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Leong Sze Hian
I refer to the article “Speculative bubble in property market a risk, says MAS” (CNA, Nov 9).
“Despite such uncertainties in the global outlook, Singapore’s property market has taken on its own dynamic,” the report says. “Private home prices rose almost 16 per cent in the third quarter – the highest quarterly increase in almost three decades”.
The question about property bubbles is whether the government should intervene, and how and when it should do so.
Let’s go back in time to look at what was arguably Singapore’s first property bubble.
Property rose in the 1960s to the 1990s due primarily to, in my view, government policy.
As CPF savings in the early years could only be used for property purchases (not investment), it fueled a boom in the property market, because the only way to try to make your CPF grow at a higher rate of return than the CPF interest rate, was to invest in property.
Moreover, the only way then to get cash out of your CPF was to sell your property at a profit, above the CPF utilised and accrued CPF interest.
Although in subsequent years the policy was changed to allow CPF investments, and the withdrawal of investing profits as cash currently, property investment is the only way to get cash profits out of your CPF.
Last year, the change that from 1 April 2008, the first $20,000 of the CPF Ordinary Account can no longer be invested, but can be used for housing, may only further fuel the property boom.
This raises the question of whether property booms which may primarily be fueled by government policy are sustainable.
Well, Singapore had one of the longest bear property markets in the world, from 1996 to 2009. It took some 13 years for the last property bear market to only recover this year.
What triggered the last big property crash in 1996?
Arguably, it was government policy, when Capital Gains Tax on property was introduced in 1996. In fact, it may be argued that ad-hoc, knee-jerk government policy measures to try to influence the property market may actually lead to the opposite outcomes desired.
For example, when the government barred Interest Absorption Schemes (IAS), the outcome was a 16 per cent increase in property prices in the third quarter.
Why? Maybe because the market perceived that the market must be very hot and bullish – when the Government takes action.
What drives the private property market?
I think the HDB market plays a significant role.
To what extent has the HDB’s “market subsidy pricing” policy and the huge increase in the prices of new HDB prices, contributed to the booming private property market?
The policy of increasing HDB housing grants, which generally do not catch up with the increase in new HDB flat prices, may also have contributed to the rising private property market.
So, perhaps the market is best left to itself, rather than too much, or too often, governmental intervention and policy changes.
In my view, the government’s main role should be to provide adequate supply of land for private housing, adequate and affordable public housing. The government should not make too much money, as the more the government makes from property, the higher may be the prices that Singaporeans have to pay.
In this connection, the fact that 30,770 or 7.5 per cent of HDB mortgages are in arrears over three months, may be a clear indication that affordability of public housing is an issue.
As to the number declining from 33,000 last October to 30,770 now, this may be due to more HDB foreclosures and enforcement to encourage defaulting HDB mortgagors to sell in the open market because HDB will only give 90 per cent of the valuation upon compulsory acquisition.
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Instead of reducing PRs and increasing subsidies, the government is releasing land for….PRIVATE property.
I don’t know if I am the only one, but I CAN”T afford a private condo
Government intervention is good only if it helps the people. As far as I can see, land sales to private developers line the government’s pockets while we are still stuck nowhere.
Singapore has the highest foreigner ratio in the world and if something happens like a economic crisis relapse to chase them away. Our property bubble will have the most serious burst in human history.
Agree with TemaSICK. All the intervenation by the government are targeting at the wrong group. What is the point of release more private land to depress the private property prices? The private property market is subject to free market, supply down, price up etc. so it is self regulating on its own.
Instead of these top down measures, the govt should be concentrating on the bottom up measure, i.e. taking care of the 80% population. They should be cracking their million dollar brain on how to remove the COV, remove the competition from PRs, reduce the ever increasing cost of public housing.
These are the tools that the govt can use since they pretty much in control of all the public housing supply.
But will they do it ? I hardly think so, they just want to subject citizens to more and more debts so that we will be so stressed making ends meet.
Now the government really talks rubbish after LKY talked rubbish earlier.
Since I bought a private in 1987 till today, the property price has gone up 200% on the open market. That goes with HDB prices too. I sold it during the good times and made150% on the cost of the property.
The government excited the property market to rise for their benefit. Have they ever care about the ordinary citizens’ fate whether we are paiding through our noses on the escalating property prices. HDB included.
No government intervention at all. They are responsible for the property rise to this present state of affair. To the elites, cronies and balls carriers and ministers, buying an expensive property is as easy as ABC with the obscene high pay. Can an ordinary citizen earning $2000/- buy a $300,000 HDB flat. Most die paying their lives paying the mortgage and to add insult to injury they opened the loans to the private banks and loan interest goes way up. Every month, force acquiring of homes due to unpaid loans are rampant but the Shit Times never published the news.
