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Thread: Your views on the current surging property market

  1. #281
    Moderator diver-hloc's Avatar
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    Default Re: Your views on the current surging property market

    From TODAY online - http://www.todayonline.com/Voices/ED...you-can-afford

    I refer to the letters "The cash-over-valuation curse" by Ms Lim Eng Choo (Aug 27), "An HDB study into COV will help address issue" by David Soh Poh Huat (Sept 16), "When COV reaches $100K, it's time for HDB to act" by Ong Bee Lan (Sept 17), and "It's about supply and demand" by Yeo Shuan Chee (Sept 17).

    Resale Housing and Development Board (HDB) flat transactions take place on a "willing buyer-willing seller" basis. HDB does not get involved in the transactions. Cash-over-valuation (COV) arises when buyers are willing to pay more than the market value of the HDB flat. This market value is determined by professional valuers. HDB and the banks will only provide a loan of up to 90 per cent of the market valuation. If a buyer is willing to pay more than the valuation, the excess will need to be paid in cash, thus the term cash-over-valuation. There is a wide range of COV for each flat type across different towns, including transactions at or below valuation.

    We can expect a flat seller to ask for as high a price as possible. On their part, buyers should negotiate with flat sellers.

    To help them make informed decisions, HDB provides information on recently transacted resale prices and COV on its website. In July this year, 31 per cent of resale transactions were conducted with no COV. The median COV level was $7,000. Given the wide range of flats in the resale market, flat buyers should look around and buy a flat that they can afford.

    Did like the part about "Willing Buyer-Willing Seller"......

    Scuba & Father... For Life

  2. #282

    Default Re: Your views on the current surging property market

    Well, I've seen it happen. This govt will never give out free handouts no matter how much people crap abt it. Selling HDB flats at cost price is exactly that - free handouts. And I've personally witness relatives benefits from such handouts. Buy from HDB and sell on resale, buy from HDB and sell on resale. The only way to stop price rise is to build more HDB flats by building taller and smaller. Or lower the population. The alternative will have their own set of problems.

  3. #283
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    Default Re: Your views on the current surging property market

    Quote Originally Posted by alan1996 View Post
    HDB house is public housing not private housing and it is high. Asia property booming but not their public housing. GOV said HDB price is Ok, using the monthly loan repayment over income and match it with what other country loan repayment size. I do not think the loan repayment and income rate that they talk about are base on public housing. HDB price cannot be the same as normal property property. HDB do not bid for the land and most of their office cost or rent and salary are from Tax Payer.
    ....public housing means basic housing in most other countries, not sure if that is what our public housing applicants are eyeing. Public housing are often located in less desireable location....like Toa Payoh in the past....but due to investment in Public transport, TP has since become sought after location amongst the hdb estates.

    In some way the fringe areas like Jurong is not unlike TP in the early years. But with great vision, out govt has made these fringes more desirable like the plan to create a Lake District in JEast, just like Punggol 21 a hdb town by the sea.......2 years ago there were left over stocks of flats built in 2001 in JWest. These were sold as open mkt resale direct from Govt at below 300K for an Exec. The prices for these (year 2000 omward) flats are betw 400-450K now.....since the announcement of the imminent transformation into a 'Lake District'.... a hefty 50% increase.

    Isn't it comforting to know that our investment will always be protected through all these improvement including the MUP, UP and Enbloc schemes?

    If one want to live near one's parents, moving near them is not the only solution, one could move them along or move them with you into a bigger flats....this is easier said than done in convincing the old folks....but the upside would be they can gain extra cash by moving to less expensive locations with their children....and in turn the ir children might be able to afford to get a car by buying into a lest expensive location.

    Often all those clamouring for affordable flats near their centrally located parents may have other motive...like making a fat profit as soon as they can offload these flats and buy into a private property.......often in the suburb...not necessary as centrally located.

    Our govt....has been around, and they are as smart as us.......
    Last edited by Danntbt; 23rd September 2009 at 05:43 AM.

