Friday, October 08, 2010

Different countries same mistake....

The short article below appeared in NYTimes describing how things turned for the real estate market in Dubai. At the height of the property bubble, nobody can imagine it can come to this - property in Dubai had been rising for years and it was the place of choice to work, find money and start businesses for many foreigners who went there. Dubai, however, is not unique.

A few weeks ago, you may have caught this piece of news : Irish bank bailout to cost US$60B (S$77B) [Link]. I checked and found the population of Ireland is 4+M so the size of this bailout is quite staggering. Ireland had a property bubble which collapsed ahead of the subprime crisis in US. Before the bubble burst, Ireland was often called the Celtic Tiger[Link] (hmmm...remember Asian Tigers[Link]) for its strong economy. After the political problems (Protestants vs Catholics) were solved, the Irish economy boomed from 1995-2007. The leaders of Ireland were seen as being highly competent technocrats that transformed one of Europe's poorest countries to become one of the wealthiest. In 2006, nobody can imagine the trouble its economy will be in today. But the trouble in Ireland is not due to massive govt incompetence or fraud, it was as simple as having a property market that became too hot and falling sharply - perhaps one can argue the govt was incompetent by doing nothing and just standing by as property prices rose.

A few days ago, it was reported that a HUDC flat in Bishan was sold for $1.1M[Link]. I think Singaporeans who are so used to high property prices are only mildly alarmed by this transaction but this perhaps one of the most expensive, if not the most expensive, public housing transaction in the world. People often argue that these prices are okay because Singaporeans can afford it and are used to it. I'm sure that in Ireland, Dubai or US, when someone bought a property during the property bubble, that person can also "afford it" at that point in time. If the banks are willing to lend and you can service the loan, you can afford it. I was crossing a small road to get to Tampines Interchange yesterday and saw a notice put on the railing of the road divider by a property agent - China couple wants to buy your flat, urgent purchase. There is this belief among property agents whom I've spoken to that the immigration wave will keep prices high in Singapore. After much public outcry over the surge in property prices, the govt finally stepped in last month with cooling measures to keep speculation under control - these measures have managed to slow the rate of price rise - but they were put in place after many months of denial that there was any problem here. Some suspect that they only did it because elections have to be held soon.

In Nov 2009, Mercer came out with a report to say the CPF scheme is inadequate for retirement[Link]. Studies show that an average person will retire on between 8-26% of his last draw salary vs >50% for retirees in other developed countries[Link]. The PAP govt explanation of this situation is that property has to be counted in measures of adequacy. This is strange because in apples for apples comparison, you cannot add something that is not added in other countries. But it just shows how persistently high property prices relative to income has basically sucked in funds that can be used for other things like retirement and disposal income for consumption. In short much 'wealth' is locked up in property and because of high property prices, Singaporeans enjoy a comparatively lower quality of life.

The high dependence on property as a means of retirement and store of wealth is risky. We have seen how property prices can tumble for more than 2 decades in Japan and the damage left behind when high property prices tumble in Ireland, Spain, USA, UK and Dubai. It is one thing to make honest mistakes due to unforeseeable events but another not to learn from the painful lessons of others especially when the mistake is repeated so many times.
-----------------

Real Estate Collapse Spells Havoc in Dubai

LIZ ALDERMAN, On Thursday October 7, 2010, 4:44 am EDT
DUBAI — On a sultry June evening in 2007, more than 100 people camped out at the offices of Emaar, a prestigious Dubai property developer, to ensure that they would land a coveted spot in a gleaming new skyscraper scheduled to open this year near the Burj Khalifa, the world’s tallest building.

Today, the property, designed by the New York architect Frank Williams (who died in February), is like a number of others around Dubai — little more than a rotting foundation. Its value has plunged by more than 40 percent since 2008, after the collapse of Dubai’s real estate boom.

“It’s really a disaster, the situation in Dubai,” said Silvia Turrin, a real estate agent who bought into the property, 29 Boulevard, and has been unable to get her money out. “It’s not like in Western countries. It’s very difficult to exit here if there’s a problem. And we’ll never get our money back, but now we’re stuck dealing with this hole.”

Dubai lured people to a gold rush in properties at the height of its real estate boom — including business and political leaders from Afghanistan who invested the deposits from Kabul Bank, one of the country’s largest. The near-collapse of the bank in September was largely a result.

59 comments:

Anonymous said...

