Thursday, September 15, 2011

Developers to Khaw : Review cooling measures...

Here's a picture of our new Minister of National Development Khaw sitting at a table next to one of Singapore's richest billionaire Kwek who was there together with other developers urging the govt to review its cooling measures in light of the unfolding economic turmoil.
If you're cynical enough, you might be tempted to interpret this as big business exerting pressure on govt to safeguard its own interest and profits at the expense of Singaporeans.  I would urge readers of this blog to refrain from jumping into this conclusion. Minister Khaw works for us and billionaire Kwek is after all an ethical businessman and philanthropist - there is no reason to believe he is not would put society and his fellow Singaporeans above the profit motive.  The developers were urging Khaw to consider reviewing the measures that 'artificially' suppress demand should the economy worsen and cause the property prices to fall. It is not just developers who should be worried but Singaporeans who have taken up huge loans to purchase their homes will be adversely affected by a fall in property price. The problem with a sharp rise in property prices is not just the un-affordability of homes on the way up but the negative impact of falling prices when the high prices can no longer be sustained. The dilemma for Minister Khaw now is whether he should allow prices to fall or whether he should roll back the cooling measures to give developers more time to unload their remaining holdings.

For me, in this whole property saga, the PAP govt missed out a good opportunity to show it is extraordinary  and to prove it offers a great difference compared ordinary govts in other countries. All the ingredients were there to give the PAP a chance to show a great distinction - the public housing experience, the rising income gap, lessons from the collapse of housing bubbles all over the world. The PAP could have done something innovative, something different and something that will prove once and for all it stands head and shoulders above the govts of other countries. But it didn't and fell into the same traps, stumbled into the same problems and had miserable outcomes that were the partial cause of its poor election results.

Going into 2008, we saw the bursting of the US housing bubble and the failure of the US bamking system caused by the fall in property prices. The bubble was there the result of Alan Greenspan cutting interest rates to get out of the post-911 recession. The housing bubble was not restricted to US but seen happening in Spain, Ireland and earlier we saw the effects on Japan - until today they have not recovered. We saw the lack of govt intervention in the housing market in US and parts of Europe resulted in a catastrophic consequences. Singapore has all the tools in place when we got out of this recession - a large public housing programme, experience from the 1996 property bubble and various social conditions e.g income gap, rising poverty to justify the provision of affordable homes. Yet the PAP became entrapped in an ideology that allowed home prices to rise far faster that workers' incomes and cause so much financial pain to ordinary Singaporeans looking for a home. Ex-minister Mah who defended govt policy to the end and had this awful last argument that if homes are sold cheaper than suggested by market prices, it is equivalent to robbing the reserves.

The effects of high home prices has far -reaching effects. A worker will find it hard to live on the same or lower wages if housing cost is high - we are an expensive workforce not because Singapore workers are greedy but because the cost of living is high and housing is a large part of it. It undermines the Singapore worker's ability to compete. High housing prices means lower disposable income which leads to a lower standard of living, and pressure on businesses that depend on domestic demand. High housing prices amplifies the wealth inequality among Singaporeans - the "have too much" who owns buildings ...right down to those who work full time jobs but struggle to own a home. Inequality in terms undermines meritocracy as it makes it steeper and harder for those who have to climb from the bottom....the high debt levels of poorer Singaporeans due to housing means the slope they have to climb is greased up so they can slip fall easily.

Minister Khaw works for us but he finds some time to listen to these billionaire developers asking him to review cooling measures as a new economic crisis erupts. But remember when the recession comes, Singapore workers' income will fall and they will cheaper more affordable housing when their incomes are depressed ....the mistake was already made by Khaw predecessor Mah who did not listen to the hundred thousand Singaporeans who had difficulties buying a home...billionaires were not too concerned  as housing prices rose and ordinary Singaporeans have to take up higher debt burdens to own homes.

41 comments:

Ghost said...

I think the funny thing is that the high housing prices are still high! The cooling measures hasn't work, the prices hasn't come down, and yet they want to "review" the cooling measures! I can't help but laught at that.