  4. #284

    Default Re: Your views on the current surging property market

    Quote Originally Posted by vince123123 View Post
    Apparently you have already decided, and respectfully I beg to differ. Do refer to the earlier post I made about the upwards price spiral caused as a result of new flat price propping up resale flat prices. Bare denials don't do much to advance your point. Restrictions has nothing to do with new flat prices.
    frankly, all the "independent" websites are worse than straits times. The bias in those websites are more obvious and the articles more one sided than our newspapers.... The comments are moderated and seems that all comments are in support of the arguement. Straits times do post quite a fair amount of letters questioning the government.

    Seriously, if you want your website to be convincing, you should at least try to hide your bias.

    Keep saying too expensive, too expensive. Have they done a poll anywhere??? if they did, they will realise the majority of singaporeans don't find it too expensive... period.

    It is only the minority who wants the HDB prices to fall
    Last edited by alantkh; 23rd September 2009 at 07:06 AM.

  5. #285
    Moderator diver-hloc's Avatar
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    Default Re: Your views on the current surging property market

    Quote Originally Posted by alantkh View Post
    frankly, all the "independent" websites are worse than straits times. The bias in those websites are more obvious and the articles more one sided than our newspapers.... The comments are moderated and seems that all comments are in support of the arguement. Straits times do post quite a fair amount of letters questioning the government.

    Seriously, if you want your website to be convincing, you should at least try to hide your bias.

    Keep saying too expensive, too expensive. Have they done a poll anywhere??? if they did, they will realise the majority of singaporeans don't find it too expensive... period.

    It is only the minority who wants the HDB prices to fall

    A Poll ??!!

    If you polled me about cost of living in S'pore... I would/could said 'ITS TOO HIGH'.... I'll then said its because the rent is too high, the the workers pay is too high, everything is too high.... expect my OWN SALARY... my salary would 'always' be too low.

    In any Poll.... Buyers will complaint price is too high. Seller will not 'mind' if the price goes up abit more. But when the Buyer now own a house and intend to sell.... then I believe his/her think will be difference.

    Scuba & Father... For Life

  6. #286

    Default Re: Your views on the current surging property market

    Gradual increment of housing is a good thing to have, but a sudden increase such as on average over 20% increment or more might not be a healthy sign. This might result in inflation.

    Remember what happened in 2007, when the oil price surged to a new historical height, it caused high inflation. Did your income increase that much?
    Now when oil price had gone down, those increased food, transport and etc prices, did it gone down?

    Now, lets focus back on the issue, the increment of property for this round likely to cause by:
    1. Artificially control of new HDB flat supplies to the market
    2. Supplies to the market is too slow (BTO for new HDB flat)
    3. Influx of FT into Singapore
    4. En-blocked seller who have plentiful of cash at hand wanted to buy up private property
    or HDB resale flat to stay (they are given a period of time before they need to be
    shifted and thus they will be in a hurry to purchase place to stay).
    These caused a surge in demand.

    Isn't these conditions/situation created or within the control of the policy maker?

  7. #287
    vince123123
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    Default Re: Your views on the current surging property market

    Yup all of these conditions and situations created are within the control of the policy maker. Unfortunately, the policy maker may be more interested in increasing GDP and other numbers and hence, the salaries of the average JOE cannot keep up.

    I once read an article questioning the rise of GDP model and how it does not equate to more wealth for the population; as well as how it is cannot be sustained over the long term (counting from the present). I believe its on TOC and if anyone's interested, I can link them to it.

    The rise of GDP is related to the factor (3) and hence, is a factor affecting the rise of public housing prices.

    Perhaps the way to "fix it" is to slowdown the rise of public housing, by the factors you described, as well as changing the model of pricing new flats. Whilst perhaps not a reduction (and causing outcry for negative equity people), surely HDB can slow the rise by offering a bigger market subsidiy over resale price but yet not reduce too much to devalue existing properties. It will take a LONG time for prices to stabilise again and salaries to catch up; but its better than letting it go out of control.

