Who let the dogs out

Posted: September 7, 2009 by fievel in Labels: , ,
9



Personally, I am darn bloody exhausted by my months of unsuccessful hunt for a reasonably-priced HDB apartment and reading all the angst online shared by other Singaporeans and then reading once again in the newspapers another "oh come on, it's still affordable" report. And so I have no more energy to talk about this "affordable housing" issue. Here is my one last hurray on this topic. Our dear Minister for National Development Mah Bow Tan said the below quote, on 6th Sept, Sunday's Straits Times article, " Pinnacle in name, and pricing too?"


"In year 2006, we were building about 2,400 new flats. This year, we are
building about 8,000-plus new flats. Supply has gone up to meet demand. That's
why HDB prices have gone up but they have not gone through the roof."


I have always exerted that this current unfortunate price hike in the HDB resale market is probably not so much by design as it is by the collective failures of HDB and its related ministers, in providing a sufficient supply of housing in view of the heightened demand arising from our increased immigration count; hence resulting in a supply-crunch led property "boom" during the worst economic slump EVER experienced by Singapore, period.

All that are old arguments, but the above quote by Mr. Mah has led me to think this - Is it not the fact that 3 years ago, in 2006, we should have been building much much much more than 2,400 flats? The fact that our HDB BTO projects take 3 to 4 years to complete suggests that our current supply crunch is a direct result of that miserable output 3 years ago.


Singapore has always had a rather consistent number of marriages per year, coming in at around 23,000 to 25,000 per year. [ See data ] Even if you discount divorces and annulments of about 6,000 to 8,000 per year (which we shouldn't since logically every separated couple actually increases the housing demand by 1), there should be around 15,000 new homes required for these newly weds every year. Even with an aggressive estimation of 40% of these young couples to be private housing yuppies, that still leaves us with a very very conservative estimate of demand for AT LEAST 9000 new flats every year resulting from marriages, disregarding the effect of newly minted permanent residents who are able to purchase resale flats in the following 2 scenarios without being already accounted for in the marriage statistics;
1) Individual, over age of 35
2) Individual, under age of 35, but has another PR sibling to co-purchase the flat (even though a Singaporean under age 35 is not allowed to do so with his/her sibling!?! How counter-intuitive is that!?!)


Now you may wonder what our numbers for immigration is like and how it may impact our resale HDB market. I do not have the figures for 2006, but let's look at 2007 and 2008. [ See data ] In just the first six months of 2008 alone, there were 34,800 newly granted PRs and 9,600 newly granted citizenship, compared to 28,500 and 7,300 in the first six months in 2007 respectively. Granted, not all of them are looking to purchase a flat or even a condominium because some are merely temporary guests despite the apparent interest in staying longer, this packs approximately 70,000 or more new individuals into our housing market each year. (using 2007 figures ~ approximately 35,000 new PRs and Citizens per half yr x 2)


It doesn't take a Math genius to figure that we need much much more than that curiously pathetic 2,400 new flats output in 2006. What we needed to build 3 years ago, even after heavy discounting, is more like 24,000!!!!! What was HDB thinking about? Now, coming back to 2009, with all the inflationary pressure the housing market is putting on Singaporeans, Mr. Mah comes out shooting from the hip with a "we are now building 8000-plus new flats this year" ?!?!?


Pardon me if I draw the wrong conclusions here, but this seems more like an intended, policy-driven asset inflationary move by our PAP leaders that led to this current social-economic fix that is biting at many many Singaporeans, especially the young, first time aspiring home-owners. While it is possible there exist a good political or economical reason for this choke on housing supply, I think anyone in their right mind will agree the above demand vs supply figures are waaaaay out of whack for the proper functioning of a country, least of all a land-deprived island. If such is the case, I ponder the necessity for HDB's existence since a completely free market would almost seemingly lower the prices of housing more than one that is monopolized by HDB. In retrospect the $30k first-timer grant is pretty insignificant and almost serves as but a veil over the bigger picture of purposefully inflated public housing.

If historical performance is anything to go by, I do not expect much to come forth in the form of acknowledgement or apologies from all concerned ministries or ministers for dropping the ball big time on this one. BUT, please please please please just oh play a little nicer and REFRAIN from making anymore "it's still affordable" comments in the papers because it is just so unbearably antogonizing to us. If you have no solutions, please just shut up.



P.S The online petition for Affordable housing for Singaporeans have gotten underway and I'm glad to say it has now reached a more respectable 3-figure, although it is still far from the targetted 1000 signatures. Please show your support if you feel that our government is not doing the right thing with the HDB market, by visiting the link below. Thanks!



http://www.thepetitionsite.com/1/lower-hdb-valuations-or-build-more-affordable-hdb-housing-for-singaporeans

9 comments:

  1. Anonymous says:

    "Affordable" is subjective.

  1. well written.

    I think if this thing continues, Singaporeans should have a mindset shift abt getting a house when get married. Its simply doesnt worth the "stress and pressure" of trying to pay off the price of housing~

  1. Fievel says:

    Thanks, and thank you for supporting the online petition as well.

  1. Fievel says:

    Some other blogs have been suggesting that by locking this current generation of first timers into such a heavy mortgage for the next 30yrs, we will be trapped and indirectly enslaved to the system, leading to political stability indirectly.

  1. Anonymous says:

    Keeping HDB prices inflated will help seniors retire when they can sell or reverse mortgage their flats.

  1. Fievel says:

    Hi Anon@858pm,
    Yes I agree there are some old folks in Singapore who are able to retire because of this inflated housing prices.
    But by that extension, does that mean that our next generation will have to bear an even more inflated price in order for this current generation of 1st time home buyers to retire? When does that end?

    Housing should never, and must never, be used as a tool through which the government 'dispenses' benefits to the people. To even suggest such as an intention, as Minister Mah has done in the papers recently, is IMHO merely a convenient excuse.

  1. Anonymous says:

    It doesn't end as most Singaporeans are quite happy to invest in property and service their housing loans. Rising property prices is a self-fulfilling prophecy.

  1. Fievel says:

    Self-fulfiling prophecies without solid fundamentals to back them up soon becomes over-inflated and ends in a quick fiery burst of the bubble