Anonymous said...

I believe high property prices, like many other things where prices are high, is well tolerated by at least 60% of Singaporeans.

Therefore if I were Mr Khaw, or even the PM, this is very reassuring.

Hence I will continue to focus on strong economic (GDP) growth, where high property prices may be a factor.

After all, if casinos are OK for economic growth, what is high property prices?

Anonymous said...

mistakes have been done, what to do?

pop the bubble? big no no for me. deflation is the worst disaster.

Thus, the only solution must be able to make the house affordable and keep the the house price as now.

we can
1) increase the 1st time subsidy for new HDB buyer
2) devalue the sing dollar->higher pay for Mfg worker->higher average income for average Singapore worker-> house more affordable

Anonymous said...

The most obvious thing for the developers to do in order to increase demand for their products (and clear their stock) is simply to drop their prices to saner levels. This is how the market principle works in every other industries. Why should it be different for the property developers?

Anonymous said...

"The most obvious thing for the developers to do in order to increase demand for their products (and clear their stock) is simply to drop their prices to saner levels."
Anon 15/9/11 12:51

If I were a developer, this will only be the last resort. I think they haven't reach this stage yet, or if at all.

Anonymous said...

Let's just look at the brand new HDB prices directly purchased from HDB.

If you look at just the price of new HDB flat, it is already overpriced. How can it be considered as subsidised if its tagged to market price.

The young couple seeking to settle down are really bogged down too much by its price, not to say the waiting time of BTO which is about 3 years.

If you tagged the price for New 4 room HDB flat , $ 270, 000 with average household income to $2500 per, Its about 9 years of annual wages. This is way beyond the affordability of the lesser mortals.

Don't forget, we still need to pay to renovate and furnish it. In fact, young couple are looking forward to a mountain of debt...

I think we have dig ourselves into a corner now for housing prices...

Anonymous said...

" there is no reason to believe he is not would put society and his fellow Singaporeans above the profit motive. "

You've got to be joking!

Business exists purely for profits.

It is not a charity neither is it there for the purpose of society.
It may pretend to be, but that is another matter.

The picture shows that all in the same boat...such a cozy, comfortable feeling.

Great teamwork.

Anonymous said...

The first step in the solution to any problem is to identify the cause of the problem.

The cause of the problem is the incorporation of market price of land into the price of HDB flat.

Only when this is acknowledge can proper steps be taken to address the problem.

Anonymous said...

"minister cow works for us"

Haha. Very funny Mr Lucky.

Oh wait ... U are serious ...

Eh yes ... Your beloved Cow ... Who caused a hospital bed shortage that is worst than our housing shortage ... Is the Messiah who will solve the housing problem.

Just like your beloved Obama would solve the economic crisis ...

Anonymous said...

vkywedwe're good at commenting about other countries. For e.g. LKY telling us how euro got into present situation now among his many others. But never hear him talking and reflecting on s'pore mistakes. As for Khaw, I hope he is not another new MND minister who preferred to start his term as pro home owners first and then wait to be courted by developers to cross over their side.

Anonymous said...

Cow delivered his promise to send your old parents to JB. Out of the goodness of his heart, he is sending u to accompany them. No wonder Lucky is such a die hard fan of cow.

Readers from Sembawang pls remember to vote for cow in 2016 as per Lucky's direction.

Anonymous said...

Khaw started out very promisingly, but after awhile, he went dead silent and one can only guess he must either be spooked by the big businesses like Kwek or his ruling party. On top of that trying to appease the rich landlords. Many people are watching him and see how he's going to turn this around or not. If he fails to do so, we can only say this " he is Incompetent in spite of a competent environment" for him to succeed. So we're waiting and watching....

Anonymous said...

http://www.livetradingnews.com/jones-lang-lasalle-nysejll-upbeat-on-singapore-property-54238.htm

Don't have to second guess lah.. just read from other insiders what they are saying in their first paragraph, and you will know it's all wayang by Khaw. We already know who the Govt/PAP will side with..in the name of 'doing what's right for Singapore...NOT Singaporeans"..

