Can Singaporeans afford luxury homes?
43 years. That is the number of years that an average Singapore resident needs to pay for a luxury home in the city-state.
The figure was revealed in a Bloomberg report about the
growing disparity between incomes and housing prices in emerging
markets. The report, which compared national income averages against the
prices of homes in prime locations, concluded that Mumbai was the
world's least affordable home market. Singapore placed last among the 14
countries ranked, behind other Asian cities like Jakarta (61.7 years),
Bangkok (67) and Hong Kong (96.4).
In Singapore, a typical piece of luxury property
spanning 100 sq m (about 1,076 sq ft) costs about US$2.71 million
(S$3.38 million)—roughly 43 times the nation's average annual income.
This means that at an average price of S$3,149 per sq ft, a luxury home
here would require an average resident with a typical per-capita
purchasing power of US$59,900 (S$74,679) more than half his life to pay
off.
| Sentosa Cove bungalow on sale for whopping $108 million |
There are six bedrooms, and a swimming pool. It also has an ocean view. The owner is reportedly a Singaporean. The PropertyGuru website said that three property agents had been listed as marketing the property and that it was an indication that the owner wanted to sell it fast
However, there has been no interested buyer for the past six weeks, Shin Min Daily News reported.
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HDB flat in Bishan sold for record $1.05m
A HDB executive maisonette in Bishan Street 13 was sold for a record S$1.05 million in December with cash-over-valuation of S$250,000, according to market data.
Located on the 20th floor of Block 190, the 150 sq m (approx. 1,615 sq ft) flat was listed on real estate portalPropertyGuru for about one month and attracted keen interest from three other buyers willing to pay over S$1.05 million, said DWG agent Thomas Hee who closed the deal.
But in the end it was sold to a young couple very familiar with the market.
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Khaw urges calm after S$1m flat price
Singaporeans should not be upset over reports that a resale flat was sold for S$1 million, said National Development Minister Khaw Boon Wan during a recent dialogue session with grassroots leaders in Sembawang, reported The Straits Times.
Mr Khaw explained that there will always be premium units offering fantastic views that will command very high prices, just like the case of the executive maisonette in Queenstown.
The sale of that unit is still on-going and is expected to hit S$1 million, with a cash-over-valuation (COV) of S$195,000.
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Nobody can tell you the fair value of Sky Habitat
By Andy Mukherjee, The Straits Times, 26 Apr 2012
THE strong buyer demand this month for Sky Habitat,
Singapore's most expensive suburban condominium, has created a flutter in the
blogosphere. A three-bedroom, 99-year leasehold condo in Bishan for $2 million?
Isn't that over the top, even if it claims an 'iconic' design?
But then, how does one know what the fair value is?
Some bloggers have supplied buyers with useful rules of thumb. Former NTUC
Income chief Tan Kin Lian, who contested last year's presidential elections, has
advised readers to buy properties that cost 60 months of their salaries or less.
So to afford a three-bedroom unit in Sky Habitat, either the husband or the wife
has to earn $33,000 a month, he noted on his website.
Rules of thumb help people decide, but they are not scientific gauges of value. Why 60 months of salary? Why not 55, or 65? What will be a better way to value an apartment? I wish somebody could tell us. The trouble is there is no good way to put a 'fundamental value' on an asset.
The valuation experts who put price tags on capital assets that can be held for a long time, producing an income stream (if rented out), or consumption utility (if self-used), usually do so by discounting risky future cash flows or utility to arrive at an estimate of value today and by comparing it with the price of a risk-free asset like a government bond.
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Rules of thumb help people decide, but they are not scientific gauges of value. Why 60 months of salary? Why not 55, or 65? What will be a better way to value an apartment? I wish somebody could tell us. The trouble is there is no good way to put a 'fundamental value' on an asset.
The valuation experts who put price tags on capital assets that can be held for a long time, producing an income stream (if rented out), or consumption utility (if self-used), usually do so by discounting risky future cash flows or utility to arrive at an estimate of value today and by comparing it with the price of a risk-free asset like a government bond.
