Mah Bow Tan's comments will further fuel the property price hike

Posted: September 2, 2009 by fievel in Labels: ,
25

I refer to Mah Bow Tan's comment on Singapore's HDB market on Straits Times today



'The flat prices would probably go up ... by 1 per cent, 2 per cent,' said Mr Mah. 'It will just keep on going up if the economy recovers as people expect, and if confidence returns but affordability will always be there."



As it is, Singapore is seeing record prices on HDB scored during a global economic crisis and this is obviously a failure on HDB's part in matching supply with the increased demand. Mah, as the Minister for National Development, has not acknowledged this and instead, attributes this to the "confidence" and "recovering economy"?

With the number of newly minted PRs and natural rate of demand for housing (arising from Singaporeans marriage and single Singaporeans reaching the age of 35) easily outstripping the supply of flats several times over I feel it is his responsibility to manage the situation and take some due heat for dropping the ball this time.

Instead, he made an entirely unsubstantiated statement about how "affordability will always be there", as well as the below curious little statement. He says...


'We subsidised you when you buy and we increased the value of your flat when you live in it and... facilitate you to monetise it when you grow old. This is the best form of investment and welfare for the people.'


A few questions spring from this. Who is "we"? Who is "you"? It reeks of snobbishness and it irks me no end. With the acute lack of affordable housing for this current generation of first time buyers, HDB provides no solution when they decided to whip out another paltry 1400 flats, this time in an even more "ulu" part of Punggol. These flats require 3 years or more to get to the market. The failure of supply meeting demand is NOW. It is a mistake already committed by HDB and Mah.



With respect to the claims that HDB's prices act as a welfare from him/HDB/PAP (whoever wants to lay claim to this credit pls go ahead) to the people, I'd much rather my Singapore be not as congested as his or their version which then lends to the increased in prices, I'd much rather being able to retire with my own savings I managed to put aside (because my mortgage didn't cost me as much money ) than to rely on what is potentially a transient government policy to buy back the tail end of my flat's lease. Will you, Mr Mah, guarantee that the policy will always be there in 30 yrs when the generation Xers and Yers are looking to retire?



Mr Mah, we are not talking about a handful minority of poor and destitute here (which is another can of worms), we are talking about 80% - 85% of Singaporeans here. We ARE the people you are supposed to serve, and WE don't like to rely on events outside of our own control for retirement planning. Nor do we like to count on downgrading our flats in our twilight years in order to retire. I mean, would you like to be in the people's shoes?







With all due respect, Mr. Mah, we (grudgingly) pay you good money, more than 2 million Singaporean's taxpayers' dollars every year, to do a good job for us. Housing inflation during a recession is no good. An untimely comment like this from you will only further worsen the situation.



Maybe you have been too busy focusing on the dazzling casinos. But please have a heart and start "convincing us that our lives will improve" as SM Goh has suggested.

25 comments:

  1. Anonymous says:

    you siao ah. 90% homeowners all enjoying and richly benefited from the brilliant garmen wealth enhancing programs and here you are, probably a home owner too, slamming the garmen for political mileage?

    i think you need to check whether your cheeze has become mouldy or not.

  1. Fievel says:

    Im not a home owner and so maybe my view is biased and perhaps you are right,maybe I belong to a minority. But my parents are home owners. They bought their flat when I was a kid. They were factory workers and they paid for this flat that I still live in today (i feel like the guy in "failure to launch") in cash. Zero mortgage. As such, I draw the conclusion that today, my life as a graduate after 2.5yrs of NS and 4 yrs of work experience, is in fact worse than my bluecollar folks back in the 80s.

  1. Anonymous says:

    why pretend to envy your parents? they were the ones who slogged to provide you with much higher standard and quality of living and they slogged so you could have a lofty tertiary education. why bemoan them, for all their blood sweat to build this country, that they now enjoy asset appreciation?
    the spoilt brats of this generation now enjoy much higher standard of living and greater mobility than their parents. with better education, their potential earnings are much higher than their parents. the spoilt brats are not exactly getting the raw end of the stick considering, many of them could be inheriting their parent's wealth(asset) you know.

    you get the good life and the potential to earn big bucks to pay for the good things in life, they need their pricey assets to supplement their "coolie earnings" in their old age...i think, the gahmen did well and it's fair.