    That said, I do note that most policies appear to be made with a short term goal in mind; to target existing problems (ie symptomatic treatment) rather than long term (maybe to cash out quickly again ala banks style). However, we only hear "long term" come in when there are losses in investments :P

    Quote Originally Posted by scanner View Post
    Gradual increment of housing is a good thing to have, but a sudden increase such as on average over 20% increment or more might not be a healthy sign. This might result in inflation.

    Remember what happened in 2007, when the oil price surged to a new historical height, it caused high inflation. Did your income increase that much?
    Now when oil price had gone down, those increased food, transport and etc prices, did it gone down?

    Now, lets focus back on the issue, the increment of property for this round likely to cause by:
    1. Artificially control of new HDB flat supplies to the market
    2. Supplies to the market is too slow (BTO for new HDB flat)
    3. Influx of FT into Singapore
    4. En-blocked seller who have plentiful of cash at hand wanted to buy up private property
    or HDB resale flat to stay (they are given a period of time before they need to be
    shifted and thus they will be in a hurry to purchase place to stay).
    These caused a surge in demand.

    Isn't these conditions/situation created or within the control of the policy maker?

  8. #288

    Default Re: Your views on the current surging property market

    Vince, we are threading @ the beach of the *** ocean.

    Anyway, just speaking as a man in the street. I grew up in a kampong then moved to a leased flat in Macpherson. We were then relocated & bought a new 4rm flat in the then kampong Hougang in the mid 80s. It costed us S$56K. Today it is valued @ about S$230K, not a lot by modern standards after twenty+ years & don't forget the interests paid & inflation. Oh, I must mention that it's in the "opposition ward" which according to "industry sayers" affects property value Today, we keep it just to vote!

    My siblings bought their re-sale flats in the height of 90s in Bt Batok. It was over S$300K for a 4/5 rm. When they sold it in early 2000 of "dot-com bust", they were saddled with huge losses of over S$100K plus a debt with CPF cos it has priority over any debtors.

    I was just about to question the actual cost of building an HDB flat + land cost if possible. Then the amenities. I would suppose it is more of a town planning as you have to balance it with roads, schools, sports complex, malls, market etc.

    You guys are not even talking about the very sensitive race issue. Is this still a problem now? I remembered it was, there was a quota set by whoever which states that some races cannot buy that particular flat from the particular seller as they have to maintain a balance in the races in per block or estate. I can probably respect this rule.

    How about the recent launch of the very hot HDB estate in Boon Keng or Pinnacle? Will the profiteers buy into them then cash/lease out? What's to prevent it or is it for market to decide? Our living standards is definitely not what it was 20yrs ago but how is our income per capita or the fact for the lot of citizens? The govt wants us to grow to 5 million so import is the natural choice but balancing it with the existing population & affordable housing is a very fragile fabric.

    I did not buy an HDB flat because the places that I want has so much COV that it doesn't makes sense to me plus the fact that a mature estate in a 99yr lease has lost about a 3rd of it's life. Paying COV for private properties is quite rare & in fact often 10-30% less than valuation depending on times. Valuation is manipulated for new launches. Banks will support the developer & of course look into your credibility.

    Some will argue about staying farther but I figure that the time lost + hi-cost in transport will subsidise for the savings. I work very long hours so shortest possible travel to home or work is ideal.

    My concern is as what many are. How can our young afford their 1st home here? So, as a parent, I'm working harder to help them by buying more to invest. Vicious cycle isn't it?

    All the above are my personal experience. In Malaysia where I spend half my time, many people travel everyday to work by bus/KTM train/LRT/Taxi or drive for easily an hourx2 to reach their work/home.

    In China, the middle-income are crazily investing in new properties & stock market. They pay cash as interest rate for bank loans are quite unlike ours. Some of the apartments in major cities are easily RMB10K/SqM for a 60yr leasehold. Rental returns are +/-8% for good projects. Inflation is far higher where a normal salesgal or delivery driver gets RMB1000-1500/month. A meal in their food court is RMB20-50. S$1=RMB4.75.

