by Leong Sze Hian
I refer to the report “Property measures have taken effect: Mah Bow Tan” (Channel News Asia, Nov 27).
It states that “National Development Minister Mah Bow Tan said there are signs that measures to cool the property market have taken effect.
There has been at least a 20 per cent drop in HDB resale transactions this quarter while Cash-over-Valuation (COV) is down some 10 per cent from the third quarter.
I find it rather strange that whilst the minister is able to cite the COV data for the last month to justify his statement that COV has declined, he does not cite last month’s HDB resale price data to justify his statement that resale prices have eased.
So, perhaps the obvious question to ask, is why say prices have eased without any data to support it?
Well, I believe the answer may be that the October HDB resale price data may actually have continued to rise.
Just to set the record straight, the Resale Price Index in the third quarter of this year, rose 4 per cent, which is just over a month ago.
Also, since the previous quarter’s increase was 4.1 per cent, how can a mere 0.1 per cent drop in the last quarter, be described as prices have eased?
For the first three quarters of the year, it rose by 11.3 per cent, and by 66 per cent over the last five years.
According to the article “Cooling measures working” (ST, Nov 27), Mah Bow Tan claimed that signs “are emerging in both the public and private housing markets that the Government’s three-month-old price stabilisation measures are working,”.
But, similar to the minister’s remarks on HDB prices which were somewhat demolished above, private property prices are still rising at 2.9 per cent in the third quarter.
So, the minister’s rhetoric may not seem to match the reality of the data.
Mr Mah was further quoted as saying that COV figures have also dropped “by more than 10 per cent from around S$30,000 in the third quarter to about S$25,000 last month”. A clue as to why this may not really be a drop in COV, may be in Mdm Peh Poh Hua’s letter “Check why they’re breaking HDB flat rules” (ST, Nov 21) in response to the article “HDB flat sellers left in tight spot by new rules” (ST, Oct 24).
Mdm Peh related how to her dismay, in her hunt to buy a resale flat, the majority of sellers wanted an illegal lease-back for another two months.
This is due to what was reported in the latter article, that more than half of resale transactions now have this problem, because of the new HDB rules that a 80 per cent loan can only be confirmed when the HDB issues the official letter to the seller approving the sale, which is typically about six weeks before legal completion.
This six weeks time frame is too short for the seller to find another home. Thus, the request for a lease-back which is illegal under HDB rules.
Hence, the lower COV, may simply be an adjustment to reflect the two months illegal lease-back.
As to the drop in HDB resale transactions, why is it that the CNA report said “Mr Mah said HDB resale transactions have gone down by at least 20 per cent so far this quarter”, and the Straits Times report said “Transactions in the HDB market have also fallen by 30 per cent in the fourth quarter thus far, compared to the same period in the previous quarter”?
So, is the drop 20 or 30 per cent?
Normally, if transactions fall a lot, prices should also fall.
But, we now have large falling transactions with prices continuing to rise.
Therefore, arguably, the cooling measures may not be working very well.
Finally, if the minister is really serious about bringing HDB resale prices down, why is it that the Build-to-order (BTO) launches after the announcement of the cooling measures, still seem to be rising?
If prices are indeed falling as the minister is saying, shouldn’t the latest BTO prices be falling too?
Surely, arguably, the most effective price cooling measure, may be to start reducing BTO prices.
But then, this may result in the HDB’s profits dropping too – is it?
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one sign is certain, MBT rising unpopularity. MBT will surely 120% lose in the cuming erection.
Mrleong strongly agree with you as the BTO prices still remain high this kateh only know how to talk big cauze talk don have to pay he create his own data until the end it still what we call LPPL.
This mobo tan only mentioned COV and resale flat but not the BTO seem like he will tell the whole nation the price for BTO is still asscockable LOL.
It seems our PAP govt is now making a real mess of our housing problems instead of solving it. The minute they create more rules, it seems more problems will also surface.
Very often when people tells a lie, they will not hesitate to use another lie to cover the earlier one.
Looks like when they insist that HDB flat are affordable when the facts seems to show otherwise, there can only be one way to prove it. Why give so many excuses ?
Is it because it will be a political disaster for PAP if the facts indeed show PAP has been lying to us all these years ? Please show us the real figures then to prove that you have not been lying !
don’t need any data from hdb to tell me that transactions are falling,but prices are rising,just take a look at the property agents pamphlets. numbers have dwindled but prices quoted still sky-high
I didn’t realise the connection between the COV drop and the cost of the leaseback arrangement. Made total sense. Also makes cents!!
Cheers!
The actual sales prices of resale HDB flats have gone up in Oct, as you can see in the HDB website itself. Valuation is based on past recent resale transactions, so it’s kinda of a vicious cycle (if you’re a buyer).
COV is sentiment-driven and more of a coincident indicator. So while COV has gone down a little bit, the problem is that valuations are actually still going up. Property resale prices tend to be “sticky” — people tend not to cut their selling price; they prefer to keep holding if cannot get their ideal selling price. Only with prolonged economic weakness (at least 1 year or more) will you see big drops in property prices.
