Sunday, June 27, 2010

MM Lee : No Housing Bubble in Singapore....

'Even if we cap our excess, people in Hong Kong, Indonesia, will say,
compared to what I have to pay, Singapore is cheap, let's buy it,
' he added.
'And apart from landed properties, they can buy into any condos.'
Mr Lee, who was speaking at a dinner hosted by the Association of Banks in
Singapore, said that the Government is convinced that there is real underlying
demand for residential property
'So it's probably not a bubble yet,' he

- Ariticle "Probably no property bubble here yet: MM Lee" [Link]

Gee, I thought I heard that one of those Sentosa Cove bungalows was sold for $36M[Link] recently so we have to wait for those bungalows to go for $72M a piece before someone in govt admits there is a bubble? Also, MM Lee said that prices are rising because foreigners from places like Hong Kong find our property cheap so we shouldn't try "cap our excess" and keep prices under control - yes MM Lee, let them spiral up! Hong Kong and China had a big surge in property price and the govt there implemented drastic curbs to slow the bubble[Link] - yes, the govt there recognised there was a bubble and implemented measures to put things under control. Yet we allow the excess demand from these countries to spill over into Singapore causing prices to surge, Singaporeans who need housing will end up paying higher prices.

By saying that prices are rising due to foreign demand, MM Lee contradicted his own minister [Link]. If what MM Lee said is true, there are commonly used and effective measures to curb such imported demand for property e.g. in Australia foreign owned property can only be sold to Australians.

We have to guard against bubbles because the damaging effects of one can be serious and long lasting. But to be able to avoid trouble the govt has to be on its toes and detect it before it is too late - MM Lee sees no bubble so his ministers will now take the cue and do nothing as prices rise.
Robert Shiller is a rigorous and thorough academic who is careful about making assertions ...but he has turned somewhat pessimistic about the US housing market. Listen to what he said recently about possible long lasting effects the bursting twin bubble - stock market + housing - in the US : [Link]. Other countries have handed us lessons we cannot afford not to learn...and if the govt doesn't learn, it will again be caught off guard .....hmm, that is something that happens quite often these days.


Anonymous said...

PRs are permitted to purchase properties in Australia too.

Anonymous said...

Hi Lucky,
I would have to agree with the old man this time.
The current Singapore real estate prices are basically supported by foreign funds. There are so much liquidity in China, and now that China is relaxing its exchange rate, as the RMB becomes stronger, we can expect more Chinese money investing in Singapore.

Anonymous said...

MM Lee is probably right. He gave himself an 'A' or 'A-' for his financial planning for Singapore.

Lucky, how do you rate yourself?

Anonymous said...

Old Fart will never admit there is a housing bubble because escalating property prices help to bump up the GDP and PAP have been selling Singapore away by the square feet to foreigners.

PAP being bankrupt of ideas how to prop up GDP growth or move Singapore forward, have been bending over backwards to help wealthy foreigners buy properties here, including homes sitting on FREEHOLD land. The morally bankrupt Pro-Alien Party will gladly issue a dummy pink IC for the sake of selling a 20-30mil bungalow.

What happens when there is no more bungalows left to sell to wealthy robbers and tax evaders who park their ill gotten gains here? Evict Singaporeans from HDB flats and sell them by the block to foreigners? Start selling Singaporeans' organs?

@anon 21:26:
PRs are permitted to buy properties in Australia but the Aussie govt is smart to ensure the PRs don't end up profiteering from it.

Anonymous said...

Why? Is the old man running out of options and needs to talk up the market? Is he concerned because of elections are coming soon and the global economic situation is getting graver?

When the next major financial global tsunami happens, and margin calls swarm these foreign speculators and investors, then we'll see if Sg's current property situation is a bubble or not.

By then, who are the ones who will end up holding the baby?

Can the MIWs still be able to parrot their "caught offguard" excuse again?

Anonymous said...

That's why MM Lee, besides being a forecaster, also sets the benchmark and direction for future policies. He also prefer further merging of banks here to two or even one.

You can be sure the ministers and civil servants will start to take the cue from him and implement accordingly. Because they don't have the balls or maybe even the brain to challenge him, basically hopeless, unlike Goh Keng Swee in the past.