    I'm not sure how have NZ & Australia have recovered but they were servicing a 17% housing interest just a few months ago but of course, their FD rates are pretty high as well.
    Last edited by NineEleven; 23rd September 2009 at 12:55 PM.
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  9. #289
    vince123123
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    Default Re: Your views on the current surging property market

    For those interested, this is an article charting how the property bubble began for HDB and its unsustainable rise. It gives a good summary of the main issues (but as with all summaries, points are not developed in depth; but the main stuffs is already there).

    Those not interested, just ignore:

    http://theonlinecitizen.com/2009/09/...of-discontent/

    The future of discontent

    Tuesday, 22 September 2009, 8:21 pm | 1,059 views

    Harrison Goh / Guest Writer

    SINGAPORE may have reached the end point of its involvement in the global manufacturing market with the impending departure of Seagate’s plant. While this is not unexpected, it spells a deepening crisis that most Singaporeans may not yet fathom, thinking that the *** government has the ready solution.


    With 10,000 people under its payroll, Seagate is one of the biggest employers in Singapore’s corporate history. With its immense market share, its presence here has generated a whole segment of supporting industries which created many more tens of thousands of jobs for both locals and foreigners.


    It is difficult to imagine the impact of Seagate’s loss on our economy.


    The great migration of low-end, low-skilled jobs to China began in the 1990s, which is one reason why Singapore decided to move up the value chain in the manufacturing industry. Theoretically, the move was logical and necessary.



    There were ample opportunities to scale up and higher-end jobs were largely retained here in line with the higher educational achievements of the average Singaporean.Fast forward 20 years now and most Singaporeans are facing a looming job crisis on the back of ever higher cost of living, no doubt a result of ***’s unbalanced growth policies. The departure of factories not only badly affected the workers but the managers as well. The number of unemployed PMETs represent the gravity of the current situation.

    The growing property bubble


    The main culprit is the very wide pyramid that supports the top which is largely the result of high property prices. How did Singapore arrive at this crossroad? A relook at ***’s policies provides us with the undisputable answer.
    In the early days of S’pore, HDB flats cost below $10,000 and rose over the years. Even factoring inflation, the growth in HDB flat prices is unnatural and unsustainable for the future generations. The government’s claim that HDB flats are much subsidised compared to the market prices is a distorted view. Selling HDB flats at reduced profit compared to market prices does not do anything to reduce cost for potential buyers, and cannot be called a subsidy.


    In short, each new generation will have to pay much higher prices for HDB properties to support the artificial price rise, creating a false sense of wealth and of property value in Singapore.


    This form of property price engineering is sustainable only if we can continue to attract or produce enough MNCs to set up businessess and factories which in terms, generates jobs for the various segments of society. The consequences of a failing Singapore is dire compared to other countries due to a lack of natural resources and land for self subsistence.



    With a large percentage of the population serving mortgages on their properties, it is conceivable that the whole economy could collapse quickly, if large numbers of Singaporeans are no longer able to do so.


    The sub-prime crisis in the United States serves as a vivid warning to the government of the perilous path that its policies have created. Ultimately, it is the vast majority of heartlanders who will bear the consequences of this devastating ‘bubble tsunami’ when it strikes.

    What can we do?


    What can be done to prevent this crisis from erupting? It’s not possible to prevent the crisis but it’s possible to create a soft landing. HDB must revert to its primary role of providing genuinely affordable housing to Singaporeans as in the past. A home is the single most important and most basic asset required for developing a sense of rootedness. The “Swiss way of living standard” is nice to have if not a mere rhetoric. However, the vast majority would consider that a luxury well beyond their reach.


    With affordable housing, lower wages can be mitigated which in turn reduces business cost and makes Singapore a more competitive economy again. With less money going towards servicing mortgages, the average Singaporean can put more money into savings and more disposable income will help to drive the local economy. Mortgages are unproductive components of the economy benefiting few among which are the banks.


    Higher consumption not only helps to drive the local economy but also helps to distribute income which leads to a more equitable society. As Singapore moves towards the services industries, namely finance, legal, entertainment, retail, and so on, Singaporeans will be extremely hard-pressed to compete with foreign labour for lower pays and jobs.