Good investigative work. But don't you think Singapore is too small and therefore more easily controlled in a fall? dt

Anonymous said...

Singapore is not like Dubai. Even if correction comes, will be just a small dip. The demands are real.

Anonymous said...

To anon 11.06 : Dubai is smaller and has neigbours with hugh petro $$$$$ reserves! Apparently you have forgotten the last plunge in property prices here in Singapore -when hot $$$ bailed out!(especially from Indonesia and HongKong)

Anonymous said...

It's 1.1 million HDB flat in Shunfu, an outskirt of Bishan.

Anonymous said...

when men on the streets believe that the value of particular class of asset can only goes up, it's likely that the asset is already in the bubble.

Look at all the bubbles in the human history, it's nothing new.

geelo said...

PAP legitimacy to power is to create wealth for the people. Increasing property value is one way to create weatlh. The island is already full of millionaires because of the high property value. With more than 80% of its population owning properties, we are a very rich nation indeed. As long as property price keep going up, no one is going to question if it's a bubble. Ignorance is bliss. I really hate to think what will happen if there is a downturn when a significant proportion of the population are not able to service their loans. Perhaps the solution then is to import even more foreigners.

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

LKY now does only harm for the country.

During property crash of 1997, Japanese leaders learned their lesson. Till this date, the property of Japan still 30% of 90s.

LKY simply obsess with property, and Singapore already pass the 97 high. And worse, the current property boom is not fuel by rising income as in 90s, instead its being driven by foreigners, highly leverage debt and ultra low interest rate.

I think LKY is not mentally insane. I believe he create such situations because many of his relatives, elites not least our Temasek and GIC is heavily exposed to western toxic investment. He needs to bail them out. They cannot lost face and they must have the right to brag they are talent.

So all these fxxking elite recapitalized their junk balance sheet by making Singaporean pay for ultra stratospherically property

lim said...

Just think, how many of these foreigners will actually sink their roots here..

If not many intend to stay here for good, then we can expect a mass exodus in 20-30 years time, when that happens, we can see prices falling like a rock...

geelo said...

Don't think we have to wait 20 - 30 years for foreigners to move on. If the lessons of 1997 crash are to be learned, HKers moving back have the handover is one of the factor for the long slump in property prices in Singapore. Of course people forget easily. Especially with the help of msm.

I believe many foreigners here treat Singapore as a stepping stone. Many are on the look out to migrate to places like the US, UK, Canada, Aus and NZ. Others will work here and go back to their country of origin when they retire. In the end, the country will just have to resort to importing more and more foreigners to prop up the property value. That is if people still want to come here.

Wai Leong said...

Is your post about high property prices or cpf being inadequate for retirement? While there's some relation between the two, these are different topics.

Housing prices will always be high in dense urban areas. See hong kong, shanghai, new York as examples. The hudc transaction you cited was a purely private deal. Willing buyer, willing seller. The new York city govt can't control private real estate prices in manhattan, so do you expect the Singapore govt to control private resale prices?

What the govt can control are land sales, loan to valuation, stamp duties, etc. But these are all crude measures, and if pushed too far, can cause severe falls in property prices, resulting in negative equity and foreclosures. The govt has pricked property bubbles before, and it was not pretty.

As for cpf being inadequate for retirement, the question is, whose responsibility is it to plan for retirement? The individual's? Or the govt.'s?

People have argued repeatedly that cpf money is their money, not the govt.'s money, hence the govt should not keep increasing the withdrawal age, restricting the use of their cpf money, etc.

If we accept that cpf money is our money, how can we complain that cpf is not enough for retirement, if we are clamoring for more control over our own money? If it's our own money, then we should be the ones planning for our own retirement, and if it's not enough, we should be doing something about it ourselves rather than complain cpf is not enough.

Right?

If you don't have enough money to buy an iPhone, do you complain that the govt didn't make you save enough money? So if you don't have enough money for retirement, why should you complain cpf is not enough for retirement?

Of course people blame the rising cost of living and the high cost of hdb flats for eating away the adequacy of cpf for retirement.

I think that is really what peole should complain about, rather than cpf no enough. The govt can't increase cpf rates further, not from employer side, not from employee side. It's already too high.

But beyond complaining, people need to take the pap to task for the cost of living. By repeatedly voting pap, the people have not given pap a strong enough message that something has to be done.