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A number of you have forwarded to me a blog post written by netizen “Gintai”. He shares about his conversation on housing issues with two colleagues, before moving on to talk about the perceived inequities between locals and PRs in Singapore. He also asserts that he is not proud to be a Singaporean.
I will address the issue of PRs in another note. Let me just talk about the housing situation in Singapore. Is it really so dire? Is the HDB flat really so out of reach?
For a start, we need to understand why the flat pricing system works the way it does. Gintai seems unhappy that similar sized flats are not priced the same. When determining the prices of flats offered, HDB factors in the costs of building the flat as well as the prevailing market conditions at the time of the offer and the individual attributes of the flats. Therefore, a flat on the 16th floor and one on the 2nd floor would be priced differently. The price of a similar-sized flat in Jurong West and in Queenstown would differ. A flat near key amenities would be valued more than one with less.
Is there really a difference in value? Many Singaporeans who have sold their flats know that these different values would surface immediately in terms of the price their different flats can command. Should we therefore price them all the same? If they were, everyone would just wait for a flat on the top floors in a matured estate. And some would make huge capital gains compared to others when they sell.
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Pasir One@Pasir Ris
Looks like this is going to be the last of the DBSS launches. I still have no
idea what's the whole point of creating the DBSS sites because it is neither
here (HDB) nor there (private). However, if they revive the concept of private
apartments, just maybe this will make sense. I will not repeat what I have
written in my other posts on DBSS and you can refer to my other posts for more
information.
DBSS @ Pasir Ris has been named Pasir Ris One, and is located at Pasir Ris Central, right next to White Sands. The indicative pricing and configuration are as follows:
You can take a look for more information here. The pricing for Pasir Ris One as usual is off the charts, mainly because it is next to White Sands, and near many schools. It is also not stated that there are built-in wardrobes, kitchen cabinets and appliances, air-conditioning system, etc. However, so far I've not seen a DBSS that does not provide this standard furnishings.
DBSS @ Pasir Ris has been named Pasir Ris One, and is located at Pasir Ris Central, right next to White Sands. The indicative pricing and configuration are as follows:
| 3 room | ~65 sqm (103 units) |
from $390,000 to $490,000 |
A/c Ledge; Living Room w/ Balcony |
| 4 room | ~86 sqm (237 units) |
from $550,000 to $670,000 |
Big A/c Ledge; Living Room w/ Big Balcony; Master Bedroom w/ Big Balcony |
| 5 room | ~105 sqm (107 units) |
from $650,000 to $770,000 |
Big A/c Ledge; Living Room w/ Big Balcony; Master Bedroom w/ Big Balcony; Suggest Study Room location |
You can take a look for more information here. The pricing for Pasir Ris One as usual is off the charts, mainly because it is next to White Sands, and near many schools. It is also not stated that there are built-in wardrobes, kitchen cabinets and appliances, air-conditioning system, etc. However, so far I've not seen a DBSS that does not provide this standard furnishings.
Tan Chuan Jin asks netizens: Is the HDB flat really so out of reach?
Minister of State for National Development Tan Chuan Jin has responded to an article written by a netizen ‘Gin Tai’ on the increasing unaffordability of HDB flats on his Facebook.
In the article, ‘Gin Tai’ lamented at the sky-rocketing prices of HDB flats in Singapore in recent years which has priced many Singaporeans out of reach. He also expressed his unhappiness that similar-sized flats are not priced the same.
The honorable Minister did not really address the $68,000 difference in sale prices of two units of same flats on 2nd and 12th floors. The lowest floor is $68,000 more expensive than the highest within one and half year! How would you feel if you had bought the same size flat which costs extra $68,000 than your neighbour? Inflation or drastic market price rising within such a such time? Or profiteering? I don't know. It seems so obviously ridiculous right? That is the crux of the issue. If it's just $6,800 I'm sure most of us can accept. This is my perception. I'm sure many will share the same view.
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Housing issue: A short reply to Minister Tan Chuan Jin who replied to Blogger Gintai aka Langgar
Please read gintai blog here and Minister Tan reply here before reading this rant although I would not put it pass you that this is entirely legible and intelligible on its own.
