In our context, the lure of asset enhancement has given licence for the authorities to inflate public housing prices, via the mechanism of linking to private property rates and some mysterious accounting entity called "land reserves". Whatever the sleight of hand, sufficient numbers have subscribed to the snake oil, and 20+ year old houses which used to cost $20,000 are switching hands at $400,000 or more. The market's the ceiling.
The sad part of the episode is that the younger generation will have to perpetuate the shady exercise by taking the role of the subsequent investors in the Ponzi scheme of things. Why should they be mired in a fraud just because earlier investors drank of the Kool-Aid?
Caught between a rock and a hard place, the Minister for National Development could do the morally right, and effect a proper spring cleaning. He should be aware that many of the younger generation will be coming of voting age in 2016.
Unfortunately, instead of roaring into action, the mouse squeaked. Khaw Boon Wan told participants at an Our Singapore Conversation (OSC) dialogue on housing that he wants to lower the prices of flats by just "a few percent" over the next few years. His (selected) audience was objecting to selling back new flats only to the the Housing Board as this would limit the profit home owners can make. These are obviously not the needy people in dire need of shelter. Or assistance from public subsidy to stay out of the rain.
"If you want to sell a flat for $700,000 or $800,000, how can we stop you? No way". He says that, in accordance to his principle, he does not oppose the idea of subsidised EC (executive condominiums) owners making a tidy sum when they sell their units. To be rich is glorious, Deng Xiaoping would be so proud. Social inequality, Gini coefficient, all will have to take a backseat while this man is in charge. That's the golden rule in play: He who holds the gold, makes the rules.
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//Khaw Boon Wan told participants at an Our Singapore Conversation (OSC) dialogue on housing that he wants to lower the prices of flats by just "a few percent" over the next few years.//
ReplyDeleteIf over the next three years, the prices of HDB flats really lowered by, say 5% and the national median income increased by 5% per year, then we can achieve the effect of a 20% “reduction” to the prices of HDB flats by 2016. This will greatly improve the affordability of owning a HDB flat.
Singapore economy is too dependent on high property prices and this will lead to a meltdown in near future.
ReplyDeleteWe are often told HDB is operating on a yearly deficit because of generous grants & huge subsidies. But they never back it up with what is the real costs or reveal the actual land cost charged to each applicant ?
ReplyDeleteBut if is to the credit of our PAP Govt, why is it they never dared reveal the true cost figures ? It has never been the nature of our PAP leaders not to take the credit, remember ... unless it is assumed that they have something to hide from us?
I have 2 companies, one makes textile and the other makes garments. The garment factory has no choice but to buy the fabric from my own own textile mill at an inflated price which rises 5% every year regardless of business conditions.
ReplyDeleteEvery year my textile mill makes super-normal profits but my garment factory makes huge losses but overall, my business makes money so I let it continue this way. Every year, I put the blame of my losses in the garment factory on the managers and the workers and tell them that they are an ungrateful lot because I am still keeping them in their job despite the losses.
SLA=Textile mill
HDB=Garment factory
This joker was saying he might offer a 30% discount in exchange for a 30% decrease in the lease of the flat. He now says new flat prices might come down just a few percent so which is which?
ReplyDeleteWhen a nation has lost its ability to produce any goods and politicians have to resort to real estate bubbles to show "growth" or ensure enough taxes to pay their fat GDP bonuses, you know we have become a Ponzi nation, just like all the anglo saxon (Aust US UK Canada NZ) and peripheral european countries (Spain, Ireland).
ReplyDeleteUnlike you, I don't believe our children will see million dollar HDB flats. For simple reason, all bubbles crash, and before they do, all economists and politicians would assure you there is no bubble! The last 2 property bubbles lasted from 1994 to 1997 asian financial crisis, most recent bubble was 2006 to 2009 then crashed after Lehman. This one started in 2010 when bernanke cut rates to zero and is now 3 years old. Its about time, but since Bernanke is not leaving the US Fed until Jan 2014, maybe we will have to be a bit patient. Remember the $100k COE of 1996? A Toyota Previa 6 seater cost my civil service friend $240 in 1996k. Maybe your readers are too green to remember and think $96k COE in 2012 was the high point. Penny stock punting was rive among many civil servants then too, just like 2013. But those exuberant years of 1995 and 1996 did not last and were followed by $5k (even $50) COEs just 1 year later. All Ponzi schemes come to an end, and no need to pity those who stubbornly hold on. I see this cow and kojak (SG's version of dog and pony) show as the usual last ditch effort to delay the end. After summer comes winter. Cannot argue with that.
Yearly deficit by HDB, yearly Land Sales including those for HDB flats were never "accounted for" in our yearly Budget as surplus.
ReplyDeleteComing back to this ponzi thing. Who is ultimately responsible?Am afraid it is the citizens who gave the "coverment" the means and authority.
After including interest paid over 25-30 years for a flat, does HDB still make a loss on that flat? Anyone out here who could throw some light on this?
ReplyDeleteSince Singapore has no oil reserves to get $$$, land becomes the reserve to get $$$. Hence every inch in tiny 700 sq km Singapore is very precious because the demand is always there as long as there are inhabitants. More inhabitants (imported ones included) will also raise the $$$ value of the land.
ReplyDeleteTo lower prices of HDB flats is tantamount to raiding the reserves.
So Sinkies need to sacrifice to ensure our reserves are maintained and even enhanced.
Still don't understand why need 6.9 million population?
Higher property prices draw a strong demand, which in turn attracts more projects...and that cycle goes on and on. That is the way growth in our GDP is generated. That partly tells us why we need 6.9m or even more at 10m population size. The only loser: the people
ReplyDelete