BTO prices are based on valuation, which in turn is based on past recent resale transaction. So if valuations are still high and “sticky” as explained above, the BTO prices will still be on the high side.
New HDB flats e.g. BTOs, balloting of unsold flats etc are no longer sold on cost basis, ever since the early 1990s. They are now sold based on recent resale transactions, less a “discount” of about 25%.
Anything that joker Mah says is to be taken with a pinch of salt. I personally have more faith in Mr Leong’s analysis, but not joker Mah
Singapore is a tiny island – supply is limited.
80% of Singaporeans live in HDB houses – demand is strong and rises at an unabated rate.
How low could HDB flat prices be lowered? Let’s be realistic with our expectation instead of cooking up childish arguments just for the sake of criticising the government.
Members of the public are not naive, they understand that given Singapore’s limited land size, property price must go up. Yes, they complained a lot about the huge price increase of flats, but down inside their hearts, they could understand there is nothing much the government could do about it.
georgia tong 28 November 2010
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Mr. Mah Bow Tan is the man in charge of HDB for decades.
Leong Sze Hian has never spent a single day overseeing HDB operations.
And you claimed to hold more faith in Leong Sze Hian’s comments about HDB? We could probably tell how logical are you.
MBT treats singaporean like a idiot..
@The General Public
Who care’s how long MBT is in charge of HDB? It is amazing that faith in the HDB ‘old bird’ is referred to as being logical. I just want to see proper figures and not MBT’s visions of what he thinks is happening.
PAP supporters like “The General Public” essentially are suspending their rational thinking skills as well as economic principles for the sake of “faith” in PAP leaders like Mah Bow Tan. When the housing crash inevitably comes (as it is unsustainable in the long run), they will be the ones who will have to pay the price. By then, Mah Bow Tan will be happily retired elsewhere. I’m not sure if Mah’s “oops” or “guess i got caught offguard again” will suffice for “The General Public”‘s personal financial losses.
Gd analysis…even if prices stablise…current prices are still way out of reach for general public
why do you need to lease back for 2 months when you can lease a nicer unit at Pinnacle@Duxton? there are many units available for lease. you don’t need to wait 5 years.
notice how there must be an emphasis that COV has dropped by double-digit percentage. “more than 10 per cent”
why this emphasis on a $25000 COV which implies that prices have gone up by $25000?
Answer: When you have no more statistics to use to defend your case, you have to harp and play loudly whatever little you have left. It is wiser than admitting that you lost your argument.
“The General Public” MBT, could’t win an election standing on his own, need to get in thru’ GRC, ask him to win election on a single seat, i will than respect him, even if he become PM.
i am sure he lose big time just like the rest of the cabinet MP.
sg is so small and yet still let foreigner buy government house… yeah… my turn to ask…where’s the logic???
I heard PRCs are buying up shop houses in bugis and geylang areas. What kinds of restrictions do we have on foreigners buying commercial, landed, shophouses? I’m sure we have some sort of restrcitions to protect our land. I understand that countries like Vietnam turn free hold properties into 2 entities: land and the property sitting on the land itself. When Vietnamese buy, it’s free hold. When foreigners buy, it becomes leashold.
curious 30 November 2010
I heard PRCs are buying up shop houses in bugis and geylang areas. What kinds of restrictions do we have on foreigners buying commercial, landed, shophouses
…………..
frickin greedy government..
remembered in the good ole days..foreigners are onLEE allowed to buy condos…not landed properties
with all this foreigners snappin landed properties..even mustafa inc can hav their properties bubble burst…
Wong Kan Seng never apologise for Mas Selamat’s escape. So don’t expect Mah Bow Tan to apologize for high hdb prices. This is part of PAP’s culture. In fact, Mah is now using Today to justify his actions.
This is my 2 cents worth. Yes indeed COV has fallen from $25k to $22k for Nov transactions. That would also mean that the valuation for future flats will be higher. That means those who bought earlier will have a flat with lower valuation but higher cov. people buying now will have much higher valuation and slightly lower COV. because i heard that valuation is done on the average prices of the flats inclusive of COV transacted around the area. please give comments.
Have some mercy on dogs.. It’s the master who trained them… That’s what my neighbor said to console me after being bitten by an unleashed dog in the park…
The situation in the HDB resale market could be in this situation now >> before all those new measures comes in, there are probably 15 buyers looking into 10 flats for sale!
After all those measures, the numbers decreases > 11 buyers looking into 7 flats for sale!
The irony here is; the percentage could have dwindle, however the potential buyers to sellers ratio are still about the same. That is the reason for the resistance on HDB resale flat prices (or valuation).
One certainty is, valuation done on flats after the Jan 2011 measures, did result in a small decrease (still marginal). For flats buyers out there (just like myself); be patient and prudent! Buy into flats which will still give you good yields in years to come.
Lastly, interest rate will rise in near future. Remember that the economy in this world is still yet to crawl out of the woods; US & EU has yet to fix their ballooning budget deficits problem; cheap money is still in printing, their job markets still gloomy.
We just have to keep praying that those BRIC nations can sustain in their good economic development.
i agree.
hahaha