Many PRs own big and nice property in their home countries and yet they are allowed by buy HDBs even though it is against the regulations. There is no way of verifying this with so many PRs around. Some houses are owned by their parents or using companies and trusts. I have said this before, govt should consider a capital gains tax for PRs who sell their HDB and ship out or a lesser capital tax if they upgrade to private property. Perhaps no tax to be levied if they purchase another HDB flat.
Another point, the possible reason why Anak Abu (again read gintai and minister) wants to so call stretch himself, as noted by Minister, and buy a bigger flat is perhaps because he needs the space for his children or even parents. Should he not buy a bigger flat now, when he wants to upgrade later, he would have to cough up the levy or cov or are we so optimistic as to think that Anak Abu can afford a private property to house his entire family? At the same time we are complaining about our TFR and children ignoring their elderly parents when the property policies are not even enticing or encouraging enough to set up decent sized and robust families.
I understand that the grants and subsidies are there to make HDB flat more affordable for citizens. But don’t forget the wages of many of workers have stagnated and their meager savings are being eroded by the high inflation rate. And we haven’t even got down to the elderly singles, divorcees, single parents and second marriage families. What sort of policies restrictions would they face from a housing agency who expects citizens to abide by some prudish moral standards of a single marriage and three children and cooperative parents and wholesome fully obliging siblings?? Can find but damn hard these days.
And if we delve further, we realised that in the overall working environment in Singapore, it favours a straight married couple (who might not have a clue of what is work-play balance) with no or one children, very much committed to their jobs, and entirely cooperative parents and siblings who don’t give too much trouble. Be sure to be able to afford full day child care as your parents might stay faraway because you are living in a new estate. Maybe an understanding boss so that you can leave work on time if not the child care centre will fine you. Pack some unhealthy food from kopitiam as dinner and go back to continue working again. If you have an hour before you sleep, check out the latest handbags, gadgets and new car models hitting town.
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Is this my Singapore? My home and my country?
Many PRs own big and nice property in their home countries and yet they are allowed by buy HDBs even though it is against the regulations. There is no way of verifying this with so many PRs around. Some houses are owned by their parents or using companies and trusts. I have said this before, govt should consider a capital gains tax for PRs who sell their HDB and ship out or a lesser capital tax if they upgrade to private property. Perhaps no tax to be levied if they purchase another HDB flat.
Another point, the possible reason why Anak Abu (again read gintai and minister) wants to so call stretch himself, as noted by Minister, and buy a bigger flat is perhaps because he needs the space for his children or even parents. Should he not buy a bigger flat now, when he wants to upgrade later, he would have to cough up the levy or cov or are we so optimistic as to think that Anak Abu can afford a private property to house his entire family? At the same time we are complaining about our TFR and children ignoring their elderly parents when the property policies are not even enticing or encouraging enough to set up decent sized and robust families.
I understand that the grants and subsidies are there to make HDB flat more affordable for citizens. But don’t forget the wages of many of workers have stagnated and their meager savings are being eroded by the high inflation rate. And we haven’t even got down to the elderly singles, divorcees, single parents and second marriage families. What sort of policies restrictions would they face from a housing agency who expects citizens to abide by some prudish moral standards of a single marriage and three children and cooperative parents and wholesome fully obliging siblings?? Can find but damn hard these days.
And if we delve further, we realised that in the overall working environment in Singapore, it favours a straight married couple (who might not have a clue of what is work-play balance) with no or one children, very much committed to their jobs, and entirely cooperative parents and siblings who don’t give too much trouble. Be sure to be able to afford full day child care as your parents might stay faraway because you are living in a new estate. Maybe an understanding boss so that you can leave work on time if not the child care centre will fine you. Pack some unhealthy food from kopitiam as dinner and go back to continue working again. If you have an hour before you sleep, check out the latest handbags, gadgets and new car models hitting town.
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Is this my Singapore? My home and my country?
Last week from Mon to Fri, I took my meal break at Joo Koon MRT Station with my colleague Train Officer ‘Anak Abu’. We were supposed to travel back to Jurong Crew Station for our one hour meal break after ‘stepping out’ from our trains at Joo Koon station. We would have to travel back to Joo Koon from Jurong station to intercept our trains after taking our meal break.