Everyone wants "opposition", as long as it's in someone else's constituency. And they're not willing to throw out an entire slate of grc candidates because they're not willing to sacrifice the minister.

That's the major problem.

Anonymous said...

Is your post about high property prices or cpf being inadequate for retirement? While there's some relation between the two, these are different topics.

Housing prices will always be high in dense urban areas. See hong kong, shanghai, new York as examples. The hudc transaction you cited was a purely private deal. Willing buyer, willing seller. The new York city govt can't control private real estate prices in manhattan, so do you expect the Singapore govt to control private resale prices?

What the govt can control are land sales, loan to valuation, stamp duties, etc. But these are all crude measures, and if pushed too far, can cause severe falls in property prices, resulting in negative equity and foreclosures. The govt has pricked property bubbles before, and it was not pretty.

As for cpf being inadequate for retirement, the question is, whose responsibility is it to plan for retirement? The individual's? Or the govt.'s?

People have argued repeatedly that cpf money is their money, not the govt.'s money, hence the govt should not keep increasing the withdrawal age, restricting the use of their cpf money, etc.

If we accept that cpf money is our money, how can we complain that cpf is not enough for retirement, if we are clamoring for more control over our own money? If it's our own money, then we should be the ones planning for our own retirement, and if it's not enough, we should be doing something about it ourselves rather than complain cpf is not enough.

Right?

If you don't have enough money to buy an iPhone, do you complain that the govt didn't make you save enough money? So if you don't have enough money for retirement, why should you complain cpf is not enough for retirement?

Of course people blame the rising cost of living and the high cost of hdb flats for eating away the adequacy of cpf for retirement.

I think that is really what peole should complain about, rather than cpf no enough. The govt can't increase cpf rates further, not from employer side, not from employee side. It's already too high.

But beyond complaining, people need to take the pap to task for the cost of living. By repeatedly voting pap, the people have not given pap a strong enough message that something has to be done.

Everyone wants "opposition", as long as it's in someone else's constituency. And they're not willing to throw out an entire slate of grc candidates because they're not willing to sacrifice the minister.

That's the major problem.

Anonymous said...

Re Wai Leong

Why not raise the SIBOR interest rate to 6%, and see what happen. (a 5% rate is what is desirable for not penalizing savers)

We would then have enough CPF and low property, 2 bird in 1 stone.

We could also forbid non-citizen from owning property and also control immigration and allow only top foreigner in. Then we wont have all these bubble.

You cannot argue that PAP is not responsible for all these mess, and keep blaming Singaporean? PAP is the worst culprit.

Do you have a conscience?

Anonymous said...

Pap and the whole legacy of MM LKY will go vanish when property collapses.

Better pray that it will not happen and that Spore will continue to be blesses.

Anonymous said...

Lucky, Singapore has grown way beyond the situation Dubai and Ireland are in. Let me explain. The 1985 recession exposed the major fault line in excessive property speculation. At that time many banks especially the local ones were carrying properties which were worth much less than their true worth. Not only were Singaporeans caught in the negative trap but I know for sure that had the banks been forced to revalue their propety portfolio, many of them would have gone burst. So the lessons were learned and measures put in place like those forbiding banks from owning properties amongst others.
Singapore is today fast becoming a cosmopolitan global city which many rich and not so rich will like to set up homes. So the demand and the ability to pay are there.
Third, Singapore is such a small island with such a fast growing population.
In short, there is a paradign shift in Singapore which many Singaporeans especially the average ones are not aware of. Compare to other desirable global cities, Singapore is still very cheap. Don't believe ? Just watch and see.

Anonymous said...

When every things in japan were going thro' the roof,tons of PHDs have stack of books to prove that why Japan was different.

Of course now Dubai,Irland,China,etc,etc,are all having very long thesis writeen to explain why they are different,many books written by book worms really.

So isn't Singapore unique,Lucky?we are different,haha

Anonymous said...

Of course with an population growth rate of 35% a year,how can the property prices not going up?

PAP not be be blamed.that is really stupid guy who claimed so,how more stupid can he be?I think he meant to say people just happen to wake up and find themselevss in Singapore one day.

On the other hand,singaporte citizens do know well that the S$$1.1 million price was achieved because of MM LKY and PAP,that is a sum which would take an avergae wage earner more than 30 years of his life to work and save,with out spending a single cent during the whole of his lfe.

If this is not magical,then what it is?