Why people still so daft!?! We are just a DIGIT remember!!!!?

Anonymous said...

I think the developers, not bankers control the loots here. It is interesting to see the players in the process of being brainwashed by the unfolding agendas in real time. Instead of worrying about the livelihood and welfare of a few billionaires, I think our representatives in govt shud think about their people.. in following China's property cooling measures.

Anonymous said...

so here is khaw deciding whether he should have populist policies for singaporeans (an absolute no-no going by all tt's been said), or policies which are popular with property developers. but the question probably on his mind: how can he let down old friends?

meanwhile, there is a ready solution that allows him to wash his hands of rises in property prices. no taking sides, no repentance needed. And it is being preached loudly by an old and valued former minister (all puns intended). simply, it is - bring in the foreigners!

Anonymous said...

have seen how properties can slide during 97 asian financial crisis, and 03 sars crisis. spore is not immune to crisis. once housing bubble burst in china, hk, korea, taiwan, spore will follow. housing bubble burst will lead to banks and people who borrow having trouble.

Anonymous said...

wonder when they will start developing pulua ubin and kusu island?

Anonymous said...

Too much at stake with too many Indon,Chinese,bigwigs involved in properties.

It will not collaspe. It may drop but it will not collaspe.

Dont be daft.

Clear eyed said...

"Minister Khaw works for us and billionaire Kwek is after all an ethical businessman and philanthropist - there is no reason to believe he is not would put society and his fellow Singaporeans above the profit motive."

Lucky, I hope that Khaw and Kwek will live up to your kind and generous view of them. I hope they will think of the ordinary Singaporean and not milk and slaughter them for $$$ like cattle.

Anonymous said...

You know how this JB thing come about?
People keep complaining we don't have a countryside/rural place where it's cheaper for Singaporeans to go retire. So they cleverly come up with this new idea to partner MY to create JB as the new countryside lah...so it will start with old age home, then slowly houses (happening now) and what else is next..you don;t need PHD to figure out that one.

So Singaporeans please stop whining about cheaper countryside to retire. What you REALLY need to do is scream, yell, kick, whip, protest and eventually rally if you have to..if our Govt/PAP refuse to budge. They will not stop until they see blood and cries on the street where real people do the real acts! By the time you wake up,the entire voting demographics already tilted so much, you don't have a say but to move with your feet...

Anonymous said...

when lucky farts, all his fans here take a deep breath and suck up all his fart. LOL.

you know what's wrong with this article? guess not that's why sinkaporeans so bodoh lah.LOL

Anonymous said...

Shameless! Price has not even correct and here we have developers asking the government to remove the cooling measures to protect their own interest. So, when the market improves, does that mean that they can scale to a New High from Current High??? Greed!

Anonymous said...

Don't tell me those who want to see a price correction are not..GREEDY. haa

Anonymous said...

The Scheme for Housing for Foreign Talents (SHIFT) was launched in August 1997 by the Jurong Town Corporation.

Under this scheme, foreigners can rent HDB flats at a lower rate.

Monthly rental is $700 for an unfurnished three-room flat, $1,000 for a four-room flat, $1,300 for a five-room flat and $1,500 for an executive flat.

To be eligible for this scheme, you must:
Be a highly skilled worker, professional, graduate or student,
have been working in Singapore for not more than two years
not own property.

You may share the flat, but the limit is at three adults to a room.

http://www.expatsingapore.com/content/view/1184

Anonymous said...

I find it hilarious that MBT has not been offered a job by any of the big property developers, considering how he helped them to make so much money in the last few years. LOL

Anonymous said...

He is worth millions and I dont think they can afford him LLOLL

Anonymous said...

Ghost is right.

The prices are rising, Mr. Tan.

COV prices are bubbling and even places which are not near to the cities in the north are asking for $40 000 COV for a 4-room rented pigeon hole.

My sincere condolences to the young Singaporean couple who wants to get a 99-year rented HDB flat.

COV is too high and if they go for BTO, they have to wait at least 4 years.

Either way, they are squuzed.

