The prices of HDB rose by 4.1% in the 2nd quarter (April - June) of this year[Link]. This rise is also mirrored in private properties which rose more than 5% in each of the last 2 quarters of this year - that is a whopping rise of more than 10% in 6 months. There are many negatives associate with the increase in property prices. Property prices rising much faster than income means that ordinary Singaporeans have to take up more debt for housing. The price rise also worsens the effect Singapore's income gap which is already the highest among developed countries - middle and lower income families have to purchase smaller homes and are unable to upgrade while wealthier Singaporeans more than 1 property can enjoy the wealth effect of higher prices by selling at these lofty prices.
Things are not going to get better with another 100,000 extra foreign workers that PM Lee said will be here in the coming months. They too will need housing and that will worsen the situation. In the recent BTO for Ponggol Waterway Terraces, the number of applicants was 18 times the units on offer. We have a very hot market set to get hotter in the coming months unless HDB does something to meet the demand. One can argue whether we are in a bubble or not. Bubbles are obvious only on hindsight. However, price rise that is so much faster than income growth means that the debt burden for ordinary Singaporeans buying homes has increased rapidly in the past few quarters. For an economy that depends on workers to be faster, better and cheaper, rising debt burdens and increase in cost of living will undermine their ability to save, cause their living standard and quality of life to fall and lower their ability to start a family and have children. The govt is asking workers to be cheaper while it does little to arrest the risning cost of housing.
Last week NMP Viswa Sadasivan urged the govt not to focus solely on GDP growth[Link] and use other economic indicators that measure the general well being of the ordinary Singaporean. I would go even further than that by saying that the high GDP growth is negatively correlated with improvement in quality of life for a large segment of the population. For many Singaporeans, the GDP growth in recent years simply translate to increase cost of living without the correspondng rise in wages. It has to do with the way the PAP govt generate such high growth by importing foreign labor. When the economy grows, you see headlines like the on today's Straits Times "Resale HDB Prices hit new highs" but you won't see headlines like "Wages of Singaporeans go up by 5% last quarter". ...as property prices, transport costs, utility rates, conservancy charges rise to negate any economic benefit of growth.