  1. Anonymous says:

    Mah is just a money grabbing businessman-wannabe who cannot make it in the real business world. He is in parliament to serve his PAP master, not the people.

  1. Fievel says:

    Anon @ 8:48am,

    I am not "bemoaning" nor "envying" my parents. I think you got it wrong. I was merely presenting a conclusion, a fact, that in terms of purchasing power, my generation is worse off than theirs.

    You say,
    "you get the good life and the potential to earn big bucks to pay for the good things in life...i think, the gahmen did well and it's fair."

    Define "big bucks", define "good life", if you become several times more in debt for the same basket of goods.

  1. Anonymous says:

    i can't speak for you but, in general, graduates or tertiary educated are expected to make "big bucks"(at least more than your blue collar parents) or enjoy the "good life". now if you are not that class of people yet, it doesn't mean you will never be - potentially, remember?

    as for purchasing power, it's subjective as we do not share the same financial responsibilities, inclinations and variables in life.


    in any case, housing for our people is changing and hence, best not to compare ourselves to the "luckier" first generation home owners.

    we should console ourselves that we are much better than other developing countries in some aspects.

    lastly, your lamentation, like many others, can only be taken with a pinch of salt without full disclosure of your financial history and records.

  1. Fievel says:

    Point 1)
    >> A generation of Singaporeans who expect to make "big bucks" or "enjoy the good life"

    I think I speak for many of us from my generation when I say we grew up feeding on the hope that if we study hard and work hard, we will be rewarded with an improvement to our lives. So what if we have higher expectations than that of our parents? Is it wrong? In any case, I am stating that our life is worse off,not debating whether we should or should not expect "the good life".

    Point 2)
    >> as for purchasing power, it's subjective as we do not share the same financial responsibilities, inclinations and variables in life.

    My folks ate charkuayteow and kuaypng, i also eat charkuayteow and kuaypng. My folks took public transport. I also take public transport. My folks bought a 5rm flat without debt, I am looking for a smaller one, maybe a 3rm or 4rm, but has yet to find one that doesnt shock me with the asking price yet. Do we share the same financial responsibilities, inclinations or variables? I dunno man...you do the comparison and u tell me.

    Point 3)
    >> in any case, housing for our people is changing and hence, best not to compare ourselves to the "luckier" first generation home owners...we should console ourselves that we are much better than other developing countries in some aspects.

    That sounds and smells like a unthinking person spouting whatever is printed on our newspapers. Housing is changing? yes, they are getting smaller in sizes. "We should console ourselves"? I don't like to be a dumb optimist. Comparing downwards can be countered by comparing upwards. Its a self-defeating argument. We should just compare with ourselves, with our past...oh and please don't pull the "kampung-to-city" slideshow on me cos we all know the other little asian countries like taiwan, S Korea, HK, all modernized themselves during this same period of time. "Patting ourselves on our back" time was maybe ok for the 9th August but come on, lets move on now.

    Point 4)
    >> lastly, your lamentation, like many others, can only be taken with a pinch of salt without full disclosure of your financial history and records.

    I am a typical 30yr old Singaporean except I have never bought nor speculated in a property and my wages were never going to catch up with our rate of inflation. I feel poorer as the days go by.

  1. Anonymous says:

    Anon 2:41 PM.

    You really don't get it do you?

    In the 1970s, the starting graduate salary was $1000 per month. Then, in the HDB Marine Parade Estate, prices of new 5-rm, 4-rm and
    3-rm flats were $35,000, $20,000 and $17,000 respectively. That's equivalent to 35, 20, and 17 month's gross salary.

    Now, starting graduate salary is 3 times higher at $3,000. However, the price of HDB in the same area for 5-rm, 4-rm and 3-rm flats are at least $560,000, $410,000 and $340,000 respectively (I looked up the lowest ones). That's equivalent to 186, 136, and 113 month's gross salary.