Just with your parents until you die lor!

Mah has caused a lot of harm and suffering to the young Singaporeans.

Anonymous said...

"evertheless, he said home prices could fall if there is an economic downturn, given that past trends show that Singapore prices are driven largely by sentiment and not stock levels alone.

The flow of new homes might slow the gain in the Urban Redevelopment Authority’s property price index to about an average of 1.8% to 7.5% a year from now until Y 2015, depending on immigration inflow, he said."

http://www.livetradingnews.com/jones-lang-lasalle-nysejll-upbeat-on-singapore-property-54238.htm

Property prices will burst. And the developers know this. They are coming in to Khaw to prevent from falling into millionaires from their current status as billionaires.

They expect an economic downturn coming and Singapore to enter at least a technical recession in the last quarter.

They are trying to remove the cooling measure which has NOT at all cooled the market. We should know as we're been looking around from one.

Read your news wisely. Speak from experience and not merely from others' assessment. To get that experience, go and seek out a resale HDB flat now.

There is no impact from the cooling measures as the government is still allowing MORE foreigners to come in to purchase them. I saw 2 indian families from India and one China couple vying for the same flat with another Singaporean family. And it's public housing HDB flat, we're talking here.

The developers have learnt from experience that prices will drop and they want to intervene to prevent history from repeating itself.

They want to make as much as they can before the technical recession sets in.

Strike while the iron is hot is what drives the developers.

And Lucky Tan knows this.

Anonymous said...

The bubble will burst when the developers have unloaded their properties to lesser mortals and the PAP will lose control but by then the rulers will be skiing in Switzerland. Heads they win, tails we lose, so jump on the gravy train and enjoy the ride while it last and we can all retire to JB and let new migrants slog out their debts.

Anonymous said...

Don't worry about the boom ending so soon, it wont. The main beneficiaries of the boom in 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011 have been the developers and the govt. One gets the windfall and the other collects the taxes, stamps, gst. They should continue to be seen bickering in public, if that makes everyone happy.

Anonymous said...

What bubble burst? The developers are organising tours for foreign buyers to come here and pick their property. Mr Khaw must really do something to stop the foreigners from snapping up our living space. To hell with the greedy developers!

Anonymous said...

If you see it from the correct perspective, it is so easy to solve. Pay these ministers millions for fuck? Sinksporeans are a stupid bunch of people. Only can score high in U but can't think. MUAHAHAHAHA

Anonymous said...

If you allow anyone who has money to purchase a stable piece of scare space & land, naturally the price will go up and up.

How are average people who need to work & survive seeing their wage not moving much higher very fast as compared to a dead piece of static space / land (where people need to work and live) whose prices are going up and up.

Why are defenders of free market economy able to defend the stagnating or slow creeping wages for workers down the value chain in the name of competition while it is those workers who have to work extra work while the system is nicely benefiting those who happen to have good competency in the construction development area in a land scare area vis a vis liberal policies as far as allowing foreigners here is concerned henceforth creating 'artificial' demand (market demand).

Note : Having a shelter and food (& income to support this) are basic human necessities. This prices of these have to be finely monitored & controlled if they are getting out of hand.

The financial crisis has started through the greatest property mess from one country and later on filtering down to many countries and now liquidity is also affecting other areas like commodities and food (also partly due to climax).

Anonymous said...

Avoid moral hazard.

Don't need to protect developers or even the property owners who thought it wise to overspend on property.

Lee Kuan Yew:
"They go up, then they go down. So when they go up, don't believe that it's going to go up further and further, and you start buying bigger and bigger, and mortgage for bigger and bigger amounts. Because the day it starts to fall, the cycle goes around, you will find yourself with a negative value asset."

Cycles must be allowed to run their course. As prices have been allowed to double, they must be allowed to halve. Buy at the right time, you make. Buy at the wrong time, you lose. This must be permitted.

Or else the moral hazard creates bigger more dangerous bubbles.

Anonymous said...