    The government has opened the floodgates for foreigners to come in without much consideration for the average Singaporeans. With depressed wages leading to less financial freedom, the average Singaporean will have to continue to slog to pay for inflated housing mortgages and living costs. The rich, however, will continue to benefit disproportionately, giving rise to a widening social chasm.


    There is much to be learnt from any crisis. If we do not, we are priming ourselves for an even more tumultuous calamity. If that happens, we have only ourselves to blame for playing into the hands of the economics of greed.
    Last edited by vince123123; 23rd September 2009 at 01:07 PM.

  10. #290

    Default Re: Your views on the current surging property market

    Hmm. Vince. IMHO, I think this Harrison's POV is somewhat unfair.

    Firstly, the moving of manufacturing happens to all developed countries so we are not alone & don't forget that the major % of factories here employ Malaysians rather than Singaporeans. Remember some years ago when Mahatir stirred about getting our govt to release the CPF monies back to Malaysians?

    The influx of foreign workers esp low-cost workers will persist and is probably one of the pillar to our economy now. You wouldn't want to clean hawker tables or mend that road would you? Neither would your children, that's why we educate ourselves and strive to improve. The key thing is how to bring in or create jobs/businesses that require better minds/talents & of course salary. Otherwise, our local talents will migrate elsewhere. This is a natural cycle, people go where the grass is greener. I will bet that the new casinos will be employing more than half that are foreigners as well. Some of my staffs are foreigners simply because locals don't want to work 10-12hr days & expect a list of benefits.

    The govt can sell HDBs to us @ cost but then the enterprising Singaporeans or PRs will flip it within the next minute once the barrier is removed or matured. Profiteering from properties is probably 50% of our pastime hobby here now.

    Oh you guys have not even talked about the GST, stamp duties etc collected with each & every sale.

    Yes, cushioning is the only way to go. Curbing speculators and regulate the valuations carefully so as not to irk the owners yet satisfy the buyers. It's damn if you do & damn if you don't. Ouch!

    Meanwhile, to the TS. Shop during low season like ghost month, CNY etc where you can hopefully have a better deal I would still adopt a wait & see attitude for now. Rent 1st, save up & buy when you are ready or planning for a family which will change your needs & wants.
    "Like Moths, photographers gather at the sight of light" Robert Doisneau
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  11. #291
    vince123123
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    Default Re: Your views on the current surging property market

    2 main points:

    1. For the foreign worker issue, I think there are both jobs which locals dont want to do, as well as jobs that they want to do; but get edged out by foreigners. I don't think tis a black or white case either way.

    2. For the HDB price thing, consider the two situations in my previous post:

    http://www.clubsnap.com/forums/showp...&postcount=123

    Yes, people can still flip, but there will come a resistance level. For example, if new flat prices stay at 100k, do you really think someone can flip until its 400k (current levels)?

    But if new flat prices go to 350k, the same person selling the same flat can more easily sell at 400k.

    You are right, damn if you do, damn if you don;t but I'm sure million dollar ministers can think of something Other than the two groups of "owners" and "buyers" I'm pretty sure they will also think about "themselves" when formulating policies heheheh

    Quote Originally Posted by NineEleven View Post
    Hmm. Vince. IMHO, I think this Harrison's POV is somewhat unfair.

    Firstly, the moving of manufacturing happens to all developed countries so we are not alone & don't forget that the major % of factories here employ Malaysians rather than Singaporeans. Remember some years ago when Mahatir stirred about getting our govt to release the CPF monies back to Malaysians?

    The influx of foreign workers esp low-cost workers will persist and is probably one of the pillar to our economy now. You wouldn't want to clean hawker tables or mend that road would you? Neither would your children, that's why we educate ourselves and strive to improve. The key thing is how to bring in or create jobs/businesses that require better minds/talents & of course salary. Otherwise, our local talents will migrate elsewhere. This is a natural cycle, people go where the grass is greener. I will bet that the new casinos will be employing more than half that are foreigners as well. Some of my staffs are foreigners simply because locals don't want to work 10-12hr days & expect a list of benefits.