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

Re Annon 8/10/10 14:26

The paradigm has shift, its right, but Singapore could still be crashing to the earth. I wish to elaborate.

Many people do not realise that the property boom here got alot to do with rascal Bernanke, Larry Summers and Tim Geithner.

During Great Depression, Rosevelt o the very least hand out some $ to the poor. In current crisis, 100% of the monies goes to the rich, who themselves are the culprit in creating the mess.

These monies is suppose to trickle to the poor. Unfortunately, if you do not have currency control, all these cheap monies will leak out. These is why we see as US stimulate, property in SG, HK, commodities as well as emerging market stock go through the roof.

On the event of hyper-inflation, central banks may hike interest above 5%. We will see our properties crashing down.

Many super rich FTs here are really thieves who stash their ill-gotten gain here.

Anonymous said...

While we open the floodgates, do we have any exit plans when mercenaries leave en mass? 10 - 15 yrs later, once our ecnomy matures, saturates and ran out of ideas, coupled with the aging baby boomers generation with small households. We can only experience a hugh property glut. It is a very likely scenario.

Anonymous said...

I always thought people were crazy to invest in Dubai. Regardless of its status as a banking hub, Dubai's laws and society are still trapped in its medieval past.

Just because a man is rich, it doesn't make him civilized by default. Human right abuses and corruption are rampant throughout the Middle East.

All the problems are just masked under their massive oil reserves, which makes the world turn away from their social problems.

Mad to even invest in Dubai. Not surprised that those investors can't get their money out.

Anonymous said...

Singapore is not Dubai. Singapore is also not Ireland. And definitely not New York or Shanghai.

So to say it will also happen in Singapore based on what had happened in other countries or cities may not be quite appropriate. Or even off the mark.

The status quo in Singapore will continue for a long time to come, maybe even after our life time.

Anonymous said...

In short much 'wealth' is locked up in property and because of high property prices, Singaporeans enjoy a comparatively lower quality of life.

That's a naive way of seeing things. Your wealth is not "locked up" in anything. It's just gone.

If I force you to buy a 10-cent pencil from me at $100, what you have is not a $100 pencil, you still have something that's only worth 10 cents. The missing $99.90 is profit that now belongs to me, the seller.

When the PAP government sells you a flat that cost them $50,000 to build at $500,000. The excess $450,000 goes to the government as profits, which is then channeled to Temasek and GIC for them to buy mortgage-back securities and Enron shares, invest in Lehman Brothers and Bernie Madoff's company, etc. In short the $450,000 is just gone.

Jamesneo said...

vonhayek, you are absoltely correct, the monetary easing from the US has exported inflation in all physical asset classes overseas due to huge amount of liquidity added. The problem arises when the US either hyperinflate or suffer deflationary spiral( i am not sure which is the final judgment but my prognosis is the former) and this leads to all dollar denominated paper money becoming worthless. In this chaotic situation it is hard to guess how this will affect the world economy but my belief is that it will be catastrophic. Do one really think that in that environment the liquidity will be there to support the ponzi financing our economy, cpf and property have become. Singaporean are way not prepared for the coming financial tsunami coming in the next decade.

Anonymous said...

"Why not raise the SIBOR interest rate to 6%, and see what happen. (a 5% rate is what is desirable for not penalizing savers)"

If SIBOR went to 6%, what do you think mortgage rates will become? Who do you think will get hurt?

"We could also forbid non-citizen from owning property and also control immigration and allow only top foreigner in. Then we wont have all these bubble."

Notwithstanding this is untenable, what do you think will happen if foreigners can't buy any kind of property? Who do you think will get hurt?

"You cannot argue that PAP is not responsible for all these mess, and keep blaming Singaporean? PAP is the worst culprit. Do you have a conscience?"

I stated very clearly at the end that one must use one's vote wholeheartedly to send PAP the message. Not the chicken_hearted kind of voting for "opposition". Do you have eyes?

Anonymous said...

Shunfu HUDC is in Bishan. They are preparing for privatisation and thence en bloc next year. Hence the $1.1m. Previous transacted prices are $700 to $800k maybe 2 years back. So the current basis for $1.1m is valid given the redevelopment potential.

Anonymous said...

experts compare wage increase to property increase. is plain obvious that there is a bubble at least for ordinary singaporeans whose wages have stayed largely stagnant over the past three years while property prices gallop up.

vote out pap. or pay thru a bleedin nose for a pigeon hole. or sleep on the street.