When the balloon burst, the property owner's unit get foreclosed, the property development company go burst(not the owner), the bank gets bailout fund from taxpayers money borrowed from future generations. One thing for sure, the property developer will be busking in the sun somewhere in Bahamas while the honest n hardworking folks continues to slave - only much harder this time round.

Anonymous said...

$Cycles must be allowed to run their course. As prices have been allowed to double, they must be allowed to halve. Buy at the right time, you make. Buy at the wrong time, you lose. This must be permitted.

Or else the moral hazard creates bigger more dangerous bubbles.$

Nonsense.

Anonymous said...

I think the solution is to deflate the bubble slowly. I think it is possible here in Singapore because unlike in the US, we are not allowed to walk away from our mortgages simply by handing over the house keys to the bank. Hence, we will do our best to pay off our loan even if there is negative equity, regardless of how hard we have to work or suffer. This means that there will not be massive foreclosures and panic selling at steep discounts, which in turn means that prices are go down at a moderate pace instead of crashing. In the long term, I believe majority of people will benefit. Only those who overreached by buying properties beyond their means or seek to speculate on properties will suffer. As a society, we are not obligated to assist such individuals, hence let it be a lesson to them about financial prudence.

There should also be some steps taken to curb excessive purchases of properties by foreigners because these are in reality hot money speculation, the essential fuel for an asset bubble.

Anonymous said...

Anon 15:36

Which primary school you graduated?

I need to know so that I can avoid sending my son there.

Anonymous said...

//Which primary school you graduated?

I need to know so that I can avoid sending my son there.//

What anon 16/9/11 15:36 suggested makes sense. This will tamper the enthusiasm for financial institutions to lend hence the tendency for prices to spiral upward & quickly is reduced. Else the easy & common threat of foreclosure or major bail up (if many people are affected and the accompanying social problems are too great for the nation to stomach if the bubble bursts) will create another set of problems (homelessness or tax burden on the future generations).

The above must also work hand in hand on population control & enough units to tame under supply.

Anonymous said...

Kwek is just getting ready for "I told you so" moment so that he comes out as "a white knight in shining armour" in the end while at the same time "raping" silly sinkaporeans and sotong investors to death selling wafer thin condos. Khaw looks as blurred as ever may be from eating too much rojak... MahBuk Tan should be tried for all the crimes against sinkaporeans seriously...

Anonymous said...

Aiyah..nothing will change one lah. Singapore gahmen missed a great opportunity to learn from all the other countries property bubbles and avoid the same well-trodden mistakes. Look at what happened to the property bubbles popping in the US, UK (if you missed the real news, not the BS that BBC puts out...most of the prices fell except in London), Ireland, Greece, Italy, Spain, Poland, Dubai (property there fell about 50% from the peak), Japan and on & on...No one wanted to be the one to be blamed for stopping the music, so everyone partied on. If you already own property, then hurrah, continue enjoying your martini since you're already in the pool-side cabana with a great view of the bikini babes partying. If you haven't joined the property party yet, Just make sure you don't be the last greatest fool to pay good $$$ to join the party at the last moment...and then POP, the last fool who gatecrashed into the property party will foot the bill for all the beer, liquor and drugs that the earlier party-goers had incurred AND enjoyed. Everyone will just WALK-AWAY (like in the US where mortgages are under water) and the last greatest fool to join the party will be alone drinking from left-over soda cans and wading in a swimming pool filled with urine and vomit. The last greatest fool will literally spend years/decades of his life cleaning up the mess while other people will look from outside at this greatest fool and say he/she deserved it by being a "speculator"/"market manipulator"/"profiteer" who had "Crashed" the property party. Now when the greatest fool had cleaned up everything (i.e. finally paid up his debts or die trying), when the greatest fool is and now an old haggard struggling from the years paying off other party-goers excesses, when the greatest fool in tattered pants and all wrinkled up finally walks out of the pool-side party alone towards his/her grave; then slowly the "newbies" looks at the clean pool tentatively and a few brave ones starts dipping into the now-cleaned & beautiful pool... some folks start to call their friends about this discovery ...and then "suddenly" there is ANOTEHER GREAT PARTY!!!