    The govt can sell HDBs to us @ cost but then the enterprising Singaporeans or PRs will flip it within the next minute once the barrier is removed or matured. Profiteering from properties is probably 50% of our pastime hobby here now.

    Oh you guys have not even talked about the GST, stamp duties etc collected with each & every sale.

    Yes, cushioning is the only way to go. Curbing speculators and regulate the valuations carefully so as not to irk the owners yet satisfy the buyers. It's damn if you do & damn if you don't. Ouch!

    Meanwhile, to the TS. Shop during low season like ghost month, CNY etc where you can hopefully have a better deal I would still adopt a wait & see attitude for now. Rent 1st, save up & buy when you are ready or planning for a family which will change your needs & wants.

  12. #292
    vince123123
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    Default Re: Your views on the current surging property market

    An article talking about how increasing FT into Singapore will raise resale prices (and therefore new flat prices since new flats are priced based on resale prices):

    http://singaporealternatives.blogspot.com/2009/09/hdb-high-prices-influx-of-ft.htm

    HDB High Prices & Influx of FT



    One of my favorite blogger Lucky Tan has written on the reasons of the rise in HDB resale as well as new flats' prices. The moderator of 3-in-1 Kopitiam Kojakbt has put up one of his reasoning and his chart on how influx of Foreign Talents is correlated to the pricing of HDB resale flats. (See above)

    Although the Pearson Correlation Coefficient is pretty high for the two sets of data, technically speaking there must be a reasonable explanation behind such correlation, else such correlation would be considered irrelevant statistically.

    The more appropriate data to be used is the number of increase of PR and non-native Citizens vs the HDB resale pricing. This is because only PR and new non-native Citizens are allowed to buy HDB resale flats. The Total of Foreigners in Singapore could only at best be an approximate to the increase in PR or new non-native Citizens, assuming that the number of new PR and Citizens are directly correlated with the Total number of Foreigners. In Singapore, we have not much choice of data set because the government does not release specific numbers on the increase of PR and New Citizens.

    The spiral of HDB resale prices is basically due to two forces, demand and supply. Singaporeans generally could only own one HDB flat per household. It would mean that the supply of HDB flats to Singaporeans are more or less in equilibrium. However, with the injection of new demand caused by the increase in PR and New non-native Citizens, it would cause an inequilibrium in the demand and supply. The supply of HDB resale flats are limited as most Singaporeans bought the flats for own use while the demand of such flats keep going up with the influx of foreigners as PRs and New Citizens.

    This will inevitably cause the prices of new flats to surge because the present new HDB flats' price are pegged at the resale flats' price. In effective, HDB is just giving a "discount", not a real subsidy for native Singaporeans. The implicit result would be the influx of Foreigners would have tremendous impact on Singaporeans, especially the young couples, in terms of higher HDB prices.

    My suggestion is as follows:

    1) HDB should stop hoodwinking Singaporeans by pegging the new HDB flats' prices to the resale HDB market prices and disguise such Discounts as "subsidies". The pricing should be de-linked and new HDB prices should be sold to Singaporeans at cost price and on top of that, REAL subsidies at cost price should be given as follows:

    a) Born native Singaporeans or those who have lived here for more than 15years, $20K of subsidies from cost price.
    b) Those Singaporeans who have completed their NS, another $10K subsidy
    c) Those who get married before 30 years old another $20K subsidy.

    2) In view of present FT policy, *** must solve the problem of inadequate infrastructure, especially housing. HDB should sell NEW HDB flats to PRs direct at MARKET PRICES, instead of cost prices. This will ease the unbalanced market situation due to high influx of FT getting PRs. By earning from these PRs, HDB will be able to cross subsidize native Singaporeans.

    This will of course encourage more PRs to convert to Singapore citizenship and at the same time, give REAL VALUE to Singapore Citizens who have contributed to this Nation. On top of that, it encourages family units to be formed without discriminating those singles badly. Singles who are native Singaporeans and served their National service would get their subsidies in recognition of their contribution to the Nation as well.