If MM Lee were to kick the bucket, (maybe at most another 5 years), I foresee the govt losing its brain and direction and chaos will ensue.
When that happens everything will plunge, including property or even the currency.

So better keep liquid cash, which can be switched to another faster than stocks or property.

Anonymous said...

Property prices have to be supported by earned income. If a medium income family cannot afford a typical property, there is probably a bubble.

The problem with hot foreign money is that it increases the cost of mortgage payment for locals without clear benefit. When the hot money goes away, the locals will continue to suffer high mortgage payment for many years to come.

So if the rent is (much) cheaper than monthly mortgage payment, always go for rental!

DanielXX said...

the garment is not interested in pricking luxury ppty bubble. in some ways that is right, cos ordinary singaporeans won't be able to afford them cheap or expensive anyway. however, i would beseech MM to pls consider crushing the prices of mass market ppty b4 singapore becomes a social shambles in 10 years time when the young become disillusioned with being unable to buy a place of their own and end up becoming 2nd class citizens to richer new immigrants. then there would truly be no rooted true singaporeans.

Anonymous said...

@DanielXX, you wrote " b4 singapore becomes a social shambles in 10 years time when the young become disillusioned with being unable to buy a place of their own and end up becoming 2nd class citizens to richer new immigrants ". Don't you realise you are already in deep shit? When will you start realising that you are already in it so deep you will not be able to get out of it? Well. if you think there is still hope for the younger generation Singaporeans, then I advise you to look deeper into the Singapore you have today. If nothing drastic changes in the direction you are going, then in 10 years you will not even be 2nd class citizens, you will be 3rd or 4th class well below the elites, rich PRCs, rich Indians, rich Indonesians etc.........and way down somewhere at the bottom will be the true blue Singaporeans, still voting for the govt. the have voted for the past 50 years. Good luck to all your children and grandchildren.

Anonymous said...

i only noe the old man is always diametrically right in his prediction

there IS a property bubble in singapore after all...

Anonymous said...

June 27, 2010 at 2:50 pm





Name : Mr Khaw Boon Wan (Minister for Health)
Constituency : Sembawang GRC
Place of Birth : Penang, Malaysia

Name : Er Lee Bee Wah (Member of Parliament)
Constituency : Ang Mo Kio GRC
Place of Birth : Johor, Malaysia

Name : Ang Mong Seng (Member of Parliament)
Constituency : Hong Kah GRC
Place of Birth : Johor, Malaysia

Name : Ng Phek Hoong, Irene (Member of Parliament)
Constituency : Tampines GRC
Place of Birth : Penang, Malaysia

Name : Neo T.Lily (Member of Parliament)
Constituency : Jalan Besar GRC
Place of Birth : Medan, Indonesia

Name : S. Iswaran (Member of Parliament)
Constituency : West Coast GRC
Place of Birth : Madras, India

Name : Inderjit Singh (Member of Parliament)
Constituency : Ang Mo Kio GRC
Place of Birth : India

Anonymous said...

PM Lee says - Don;t expect flood free Singapore

Minister Shan says - Don;t expect govt to secure the MRT depot / Lines

I say- don;t expect million dollar salary then.

Enough crap

Anonymous said...


Somehow, LKY seems to be living in a world of his own. His logic does not make sense to simple being like us...

1) No bubble as long as foreigners are willing to pay higher price for our property. It is perfectly ok to him that Singaporeans pays are suppressed and cannot afford the housing that are inflated by wealthy foreigners??? Then where are poor Singaporeans expected to stay? All do he expect all of us to take up huge loans that we cannot afford and speculate in the property market in the hope of making a quick buck instead of putting our energy in PRODUCTIVE work that do not make enough to pay for the ever increasing housing, transport etc, costs in Singapore???!!!

2) He still thinks that we should have only 2 BIG banks when the USA is talking about not allowing banks to be "TOO BIG to FAIL".

He further quipped that we have very good regulators. HA!!!

If so, please tell me why DBS need to issue rights to raise 4 billion to do nothing during the financial crisis???

Chua Chin Leng aka redbean said...

