I worry about the escalating property prices in Singapore.
Although it started with the properties in the prime districts, it has moved to the fringe districts. It will raise the prices of HDB properties in due course.
The increase in property values will not benefit owners who have a single property. They cannot realise the gain as they have to buy another property at a higher price, unless they choose to downgrade to a smaller property.
The higher prices will be a burden to the younger generation. They will find it more expensive to afford a property.
It is better for Singapore, if the property prices are kept at a modest level, and not allowed to escalate out of control.
It is not just properties. With the Reit on shopping centres/food courts and hospitals, Singaporeans will suffer at the expense of these funds.
ReplyDeleteI agree with you, Mr. Tan. If no intervention from authority, it becomes expensive for young adult to buy HDB flat here, which will push me and many others to emigrate, to countries where our purchasing power is perceived better than here. Rather than paying premium price and having big capital locked-in, for the same amount, my hard-earned money can get me a better housing in other countries with same quality of life. Property price drives other prices up too.
ReplyDeleteSingapore has to raise the wages of middle managers, executives and workers in the private sectors in order to bring up their income to match the price of flat and private properties.
ReplyDeleteSingaporeans have been "suppressed" by the callings of bringing down their wages exhorted by ntuc. The result was wages were suppressed by the release of permits to import cheap foreign talents.
The property price is not high in comparison with the big cities like Hongkong, Korea, Japan and so on.
The main problem of singapore was that there wasa hugh wage loss in the last 10 years of recession. The wage loss is compounded way behind Hongkong, Japan, Korea, Taiwan and even China. These countries have surged so much in the last 10 years.
The only way is to benchmark the higher income group. Raise the the lowest income wage earner to $5000 per monh base salary. When this is benchmarked, the income wages will match up to the high price of the HDB and private flats.
Even when high wages is concenred, there will still be investment flowing in for it. A good example is : UK, France, Germany, and Ireland.
Properties are not priced out of the market for two reasons: the greatest differentiator to the Western societies is the low interest rate. Considering that the lending rate has dropped to below 2.5% and the loans can be financed over 30 years shows that the Singaporean government can (and will) ensure great stability over the coming decades. The function of affordability is greatly per-capita remuneration dependant. The ratio between earnings and cost of property makes property seem expensive. However, when considering the economic factors such as cost of debt there is still plenty of room to move. Secondly, even through low inflation environment, the high savings rate and continuing revaluation of salaries will allow Singaporeans to continue buying homes.
ReplyDeletetozzi,
ReplyDeleteHistory has shown that lending rates are very volatile. Moreover, MAS does not use interest rate as a monetary tool (unlike FED).
Remuneration is also fairly volatile. Don't forget 1997 and 2001 when lots of people were suddenly retrenched. Furthermore, with the govt pursuing liberal immigration policy, there is immense downward pressure on wages.
With the majority of S'poreans owning just one property, it doesn't make sense to have high property prices. That will only make S'poreans asset rich but very cash poor!!
Do you think property prices will continue to escalate given the consistent pattern over the past 20 years?
ReplyDelete