the drive to wake those who are sleeping. We may or not succeed but at least we tried.

Anonymous said...

why are people complaining in Singapore?? this country doesnt charge a single dollar on tax in capiatal gains and dividend! I made huge profits trading stocks and futures in singapore and i dont pay a single cent back! it is wonderful, everything is privileged for a mere premium. Airports have routes that service the whole world, great hotels, cheap city apartments and nice shopping.

when something you want is unaffordable, the only person to blame is yourself.

Stop whining and get some! Hang seng set to open lower on monday. get your ass up on monday morning and short the nov contract! when you make 300k a mth, singapore is on sale.

Anonymous said...

To Anon at 25/10/09 00:20,

I am not Anon at 24/10/09 22:06, but I think he/she is based overseas and his/her intent is not to brag about his material comfort there.

I am planning to emigrate out of Singapore, even though I am comfortable with my simple life here (nope, I'm nowhere near rich like Anon of 25/10/09 01:31). I tried to share with my younger friends about the deteriorating conditions for the professionals and the working class in Singapore. Although they feel the impact of poor PAP policies (e.g. even those in their 20's and 30's face difficulty finding jobs that pay beyond subsistence levels), they would rather be the proverbial slow-cooked frog than to vote for change (literally or with their feet). Despite being graduates and internet savvy, they would avoid reading alternative news online and would swallow the MSM propaganda, so as to continue their dream.

What to do? It's their choice. Sadly though, their choice would affect the significant proportion of working class Singaporeans who do not have their youth or education (tickets out of this cooking pot). I am leaving because I see this working class poor struggling daily in my neighbourhood and I no longer believe in the PAP snake oil.

LuckySingaporean said...
This comment has been removed by the author.
LuckySingaporean said...

anon 22:06,

Why do I bother?
That is a question you can also ask many other bloggers a few of whom are better off than me. Shouldn't I be playing golf shopping for my 2nd property, finding more ways to climb up the corporate ladder to make even more money...and so on.

There is some inevitability to the outcome for this country if we all behave the way the PAP govt wants us to behave. If all we care about is the amount in our bank accounts +the size of our assets and nothing else, where will we be 2 decades from now? Will your children and grand children too have the good life? Are you able to ensure they are as intelligent as yourself to remain near the top of the pyramid? Beyond your family, is there no concern for your friends, neighbors, fellow Singaporeans because your bank account has seven digits? Because you're are not sick or insured when you're sick, you don't have to care about those who are?

But more lasting than the wealth you can build for your children, is the system and society that we will leave them when we are gone. Our grandfathers and fathers at least fought to get rid of the colonialists so we can have our own national anthem and pledge. The least we can do this generation is to ensure the pledge is honored and we build a more equitable, just and democratic society for the next generation.

As for money, houses and so called wealth, when you trade certain longer lasting values for wealth - ensure your own well being in doing so but that is not the best you can do for your children and your fellow SIngaporeans.

Anonymous said...

Lucky is right, money is not everything.

However, money to PAP is everything. Money talks in everything run by the PAP - right from the obscene salary (no respectable first world country leaders wld demand that for themselves), down to the smallest matter of drawing your own medisave money (they keep against your will) to pay for your own medical expenses.

Wake up, throw out the PAP.

For your children, for your children.

Anonymous said...

Lucky is right, money is not everything.

However, money to PAP is everything. Money talks in everything run by the PAP - right from the obscene salary (no respectable first world country leaders wld demand that for themselves), down to the smallest matter of drawing your own medisave money (they keep against your will) to pay for your own medical expenses.

Wake up, throw out the PAP.

For your children, for your children.

Anonymous said...

we pay top dollars for lousy ministers...should outsource to ang mohs not ah nehs...

Anonymous said...

The PAP government is a VERY BAD government. The purpose of a government is to look after the people's welfare and interest and ensure a level playing field at least. Instead we have a government that sabo us instead.Read today's newspaper, after LSY's hotair talk, no law to protect pay cut for workers at 60. The PAP government should just get lost. We need a government, not this kind of shit. In fact, shit will be insulted to be equated with PAP. They say they are top talent and have entrepreneurial skills. Well who doesn't know how to blow his own trumpet? Starting from Suzhou industrial park, we have never made money from investments overseas.That just shows how incompetent and "fat lamb" our government appears to all these foreign banks and companies willing to wayang, make a show to kowtowing to GIC and then fleece them dry. And GIC and Temasek in turn suck us dry to make up for losses. This is entrepreneurship? My grandmother can do a better job. IMHO, PAP should just go and form a private company RAISING their own funds and investing in their own projects. We'll see them go bankrupt and be up for a fire sale in no time. In fact we might make some money shorting their stocks.

Anonymous said...

"As Singapore’s population hits five million, the space squeeze is also being felt in the private market."

And you probably need more rules (an antithesis to individual creative flair)to smoothen the conflicting needs / rubs / space (be it social or physical) of those who reside here. You just cannot have the cake and eat it too.

Anonymous said...

Anon 25/10/09 09:33 - "However, money to PAP is everything."