To save time, we brought along our food and took our meal at Joo Koon station staff rest room. We had one and half hour to enjoy our meal relaxing there.
Train Officer ‘Anak Abu’ brought his home cooked food whereas I bought mine from the coffee shop when I reported for work. There is no coffee shop at Joo Koon station. It’s like a deserted ghost town there.
Since TO Anak Abu brought his meal from home, usually he had more than enough. He would share some of his home-cooked food with me. I can’t share mine with him cuz Muslims don’t consume non-halal Chinese cooked food. In return, I brought him a can drink or 3 in 1 coffee sachets. It’s a win win situation for us.
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$3.3b spruce-up of old estates over two
decades complete with Teck Ghee makeover
By Rachel Chang, The Straits Times, 22 Apr
2012
HDB wraps up main upgrading exercise (MUP)
The curtains came down on the Housing Board's
landmark exercise to upgrade old housing estates yesterday, as Singapore's final
Main Upgrading Programme (MUP) project in Teck Ghee was declared
completed.
And fittingly, the last project was done at Ang Mo
Kio Avenue 10, just next to one of the first precincts to undergo the MUP more
than 20 years ago.
In 1990, an estate in Ang Mo Kio Avenue 3 was among
the initial batch of older neighbourhoods chosen for a spruce-up under the
programme that has since covered more than 120 HDB precincts.
Singapore homes shrink in size as prices rise
Singapore home buyers are squeezing into ever smaller homes in order to be able to afford that prized apartment.
Figures show the median size of new homes sold in the three months to today is now a very cosy 667 sq ft - a touch smaller than a squash court.
The latest figure is a hefty 24 per cent smaller than the same figure a quarter earlier, according to analysis by consultancy CBRE. This trend is made even more stark compared with the median home size of 1,141 sq ft in the second quarter of 2010
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CapitaLand CEO Calls Shoebox Apartments Inhuman: Southeast Asia
Liew Mun Leong, president and chief executive officer of CapitaLand Ltd. Photographer: Munshi Ahmed/Bloomberg
Singapore should curb the increasing trend of so-called shoebox apartments because they are “almost inhuman,” CapitaLand Ltd. (CAPL) Chief Executive Officer Liew Mun Leong said.
The government last week said it’s concerned that shoebox apartments are mushrooming in the city-state as private home sales surged to a three-year high with record purchases of units that are smaller than 50 square meters (538 square feet).
“I am dead against shoebox developments,” Liew said in an interview at the downtown Singapore headquarters of Southeast Asia’s biggest developer. “The government should intervene. Singapore’s land is very precious and you are wasting your scarce resources” by building shoebox apartments.
The island-state’s population growth, scarce land and surging property values have prompted developers to shrink apartment space. Home prices surged to a record at the end of 2011 in a city that’s about half the size of Los Angeles.
The government may introduce measures to regulate the sale of shoebox apartments after a record number were sold in the first quarter, Khaw Boon Wan, Singapore’s National Development minister, said in Parliament on May 14.
Developers sold 1,764 shoebox units in the first quarter, or 27 percent of all home sales, the most since the Urban Redevelopment Authority began collating the data in 2007. Apartments that cost less than S$750,000 ($587,000) made up 42 percent of new home sales in the first quarter, up from 25 percent in the previous three months, the data showed.
“It’s almost inhuman, it’s not good for the welfare of the family to feel that constrained,” said Liew, 65, who grew up in a one-bedroom apartment with nine people and often slept along the corridor.
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The
great subsidy game
In paradise, everything is subsidized by the govt. School fees, university fees, all subsidized. Hospital bills, subsidized. Polyclinic bills, subsidized. Housing, more subsidies in terms of tens of thousands or at least $60k for those earning $1000 pm.
Dunno how much subsidies for the bigger flats, but must be big. Public transport, also subsidized, the latest $1.1b to buy buses and pay staff salaries. PUB bills, conservancy bills also got subsidies but called rebates.