    There is no reason for HDB not to sell New HDB Flats to PRs at MARKET PRICE instead of allowing the resale market to grow into a bubble and in turn, affect all native Singaporeans' housing liabilities. High HDB prices will prevent young couples from forming up family units early. This is a contradiction to our National needs.

    It is time for *** government and HDB to give due recognition to Singaporeans' contribution to the Nation and put tangible value to our allegiance as a citizen. It is unacceptable for us, especially the young Singaporeans, to pay the price of ***'s indiscriminate FT policy in terms of paying higher price for HDB flats.

    Our *** government has been talking big about how they value Singaporeans and putting their interests FIRST above all others. But the truth is, the *** government is the MAIN CULPRIT in hurting Singaporeans' interest by implementing such housing policy that inflate the prices of new HDB prices for our young Singaporeans. If this policy is not curbed, our future generations would definitely be burdened by higher housing cost all across the board.
    Last edited by vince123123; 28th September 2009 at 01:56 PM.

  13. #293
    vince123123
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    Default Re: Your views on the current surging property market

    This article isn't that particularly well written, and I'm putting it here just for this paragraph:

    http://hardhitting-nobs.blogspot.com...range-one.html

    Quote:

    Because that’s the real reason why property prices are so high now isn’t it? Singapore’s Prime Minister Lee Hsien Loong has said that for the past few years, Singapore has accepted more than 100,000 foreigners per year. Now there are 100,000 new foreigners each year. Even if you squeeze them 10 to a flat, that’s still not enough because HDB only built something like 8,000 flats per year. That’s not even counting our own Singaporeans!

  14. #294
    vince123123
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    Default Re: Your views on the current surging property market

    This writer has given some numbers and historical data on how the tail chasing head chasing tail; ie the never ending upward spiral due to the market subsidy concept

    http://theonlinecitizen.com/2009/10/...ss-censorship/

    Prices of HDB flats – press censorship?

    Friday, 2 October 2009, 9:33 am | 720 views

    Mr See Leong Kit had sent a letter to the Today newspaper on the pricing of HDB flats (16 Sept). The HDB responded to his letter on 25th Sept. (See links to both letters below). The Today newspaper, however, has declined to publish the follow-up letter by Mr See in response to the HDB’s letter.

    See Leong Kit / Guest Writer


    HDB’s response “Why we peg to market rates: HDB” ( TODAY Sept 25) to my earlier letter has necessitated my right of reply.


    Instead of merely accusing me of being “misleading and illogical”, HDB is expected to be transparent in disclosing fully the actual breakeven cost of new flats in all its projects. After all, these are public housing developed with public funds.


    These exasperating remarks of a couple wanting to start a family sums up the genuine frustrations of young Singaporeans at the sky-high prices of public housing: “How to live in cheaper Woodlands when work is in Shenton Way and parents are in Tanah Merah? The Government must come up with more practical solutions!”


    Let me now summarise these two main issues:

    Root cause behind high prices of new and resale flats.


    In the 1970s, at HDB Marine Parade Estate, prices of 3-room, 4-room and 5-room new flats were $17,000, $20,000 and $35,000 respectively.


    In 1990, 5-room new flats cost around $70,000. Such prices then reflected a “cost-based” pricing approach.


    But, following the 1994 property bull run, HDB switched to a ”market-based” pricing approach. It confirmed that ”the prices of new HDB flats are based on the market prices of resale HDB flats, and not their costs of construction”.


    In 2000, the total breakeven cost (comprising construction cost, land cost and other related costs) of a 5-room new flat was an estimated $120,000.


    However, under the market-based pricing approach, HDB will first look at the prevailing market price of, say $260,000 of a 5-room resale flat. It will then pick a slightly lower figure of, say $200,000 as the selling price of the new flat – regardless of its actual breakeven cost of $120,000.