Anonymous said...

Re Anonymous 8/10/10 17:35
/////////////////////////
If SIBOR went to 6%, what do you think mortgage rates will become? Who do you think will get hurt?....

what do you think will happen if foreigners can't buy any kind of property? Who do you think will get hurt?
/////////////////////////

You should not ask this question. We should ask ourselves who get us here at Sibor less than 1% 12 month, and let foreigner buy whatever property they want to.

And cheap monies did not goes into productive investment like industries. It went straight into property as if LKY has never seen Thailand 1997.

If we set sibor at 5%, which is the right thing to preserve our cpf, lotsa asset owner will go broke. If business as usual, people will not have enough for old.

Same for foreigner purchasing property here, its painful to reverse.

In short PAP has created a big mess that it would take a lot of pain to solve. Curse will visit up till the 10th generation because of our greed and indifference towards tyranny of PAP.

Anonymous said...

"If I force you to buy a 10-cent pencil from me at $100, what you have is not a $100 pencil, you still have something that's only worth 10 cents. The missing $99.90 is profit that now belongs to me, the seller."

Nice ring to it, but not very accurate.

Who is to say what a particular property is REALLY worth? Valuators? We all know they do nothing more than look at past transacted prices?

Property can be valued as an instrument which generates cash flows. Given the predicted cash flows and discount rates, one could estimate the present value.

But how can one be sure of future cash flows? Maybe rentals will go up in future; maybe it will crash. Your best guess is still an estimate, even if you do Monte Carlo simulations.

So in other words, can you really say a property is worth exactly $100k?

Notwithstanding the above, the key thing abt the PAP is they don't give freebies. So don't expect them to just sell you a property at construction cost only.

If you're not happy with this, better think carefully how you vote.

Anonymous said...

I have a colleague who must have easily made over $1 million flipping condos since the Asian financial crisis. He recently made around $200K from flipping a condo he bought in mid-2009 "to free up capital for other opportunities". According to him, the ideal property market is one that is like a nice sine curve, boom & bust every few years. He doesn't like it when prices go up or down for too many years! LOL

Wai Leong said...

Re Anonymous 8/10/10 17:35
/////////////////////////
If SIBOR went to 6%, what do you think mortgage rates will become? Who do you think will get hurt?....

what do you think will happen if foreigners can't buy any kind of property? Who do you think will get hurt?
/////////////////////////

"You should not ask this question. We should ask ourselves who get us here at Sibor less than 1% 12 month, and let foreigner buy whatever property they want to."

On the contrary, this is exactly the question to ask. Complaining is easy. Untangling a mess is tough. I don't need "opposition" leaders who only know how to blame pap and make jokes about their mistakes at rallies. I need those who can solve problems. Can you name a few who would know how to get us out of this mess?

"if we set sibor at 5%, which is the right thing to preserve our cpf, lotsa asset owner will go broke. If business as usual, people will not have enough for old."

Which economic theory gave you 5% as the ultimate answer? Please share.

Notwithstanding the above, In case you didn't know, the world is in a low-interest rate environment now. So there's nothing unusual about our low interest rates. Indeed, it would be totally unsustainable if we were at 5% while the rest of the world is below 1%. As it is, our companies are already finding it hard to sustain export competitiveness due to the continually rising s$.

Anonymous said...

Most of the wealth for Singaporean was lock up in CPF & HDB. Yes, Singaporean is wealthy in asset but not cash liquidity. That's why it's difficult to find entrepreneur in Singapore.

I don't classify the current property market as bubble, because it's not driven by truth cash liquidity from Singaporean. I think the correct word is property manipulation.

I don't think it's healthy for Singapore future for locking the wealth with Government. They can use this as a tool to control the citizen by driving the property price down and show you the result of vote PAP out.

I'm not a supporter of PAP or Opposition, but with too much wealth lock in property and HDB is not healthy for the future singapore.

Anonymous said...

"if we set sibor at 5%, which is the right thing to preserve our cpf, lotsa asset owner will go broke. If business as usual, people will not have enough for old."

Which economic theory gave you 5% as the ultimate answer? Please share.
////////////

I'm not the person about but it's very funny on your reply

He use set SIBO 5% but your question is gave SIBO 5%.

I wonder you know what is SIBO.

Anonymous said...