This is because the PAP knows that without money it won't be able to buy votes, fix oppositions, and stay in power. So when LKY and LHL aims for GDP growth at all cost, it is really to perpetuate their own power.

Anonymous said...

Hello Lucky, this is anon 22:06.

If it wasn't clear before, I have already left Singapore a while ago.

I totally agree that "there is some inevitability to the outcome for this country if we all behave the way the PAP govt wants us to behave."

However what I have been seeing over the past decade or so is that essentially nothing has changed.

Personally I don't believe that any of the internet sites will impact anything substantially.

How long have you been running this blog? In all that time, have you seen the grip on power loosen?

Certainly segments of the population are more aware of the problems facing Singapore now, especially with the financial crisis, but none of this has actually translated into anything concrete.

Some of the legislation has instead become more ridiculous and restrictive; I'm sure you can come up with many examples.

The mistakes and gaffes have become more and more prevalent, yet the same people remain in power.

Sure, I'm concerned "for your friends, neighbors, fellow Singaporeans". That's why I occasionally find myself hanging around websites like this.

And as I have mentioned, I've tried to educate some of the people I know.

But what I have seen over the past decade tells me that Singaporeans are not interested in change. You could say that I tried and failed.

Probably because they do not understand that things do not work this way elsewhere. Because they have never experienced it.

It would probably be easier to just move on and chase my own dreams over here instead of caring too much what happens back "home".

I'm not trying to influence you in anyway. The world needs people like you to soldier on.

Well, it's nice to meet someone like you who obviously has more energy and drive and is more optimistic than me.

Anonymous said...

To Anon 25/10/09 20:36, no one thought the Berlin Wall would crumble the way it did. So while it is very likely the PAP will remain in power for a long time to come, never write off the "freak" possibility that change can take place when we least expect it be. So take heart, change is a certainty, the only question is when. :)

1stUSBlackPresident said...

Yes We Can!

Anonymous said...

When LKY mentioned the "inevitable" word, it is an inescapable fact that many things happening right now will decide our fate in the near future. It will affect almost every nation and future generations to come. The depletion of energy resources (we have most likely past peak oil), natural resources i.e. food, water and a burgeoning population likely to double itself in approximately 42 years will cause untold misery to our children. Added into the equation of the current failed Money System and the bamkruptcy of America, we will be facing an unprecedented disaster in the near future.

It is not prices of oil that is rising, but the value of the US$ is down and going down even further. It is expected that the US will devalue their currency to pay off the massive amounts of their debt with cheap dollars that is worth far less than the value when they took the loans. What comes next is everybody's worry and China is about to announce or already made the announcement to make the Yuan an international currency.

So it is best to get rid of your US$ and buy gold now. Monday 26th might see some dramatic changes taking place. Hope I am proven wrong.

Anonymous said...

From something that take an average Singaporean family 30 yrs to pay off, I won't said it too much for them to be more choosy and demanding. After all, that's tiny little pigeon hole is going to cost you 30 yrs of your money and you are only entitle to it's lease for 99yrs, you definitely want to get something that is good and suit all of your needs.

If HDB is really affordable and remain to be cheap public housing that take a family only a decade to pay off just like what it used to be, then I would have agree that people are being unreason to want cheaper, better and in good location.

But with HDB pushing up the price of their flat to help Singaporeans become millionaires, now we even have a flat that can be resale for 800K a unit.

This is why HDB had became a fail when they start to try to push the price of public housing to match that of a private one.

Public housing should remain as just public housing, and then you can expect people to be less demanding and less choosy when they want to buy a public house.

Anonymous said...

To Anon 25/10 01.31
Pls note that HK mkt is closed on 26/10. For someone who claims to make big bucks trading, obviously you have not done yr homework, cut the crap and leave the serious stuff to others who may not be so insecured and deprived of attention.

Anonymous said...

Eh Lucky .. the only local non-ministar blogger who could be (?) wealthier than u is Mr Wang (Koh). And Mr Wang(Koh) is no longer interested in sticking out his neck.

You are not alone.
But your side is seriously short of money.
Politics is expensive.
Just ask Obama :-p

Hazel Poa said...

Anon at 25/10/09 20:36 is too pessimistic. The seeds of certain plants after spreading out to other locations can lay dormant for many years if weather conditions are unfavourable. But the seeds continue to spread, though not visible to most. Once the conditions are met, they appear to suddenly burst out everywhere. The works of Lucky and other bloggers/ sites over the years will not go to waste.

Anonymous said...

We should go back to the basics. Build affordable public housing. That means, one that can be paid off using CPF over 20 years at the current average family income. Those who want to have more should look in the private market. I think HDB has lost the plot over the years and they are now trying to compete with the private property market. If HDB finds there is little demand for their basic affordable housing, they can release their landbanks to the private developers and make some profit there. People will then have a choice of affordable public housing or the fancy more expensive private housing. We live in a land scarce country so don't screw it up!

Anonymous said...

A new 3-rm flat in Boon Lay cost SGD138k-155k. Is that unaffordable? I think most households can pay off a flat like that in 20 years.