Someone may quip, 'We have created this excellent system for everyone to make money. Now can buy HDB resale flats to rent out and still live in private property. Isn't that nice?

And for those who cannot take advantage of this wonderful system to become richer, just too bad. Losers.

And losers are no good. Should be quickly replaced by more enterprising foreigners who are rich and clever.

Anonymous said...

Wah! This means it is time to get out of the market. LOL

Ah Kow said...

I think Old Man wont let the property price drop as most of his cronies own properties here & there. If I am the PM or MM & if I have tonnes of properties, would I not make drastic moves to stop the prices from falling? I would go out of my way to make sure that my houses now is worth 10times tomorrow!! Come on, the PAP no longer works for us, they only work for themselves & their million dollars salaries; sad but true!

Anonymous said...

It's us, poor Singaporeans who will end up getting scalded by the boiling hot HDB prices! The rich foreigners can afford to speculate, bubble burst just 'chabut' (run). Is the income of Singaporeans keeping pace with increasing HDB prices???

Anonymous said...

There must be some Singaporeans buying up properties in other countries as well.

Possibly there could be some Singaporeans rich enough to buy a whole paradise island somewhere.

nepotism free said...

matter of time PM Lee will claim "not possible to be bubble free"...predictable sequel to 'not possible to be flood free.'

when the shit hits the fence with oldman's demise, PM Lee will then proclaim, "not possible for his govt to be dummy free."

is it too late for Sporeans ?
one dumb PM leading 80 dummies
or 80 dummies leading one dumb PM ?

Anonymous said...

Dear Mr Lucky

.. psst ... South Africa's freedom was won not just by Nelson Mandela sitting quietly in a prison but lots and lots of negro blood... but let's not let fact get in the way of liberal fantasy ...

As pointed out by fellow anons ... given MM's accuracy in fortune-telling and your unwavering belief in the ability of PAP (which i assume from your lack of action) ... looks like its time for you to buy that property cheap from that upstart lawyer :-) said...

90 days free to try and study!
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Michael said...

Dear Lucky,

Listen to this if you have the time. If not, Watch from 1 hour onwards. You'll be amaze.

Anonymous said...

Sg is now a gem, better than belgium, switzerland and anywhere.
It will guard the fortunes and protect their owners from anywhere, how could there be bubble? There are many doomsayers around. Rest assured you will make yr own piles soon.

jamesneo said...

My prediction is the bubble will start to burst or begin a long decline from 2013 onwards when the supply suddenly become much more than demand. It might burst earlier if the economic situation in china and the west become drastically dire.

Anonymous said...

Today's ST (29/6/10) carried an article about UBS being very bearish on local property due to many unsold units coming onstream in the months ahead.

If I were like the old man (who sits on the board of UBS) and get to read that damning report on Sg's property prospects before it is made public, I think I'll use my influence to "talk up" the market before the public gets to know about UBS' company's negative stand on local property.

Interestingly, the old man made his positive comments about the local property sector just days before the UBS' damning report was made public.

Let's see who will be right in a year's time.

Bear Fan said...

it's weird - sgx is dropping by half a pct, but elsewhere indices are down by around 2pct.

it's foreign money again??? like the ppty? or it's temasek pumping in $$$ for coming election???

Anonymous said...

Just wondering out loud how many politicians own more than 1 property and how many properties does our ministers own?

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Anonymous said...

***there is real underlying demand for residential property.***

The rich always have plenty of excess money for them to shift their funds among the different asset classes, properties being one of them.

In fact and for some good reasons best known to themselves, the really filty rich ones have so much money they can literally buy houses in good locations of many countries as long as the countries are not basket cases.

Of course, there is real demand. The problem with this real demand in a small country like ours is how this is going to be translated into real benefits or unwanted externalities for the people.

Currently, the yardstick of real demand is money power. However, the focus should be real housing needs for the people and the real servicing capacity over their lifetime in paying off the housing obligations which are getting inflated by this "real demand" simply because we welcome anyone who has money to spend in having a share in our small country in the form of physical space aka properties.

It is going congest the whole place in which those higher in the value chain find comfortable consolation in having ready benchmark by comparing it with much worser cities in the world.

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