I'm not a supporter of PAP or Opposition, but with too much wealth lock in property and HDB is not healthy for the future singapore.
/////////
Sorry, it's property and CPF not property and HDB.

Anonymous said...

Wai Leong,

Property price can be managed and controlled by the govt. Supply and demand are mostly all in the govt hand.
There is no use of arguing what is the appropriate sibor rate but just closely pegged with the inflation rate. An extended period of too low interest rate will indirectly create an opportunistic society and in the long run the country will suffer at large.
The govt did not want to take the opportunity to lower the assets price during the financial crisis but instead let the asset value appreciated further. They have to face the challenge to those middle and lower income group people who are concerned on the escalating cost of living and worried of their children futures.

Wai Leong said...

"There is no use of arguing what is the appropriate sibor rate but just closely pegged with the inflation rate."

Excuse me, who's the one who gave 5% as the ultimate number? If you propose a number, you should be prepared to justify it. Else where's your credibility?

"An extended period of too low interest rate will indirectly create an opportunistic society and in the long run the country will suffer at large."

Please answer the question. Can Singapore set high interest rates while us, japan and Europe have historically low rates? What will happen to exporters?

"The govt did not want to take the opportunity to lower the assets price during the financial crisis but instead let the asset value appreciated further. They have to face the challenge to those middle and lower income group people who are concerned on the escalating cost of living and worried of their children futures."

What do you propose to do about it now, other than dictating rates at 5%?

Lucky Tan said...

Wai Leong,

These low rate reminds me of 1998 & 2001 flooring of rate but this time it is on a massive scale. The 1998 lowering of rates led to the tech bubble and 2001 led to the western housing bubble.

The collapse of the twin bubble in Japan - first stock and then housing...led to a situation when low rates proved useless to revive the sagging economy in Japan.

Anonymous said...

I will just touch on property valuation. In Singapore, the property market is one which has a rather distorted market value. There are different valuation methods of which one of them is based on past transacted prices. This method is on the premise that current transacted prices for similar properties translate to current market sentiments. Usually, a projection may also be included. That is to summarise, the valuation price should be very close to market price that a willing buyer and seller want to transact at that price.

The problem in Singapore;

1. Chicken and egg issue. Which one comes first? Almost 80% of us live in public housing. With the so-called subsidies and other measures, private developers tend to price their developments looking at public housing prices. With the exception of resale flats, public housing valuation has always been a secret, save for the Chief Valuer. Basically, HDB, being a major property player, intuitively, should have a big say in the property prices.

2. Land cost. URA sets the minimum land cost. They also decide if they want to sell the land or not. They also decide how much land they want to sell. Private developers need to manage land bank, because without land, they cannot build and sell. Therefore, you could pretty imagine the behind the scene scenarios of property developers trying to get some kind of advantage in terms of the land banking policies.

3. The government also indirectly control the property market by the land use. Private developers may have to pay certain premiums for white sites or redeveloping existing land.

4. Industrial (JTC), Commercial (do you know that out of the 13 or so public listed property firms in Singapore, the majority shareholder in about 10 of them is Temasek Holdings), Residential (80% HDB, private developers include the GLCs as mentioned in Commerical)

You could see the government footprints in almost every aspect of the property market. In my perspective, the government is definitely a major influence in the Singapore property market.

Anonymous said...

"The collapse of the twin bubble in Japan - first stock and then housing...led to a situation when low rates proved useless to revive the sagging economy in Japan."
- Lucky Tan 9/10/10 08:41

This started in the late 80s and early 90s. So almost 20 years already.

But Japan is still surviving. Their people are not starving, nor are there riots and disorder. Cost of living (Tokyo is still among world's highest), property has also not dropped, Japanese products are still reputed for quality, etc, etc.

Same for the USA and Singapore. The current situation may continue for 20 or more years and people will not starve or riot in the streets and the system of govt will continue as per normal.

So what's the catastrophe?

Anonymous said...

Anon 9/10/10 10:21

You are right. That's why Singapore cannot be compared with other countries where property prices and factors affecting it are concerned.

Unless they also have the Singapore type of situation and the PAP type of government.

Do they???

Remember "Uniquely Singapore" as our selling point?

Anonymous said...

Again a miracle?Haha

I cant imagine when the country stopped growing for m,ore than 20 years,and some people can still say-OK wow.

Just pick up a line fr

en.wikipedia.org-THEY MUST BE LYING,I GUESS!