    HDB will then proclaim the new flat buyer is getting a so-called ”market subsidy” of $60,000, the difference between resale flat market price and new flat selling price. There is really no “cash subsidy” given to the buyer, and HDB is actually making a profit of $80,000 for each flat sold.


    The losses reported in HDB financial statements could well come from ”transfer pricing” accounting between HDB, Singapore Land Authority and Ministry of Finance.


    HDB’s “market-based” pricing approach is the root cause of prices of new flats and resale flats chasing each other in a never-ending upward trend.


    A plate of chicken rice cost $3 in HDB coffeeshops and $20 at hotel coffeehouses. It is both illogical and ridiculous for HDB to proclaim that every person eating chicken rice in HDB coffeeshops is getting a “market subsidy” of $17 per plate!

    Are HDB new and resale flats really affordable?


    It is misleading for HDB to merely state that “first-time flat buyers use 17 to 29 per cent of household income for their loans, below the international benchmark of 30 per cent” without disclosing the assumptions used.


    HDB has since confirmed to me that a 30-year loan period was assumed.


    Of course, if you stretch a home loan to as long as 30 years, even private property will become ”instantly affordable”.


    For a couple with a combined $8,000 monthly income, a HDB loan of $500,000 at 2.6 per cent interest and a monthly loan instalment of $2,000 may appear affordable. But at the end of the 30 year loan period, they would have coughed up some $800,000 in total capital and interest repayments.


    A sensible home loan period would be around 15 to 20 years.
    —–
    Mr See’s first letter to the HDB: It’s not all about the numbers.
    HDB’s response: Why we peg to market rates.

  15. #295

    Default Re: Your views on the current surging property market

    Good and insightful read!
    Tum podem extulit horridulum...日出東方﹐唯我不敗。

  16. #296

    Default Re: Your views on the current surging property market

    Demand is 6 times greater than supply. No wonder the prices almost reaches the moon...

    12,728 bid for 2,132 flats
    Tue, Oct 06, 2009
    The Straits Times

    By Jessica Cheam

    APPLICATIONS are pouring in for the Housing Board's latest sales exercise of 2,132 homes in 24 estates across the island.

    The flats, launched under its new Sale Sales of Balance Flats (SBF) scheme last Thursday, have attracted 12,728 bids as at 5pm on Tuesday - a mere six days since its launch.

    This means that the flats, which are in a mix of established and newer towns, are about six times oversubscribed. It is the largest sales exercise by the HDB in recent times.


    http://business.asiaone.com/Business...06-172192.html
    Tum podem extulit horridulum...日出東方﹐唯我不敗。

  17. #297
    vince123123
    Guests

    Default Re: Your views on the current surging property market

    Yup and HDB trying to cut cost by only building flats which have been pre-ordered; hence it does not have sufficient "stock in trade" to meet rising demands.

  18. #298

    Default Re: Your views on the current surging property market

    Haha, the rate they are building is < than the rate that they in absorbing the PRs. The oversubscribed rates are about there since Sept 2008, when I stared noticing HDB prices. .

  19. #299
    vince123123
    Guests

    Default Re: Your views on the current surging property market

    Maybe they expect the PRs and/or foreigners to stay in squatter like accommodation lik what I see in The Online Citizen; which had photo and video writeups of how foreign workers are crammed into unlivable conditions.

    Quote Originally Posted by stonefish35 View Post
    Haha, the rate they are building is < than the rate that they in absorbing the PRs. The oversubscribed rates are about there since Sept 2008, when I stared noticing HDB prices. .

  20. #300

    Default Re: Your views on the current surging property market

    Quote Originally Posted by vince123123 View Post
    Yup and HDB trying to cut cost by only building flats which have been pre-ordered; hence it does not have sufficient "stock in trade" to meet rising demands.
    I'm probably not updated but does anyone remember when did Khaw say that HDB will not be building any more flats as they have overbuilt?

    Well, at least the population is growing

    On another note, how's the occupancy of HDBs now? Are they leased out by owners or occupied by newbies?
    "Like Moths, photographers gather at the sight of light" Robert Doisneau
    My Little Port

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