PAP government is the BANE of our life now after 50 years of rule. Get them out of our way through the vote.
Just like what Lee Hsien Loong has said, “Welfare is a dirty word”, scholarship has now become a dirty word too, especially to the commoners.
Other dirty words are “scholars” and “elites” and “millionaire ministers’ pay”.
Now that the times are bad, and many people have lost their job, HDB steps up forced acquisition of homes due to unpaid loans? Just to let the number of mortgages in arrears look better?
PAP leader told us he is robinhoo, (speck in the parliment) rock the rich, help the poor, URA took over most of the private property (from china town, south bridge road, to north road and beach road etc, ) Now they form up become Capital Land, control the property market, import other country people to buy open market HDB flat, and then they tell you free market, productivity, all rubish, they just want to control most of the singaporean future, pay the house loan 25 to 30 years, made your future life to be housing debt burden. so that easy to control you and next generation…………….
The burden to pay the housing debt over 20 to 30 years is the main reason why Singapore like Japan has low birth rate.
With such a good understanding of the property market in SG, the writer would have already made a bundle from the market.
7) Concerned
Not all debts are bad. One needs to differentiate good debt from bad debt.
The places with the highest birth rates are usually places with people who are dead broke, living well below poverty line, financially very much worse off than the places with low birth rates.
That is the irony. Is is due to the loan tenure? It is more than that I think.
9) Ah Pek
- Please compare apple to apple.
- People living below poverty line may not be in debt.
- These people also have plenty of time at night to make babies.
Apek,
your ang moh and general knowledge quite good. So did you make big bucks on those attirbutes?
This goes to show that the Government is
the biggest manipulator of “market prices”
in Singapore!
Everyone knows it but what can they do?
Solution: A two-party system – should correct any
bad policies the present government always thinks
is BEST for everyone!
Go and think about it!!
You cannot blame the govt on releasing land parcels in attempts to cool things down. Most government leaders are textbook people… They don’t kinda realise economy no good but stock market can still appreciate; they don’t kinda realise that even in China where land is abundant, you can still rack up the price of a condo. Which is why many lands are not developed in China but inflation pulled by properties cheong ahead.
They don’t kinda realise what all these inflation really means over the past decades. I mean when you are young and married, you are still starting out poor as those in 70s, 80s, and the 90s. Without a stable career in Singapore as the leaders themselves once so exited and talked about, they expect the jobless to take home more than those in the 80s, or 70s, or 60s… So can the people really afford it?
The answer is No. I have said this in YP forum. HDB flats, the basic of housing, is for those families to have a roof, not for them to speculate. How can HDB now play the market, and forget its original role as a government unit? The point is, so many are without homes, and even got repossed, what is HDB going to do for their roof-problem? And some even have 4 kids as the PM wanted. And you are squeezing them in a tiny and more tiny 2 rooms?!
If you want a population or an army, make sure you have a proper planning in place. Now so much problem, who can do anything, who will have the integrity to resign? Who?
Agree with red_dot, at least the gov wont increase this and that without a thought.
We r not suckers..but suckers without a choice…
Once the government uses HDB as a mean to achieve their other motives beyond the mission of providing public housing, eg., in the name of enhancing the value of HDB flats artificially, IMO unsusbstainably and depleting all our CPF savings on it, they MUST micro manage it or it would NOT work. So, they ended up with more than one set of unknown variables to handle… the REAL market force at play and the ARTIFICIAL demand-supply games MBT is paid to play. The real concern is – it’s our lives and monies that they are playing with.
We either have more intervention or our property values sink. Either way – we pay.
If you not happy, they challenge you to GRC and you will sure lose.
So perpetual power.
SIngaporeans asked for it so be it.
HDB is a monopoly. It has full control over supply and pricing decisions. HDB could launch more BTOs and build more new flats to meet demands; allows SINGLES to buy them too, which will help to relief the red-hot resale market etc. But, they seemed to have other motives than meet the eyes…they are more keen to MAKING MORE $$ than providing AFFORDABLE public housing..
In life, it is important to have choices. TRULY affordable housing is part of everybody’s life (to address a basic need). HDB is removing that from us. WHY?
#no Choice: It boils down to one word GREED!!!
Why all the new housing in Punggol riverfront did not include smaller units for singles and old couples (empty nesters)? They also need a roof that they can call homes. Shouldn’t HDB be ALL inclusive when they plan PUBLIC housing?
#HousingMind: singles cannot buy new hdb flats lah.. wait long long the garment maybe change their mind so can win your vote.