Prices were highest in Tokyo's Ginza district in 1989, with choice properties fetching over 100 million yen (approximately $1 million US dollars) per square meter ($93,000 per square foot). Prices were only marginally less in other large business districts of Tokyo. By 2004, prime "A" property in Tokyo's financial districts had slumped to less than 1 percent of its peak,

Anonymous said...

another usual story fr Time.Nothing wow!


December 29, Tokyo, Japan

In the autumn of 1989, Jin Matsushita was making more money than he ever dreamed he would; more money, indeed, than he thought he'd ever need. After joining Yamaichi Securities straight out of high school, Matsushita had worked his way up from lowly office boy scribbling stock prices on a chalkboard to fully fledged stockbroker in Yamaichi's nationwide army of salesmen — and what a golden time it was to be trading stocks for one of Japan's largest securities firms. Japanese companies like Toyota and Sony were becoming globally dominant, while the country's businessmen, flush with cash, fanned out across the world, snatching up iconic properties like New York City's Rockefeller Center, the fabled Pebble Beach golf course and Hollywood's Columbia Pictures. Matsushita himself was earning an annual salary of $150,000 plus a bonus that often exceeded his base pay. Everyone was getting rich. The Nikkei 225 stock index soared to an all-time high of 38,916 on Dec. 29, 1989. "It was a kind of miracle, I suppose," says Matsushita.

It was the kind of miracle that doesn't last: an economic bubble that soon burst. What followed was collapse and years of torpor that came to be known as Japan's "lost decade." Neither Tokyo property prices nor Japanese stocks — nor the Japanese people, for that matter — have ever fully recovered. The Nikkei index on June 15 closed at 10,040, an astonishing 75% below its 1989 peak. And Matsushita, now 73, is working the night shift at a convenience store just to make ends meet.



Read more: http://webcache.googleusercontent.com/search?q=cache:ocrWmZRvCmIJ:www.time.com/time/specials/packages/article/0,28804,1902809_1902810_1905192,00.html+japan+property+prices+since+1989&cd=3&hl=en&ct=clnk&gl=sg#ixzz11pRd04qr

os25 said...

I like to comment on the sentence that Singapore is different.

Supply can be different.
Demand can be different.
However, bubbles created by cheap credit and greed are the same.

os25

Anonymous said...

Theoretically, a stable price index can be achieved.in fact, we know it is in our economic and social interest to maintain prices at peaceful level.
To do that, we need to be united and cooperate to reign over the market.
We have yet to achieve that because of..a certain religion.

Anonymous said...

So long Sin remains the Hub for the filthy rich around the world to park their fortunes and a place for them to seek refuge, rest assure that the only victims to the state of economy will be the lower income group. They will have to slave and their successors will have to inherit the slavery. All the rich and successful will enjoy more good years. No blaming of the leadership, It has made Singaporeans very rich, even if it is just asset and not cash. However, It does not stop Singaporeans from encashing their assets and move off to other countries liked the way the foreigners come to park in SIN. Ultimately, it is how you plan your own future.

Anonymous said...

@@Wai Leong said...If we accept that cpf money is our money, how can we complain that cpf is not enough for retirement, if we are clamoring for more control over our own money? If it's our own money, then we should be the ones planning for our own retirement, and if it's not enough, we should be doing something about it ourselves rather than complain cpf is not enough.@@

huh ?? and yet when it comes to retirement, they still control the distribution of funds to you.

do something ? let us just see !!!

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

Kuan Yew : ''Many Thai leaders in Government and opposition have personal interests in the fate of finance companies and banks, hence a natural reluctance to discipline them,''

''So warning signs were ignored and remedies postponed.''
//////////////////////////////////
Sources : New York Times
http://www.nytimes.com/1997/11/04/world/thai-prime-minister-quits-a-casualty-of-economic-crisis.html

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

"East Asia's economic miracle had its weaknesses," he said. "In going helter-skelter for economic growth, many governments did not strengthen their banking systems. Had there been adequate legislation and rigorous supervision, the excessive borrowings that went into real estate, the stock market and unproductive industrial expansion would have been noticed and checked before they ballooned out of control. Corruption and cronyism exacerbated these problems."

Mr. Lee said that when the crisis came to a head, for several months political leaders and their officials in the finance and banking sectors refused to accept the market's verdict.