If these are subsidies, that means the govt is paying a large portion of the bills. The cost must be genuine and that is why there is a need to subsidise. Can someone work out how much would all the subsidies come to that are paid by the govt? I think it is no small amount. Or this is already provided in the budget under Subsidies?
If one flat is subsidized by $60k, 1,000 flat would mean $60 million. And for bigger flats, the subsidies could be more. Imagine how much the govt has subsidized for 800,000 HDB flats? Add the rest of the subsidies, it could come to billions.
In paradise, everything is subsidized by the govt. School fees, university fees, all subsidized. Hospital bills, subsidized. Polyclinic bills, subsidized. Housing, more subsidies in terms of tens of thousands or at least $60k for those earning $1000 pm.
Dunno how much subsidies for the bigger flats, but must be big. Public transport, also subsidized, the latest $1.1b to buy buses and pay staff salaries. PUB bills, conservancy bills also got subsidies but called rebates.
If these are subsidies, that means the govt is paying a large portion of the bills. The cost must be genuine and that is why there is a need to subsidise. Can someone work out how much would all the subsidies come to that are paid by the govt? I think it is no small amount. Or this is already provided in the budget under Subsidies?
If one flat is subsidized by $60k, 1,000 flat would mean $60 million. And for bigger flats, the subsidies could be more. Imagine how much the govt has subsidized for 800,000 HDB flats? Add the rest of the subsidies, it could come to billions.
Remember the sweet siren calls of asset
enhancement?
The abstract for the paper "The Impact of Housing Prices on Aggregate Consumption: Evidence from an East Asian City-State" by Phang Sock Yong states clearly that "there is no evidence that housing prices have produced either wealth or collateral enhancement effects on consumption."
There is no need to dwell too deeply into the esoteric academic references to appreciate what we experience in real life. Since CPF "liberalised" the use of the retirement funds in 1980, housing stock is four-fifths HDB, and home ownership is in excess of 90 percent. All this is supposedly good news except that cash was diverted from other necessary expenditures, resulting in the unique Singapore position of being asset rich, cash poor.
The research found that, regardless of the definition of consumption expenditure or disposable income used, the ratio of total consumption expenditure to GDP less personal and corporate taxes fell from 0.59 in 1979 to 0.44 in 1999. Under the myopic hypothese, consumption should track income/wealth movements and respond correspondingly to income/wealth increases and decreases.
So where did all that wealth generated go to? Definitely not to the average HDB owner, struggling with a 30-year mortgage repayment schedule.
The abstract for the paper "The Impact of Housing Prices on Aggregate Consumption: Evidence from an East Asian City-State" by Phang Sock Yong states clearly that "there is no evidence that housing prices have produced either wealth or collateral enhancement effects on consumption."
There is no need to dwell too deeply into the esoteric academic references to appreciate what we experience in real life. Since CPF "liberalised" the use of the retirement funds in 1980, housing stock is four-fifths HDB, and home ownership is in excess of 90 percent. All this is supposedly good news except that cash was diverted from other necessary expenditures, resulting in the unique Singapore position of being asset rich, cash poor.
The research found that, regardless of the definition of consumption expenditure or disposable income used, the ratio of total consumption expenditure to GDP less personal and corporate taxes fell from 0.59 in 1979 to 0.44 in 1999. Under the myopic hypothese, consumption should track income/wealth movements and respond correspondingly to income/wealth increases and decreases.
So where did all that wealth generated go to? Definitely not to the average HDB owner, struggling with a 30-year mortgage repayment schedule.
Phang has an explanation for the negative impact of housing price
Singapore’s private-housing market is off to a flying start this year, with monthly sales at their highest levels in 2 ½ years. But some analysts warn this surge in sales could ironically spell tougher times ahead for the city-state’s buoyant real-estate sector.
Government data released Monday indicate that 2,393 new private homes were sold in March, easing only slightly from February’s tally of 2,417 units—which was the highest since July 2009, when 2,772 units were sold. The March data also mark the first time new private home sales topped 2,000 units for two straight months since Singapore’s Urban Redevelopment Authority started compiling the figures in June 2007.
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related:
Tweaks in Our SG Housing