    Housing has become LESS affordable, not to mention smaller in size.

  1. Anonymous says:

    (Me is Anon 3:37)

    I'll add one more data point. Even a NEW 4-room HDB at Punggol is now at least $224,000 ($264,000 - $40,000 govt grant). That is still 74 times the average Engineer's monthly salary. (Or, close to 4 times it was in the 1970's)

  1. Fievel says:

    Anon 2:41 PM,

    I had an ex-colleague whose elder brother is a property agent. During the 2006/7 property boom, his brother would always "kope" (not very dissimilar to what we call front-running in capital markets) a property that is a good deal before flipping over to his customers. After making some money that way, he started pooling 4 to 12 people groups to "co-invest" or flip even more properties. The real-estate is necessity goods to many, but it has become but a money-making tool for others.

    Who bears these economic costs that were borne out of thin air? If our property prices increased incrementally with our earning powers and economy I'll have nothing to say. My dream government will seek to stem this form of inflation, and not speak of needing cheap foreign workers to work in hawker centers so as to prevent inflation to my $3 kuaypng.

    I imagine an alternative Singapore, where social costs are taken into considerations in policy making, where say for example perhaps my hawker revert to only Singaporean uncle and aunties and my chicken rice inflates from $3 to $6 but my housing loan deflates from $400k to $300k; I'll be looking at maybe the same net cost of living per month, but at least I have a less stressful life where my fate is more in my own hands.

    But anyway, thanks for offering your differing view, else I wouldn't have lined my thoughts out for myself as well.

  1. Fievel says:

    Anon @3:37,

    Correction to your point:

    "Even a NEW 4-room HDB at Punggol is now at least $224,000 ($264,000 - $40,000 govt grant)"

    New flats are "already subsidized" and not given a $30k grant (or 40k grant if your parents stays nearby). Hence, $264k is $264k net. By the way, these flats are about the size as our older 3 room flats at about 90sq meters. So dun get fooled by the lease-title.

  1. Anonymous says:

    (Me is Anon 3:37)

    Goodness me, that is worse than I thought.
    And yeah, I know about the shrinkage in size.

    And by "Engineer" in my 2nd post, I meant starting graduate. Don't know why "Engineer" popped into my mind. Maybe because non-law/medical graduates nowadays hardly get $3000 starting salary.

  1. Anonymous says:

    i hear the both of you, loud and clear. all your points and concerns are valid.

    i am just trying to offer a balance view of our dichotomous economic development.

    but i tend to believe the gahmen when they say homes are still "affordable" for most people.



    "In the 1970s, the starting graduate salary was $1000 per month. Then, in the HDB Marine Parade Estate, prices of new 5-rm, 4-rm and
    3-rm flats were $35,000, $20,000 and $17,000 respectively. That's equivalent to 35, 20, and 17 month's gross salary."

    let say we maintain the price ratio of housing to salary for every generation. with a joint income( assuming husband and wife earning similar pay), they could easily pay cash for their home after working several years( ONLY 2 years to be precise - for the cheapest home), which is usually the case, before marrying, couldn't they?

    without loan or financial obligations, what or where is the impetus to work and sustain this city i ask you? i think we can all retire at age 35 and travel the world or maybe not - no money to build airports etc?


    end up, if your vision WAS realized, we all would have far poorer infrastructure and lower standard of living, is that what the people wanted?

    truth of the matter is, the leaders sold their GRAND vision and the people consumed GLADLY and now you want change without destruction to everything we have built?

  1. Anonymous says:

    oh i forgot to add, without the need for housing loans. banks will diminish and thousands of jobs will be wiped out because, where do you find money to invest and expand etc? the economic damages will be devastating.... is that your idea of a better economy or better life for our people?

    pls show us your BETTER ways.

  1. Anonymous says:

    oh, i forgot to add. we all can own more than one home. potentially, with a better educated work force commanding higher salary, we can all own private homes for investment besides our humble hdb flat? so affordable these homes will be, maybe our gahmen should reclaim more land to build more cheap homes to satisfy ALL our...."You really don't get it do you?" idea?

    i think i like the idea of owning several homes and live in them myself if it's .... that cheap?