"They did not accept that things had gone wrong and that their weak banking systems and loose credit policies had been at fault," he said. "Their refusal to accept the new realities made investors sell out and cut their losses. This stampede deepened the crisis. Investors lost confidence not just in particular projects or countries but in the entire region."

Mr. Lee said the root of the problems was political.

"Ministers had not heeded the warning signals from the market because they were preoccupied with political difficulties," Mr. Lee said. "The Thais had six governments in five years, and none had the time to attend to the gaping current-account deficits. Malaysian Prime Minister Dr. Mahathir condemned foreign speculators."

//////////////////////
Source New York Times
http://www.nytimes.com/1998/02/09/business/worldbusiness/09iht-coord.t.html

LKY on Thailand 1997 currency crisis. Lee is always a wise man giving advice to people.

I believe Lee knows what he is doing now. But he needs to cover the a big hole for the elite class. I believe our elite class incur high losses in exposure of western toxic investment.

Anonymous said...

Mr. Lee said the root of the problems was political.

and therefore, religious.

TokyoSingaporean said...

Hey Lucky,

I'm already scratching my head these days when I look at the newly priced HDB flats. Prices are getting way too expensive. How are young singles such as myself who are planning to settle down to purchase one? Why are we made to wait out for 3-4 years for a flat? When you have to wait out 3-4 years for an expensive nest, how can you not say that the government's policy is the real cause of the falling birth rate in Singapore? Their greed for money has meant that we are now paying the price.

Anonymous said...

This started in the late 80s and early 90s. So almost 20 years already.

But Japan is still surviving. Their people are not starving, nor are there riots and disorder. Cost of living (Tokyo is still among world's highest), property has also not dropped, Japanese products are still reputed for quality, etc, etc.

Same for the USA and Singapore. The current situation may continue for 20 or more years and people will not starve or riot in the streets and the system of govt will continue as per normal.

So what's the catastrophe?
///////////
So your highest standard of living is like the Video below.
http://www.youtube.com/watch?v=HL1I6xbhVbw

Yes, you can't see starving and riot because they all when to mount Fuji for suicides mission.
http://www.youtube.com/watch?v=pV7znHv0OE0

Anonymous said...

Tokyo Singaporean, stay in japan love hotel. Still cheaper than hdb in the long term

Anonymous said...

If one man is able to manipulate his kingdom and influences the world, he got to be respected and not be derided.

Anonymous said...

@@@If one man is able to manipulate his kingdom and influences the world, he got to be respected and not be derided.
------------------
You mean North Korea Kim Jong-il must be respected and not be derided.

Anonymous said...

Yes! LKY is a breathing Ultimate Man, Second to the Almighty if there is one.

Without him, Singaporeans would have been fishermen, farmers, coolies and amahs. Those who can speak English can ply at Bugis(Peh swa poo) and wait for angmors.

Without him, where got Changi airpot, marina sands and sentosa.

Without him, where got hdb to stay in, singaporeans would be staying in attap huts and undergrowths.

Anonymous said...

"The Ultimate Man" That sound like North Korea Kim Il Sung & Kim Jong-il.

Anonymous said...

Kim dynasty:+1
Li dynasty:-1
But as the big one declared,wait till my coffin is sealed!
Pl try not to be an idiot!

Anonymous said...

So long he hears nothing bad while breathing, that's good enough.
You want to swear, curse and get heart attacks after the coffin is closed, it will be you die your bizness for he shall hear nothing and see not a thing. Got something to say? Say it loud and clear whilst your idol is able to hear it.

Ghost said...

It is highly unlikely that Singapore will end up like Dubai. Dubai came down like a house of cards because they build it up too fast but property prices in Singapore has always been on the high side, even before the current boom. Even if correction comes, the prices will not go into a tailspin like in Dubai (40-50% or more). I for one can't see HDB price going down by 50%.

Anonymous said...

It is highly unlikely that Singapore will end up like Dubai. Dubai came down like a house of cards because they build it up too fast but property prices in Singapore has always been on the high side, even before the current boom. Even if correction comes, the prices will not go into a tailspin like in Dubai (40-50% or more). I for one can't see HDB price going down by 50%.
-------------

HDB price can easily manipulate, but how about private property. If private property fall 50%, do you think it's possible that HDB will fall at least 20% to 30%.

Personally I don't think property price falling to 50% will be a problem, because you can just hold it. But If most of the property on heavy loan than even the price fall 10% most of the people will be in the shit. A good example in 2001.

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