  1. Fievel says:

    Your argument is starting to sound like that of a drunkard....sorry but thats the truth.

  1. Anonymous says:

    well, it's up to you to debunk but i appreciate the truth though.

  1. Anonymous says:

    hahaha, starting to sound ...

  1. Anonymous says:

    that's why he is lky and you are.....cheese HAHAHA

  1. Anonymous says:

    hi guys, i find this post quite interesting and something which i think about quite often... i only started working like 4 yrs ago.. with say a starting pay of 2.5-3 K as a fresh grad in a finance firm. 4 yrs later, i believe that starting pay is still roughly around the same figure (could be less due to the tough job environment). But what scares me is that house prices are about 20-30% higher now than 4 yrs ago!. if this trend goes on, were house prices keep on a linear uptrend regardless of economic condition, i worry for myself n the future generations to come...

  1. Anonymous says:

    Actually there is a solution to make flats more affordable to young locals without devaluation the value of existing flats.

    Your government can waive the profiteering ($172,398) when selling to young Singaporeans and stop new owners from reselling their flats for ten years.

    But I am skeptical if your government will do this to help young Singaporeans. I mean, they will lose the chance to earn so much money.

    Really feel sad for you people.

  1. Anonymous says:

    unfounded fear. the only thing you need to worry is the property market collapsing. apparently, singaporeans are quite wealthy. even the not so wealthy are investing in properties - who says properties expensive huh?

    now there is a danger of oversupply of investment properties.

    once the rental market collapses, we are in trouble.

  1. Anonymous says:

    a simplistic calculation.

    the cap, eligibility for new flats, is at $8k per household beyond which, you are considered rich enough to go pte.

    give and take, a graduate couple will most likely exceed $8k in their career.

    but lets cap at $8k for easy calculation.

    10 years 8k income without factoring bonuses and other side incomes etc will come up to....about $900k.

    times 20 years career, and you may not even be in your fifties, that would amount to like ... $2M income

    even after deducting essential expenditures and setting aside some for raining days, i believe, these people can easily afford $500k to $800k home - and paid off by the time they hit 50.

    wow, life is good in sg. LOL

  1. Fievel says:

    Anon @ 2:59pm,

    Yep, life's not too bad if you earn $8k and you never get laid off and ur old folks never one day depend on you, you dun get kids...

    Come on, life is much more complicated than the straight-lined extrapolation you drew here.

    There is a reason why many other countries have housing that are more affordable (relative to incomes). Yes maybe they just want their life to be THAT good. Or maybe their govt realises that their people do not want to have a life that resembles that of a slave, a slave to mortgage payments and all the other lifelong financial obligations so easily assumed in Singapore.

    There was a letter directed to HDB in the Straits Times yesterday, Saturday, 5th Sept. It gives you a good idea of the issues around our housing affordability. Do check it out if you can.

  1. Anonymous says:

    (Me is Anon 3:37)

    To: Anon @ September 4, 2009 4:43 PM
    Fievel already said it, but I really just can't resist poking some holes in your wet tissue paper logic:

    "without loan or financial obligations, what or where is the impetus to work and sustain this city i ask you? i think we can all retire at age 35 and travel the world or maybe not - no money to build airports etc?"

    Excuse me? There are tons of other way to spend money. People maxing out their credit cards even while servicing various loans is proof enough.

    You mean all this time we're all working only for the sole purpose of servicing property loan and keeping the banks alive? Gee... most of us don't even OWN our houses (99 year lease).

    Once you've paid off your housing loan:

    You don't need to pay maintenance fee, utility bills, property tax, etc?
    You don't need to replace/upgrade electronic gadgets, do home improvements?
    You don't need to eat?
    You don't need to plan on spending for your future children?
    You don't need to save for future medical expenses?

    It's not as if we'll magically get unlimited amount of money once we've paid up our loans.

    Not to mention that if the price of housing is much, much lower, workers can make do with less pay, hence be an enabler of lowering the cost of labor in Singapore.