10/27/2007

Curbing property speculations

Mah Bow Tan announced new rulings to curb the hot property market before it starts boiling out of control. The fear of a spiralling high property prices running beyond the reach of the average Singaporeans is a great concern. And now this concern is also creeping into the fear of FTs who will also be aversely affected. And in turn the whole business cost. What seems to be lacking is a clear strategy as to what the property market should be like and how Singaporeans of different income level would be accommodated in the big scheme of things. We have the HDB market, the condo market, the landed properties and the high end market. The different markets can be structured to serve the different sectors of the population, local and foreign, carefully planned to benefit the real home owners and the speculators, balancing a need to keep properties affordable and at the same time a lively speculative markets. We are now seeing piecemeal solutions to a very complex problem.

17 comments:

Anonymous said...

I'd like to hear matilah's take on this.

Anonymous said...

Please do not encourage him. He will come with his usual profanities and vulgarities which we have too much of already.

Anonymous said...

Yeah, he does need a mouthwash. If only he could just sit and evolve into a profanity-free human bean.

Matilah_Singapura said...

To my dear fans, thank you for all the attention. OK, Ok FUCK YOU, motherfucker, cocksucker cunt, shit, arse... GREAT! Job done! Taa-raaa!

Now that I've met your expectations with the perfunctory "vulgarities", we can get on with it.

Any move to "curb speculation" will eventually result in "innocent" people getting burned. The dumb minister (considered by many to be a right-royal arsehole) is assuming ALL speculators make money, indirectly telling people that:

"If you are greedy and buy, buy, buy prices will skyrocket and then you sell for a huge profit".

Anyone with half a brain will tell you this is horseshit. Just as you can make money in real estate, you can lose too.

To a certain degree EVERYONE—including, and especially The Land Baron Millionaire Ministers—SPECULATE ON PROPERTY when they buy. i.e. no one expects the price of their purchase to drop, everyone expects an increase in the value.

I would, and I'm certain I'm not alone in this, like to see—publicly displayed—a list of properties OWNED by top government brass and their spouses, AND a record of property transactions—including the purchase, sale, conversion or transfer of OPTIONS on property.

There are many reasons for the increase in property values. I've already mentioned credit money and the expansion of the S'pore money supply. These are all government induced directly or indirectly. So what the minister is saying is "We have to bring in measures to clamp your behaviour, because we were complicit in causing the problem in the first place." So what's new? Government messes up, tax payer pays. People responsible for the mess get promoted with salary increase of course.

More market-based reasons for the rise in property values:

1 A lot of foreigners "parking" their case by buy property. The quiet big players now are RUSSIANS. (but the Indonesians get the blame...)

2 The global economy is growing, BUT the growth rate of MANUFACTURING has outstripped the overall rate of growth. And we know who is doing most of the manufacturing these days.

3 A lot of private sector locals are getting wealthier very quickly—especially those tapped into China and India. Property is the NUMBER ONE GAME played by wealthy Singaporeans. If you look at the local billionaires, most of them got rich from real estate.



Who loses when the govt clamps speculators?

Whenever govt interferes with the free market processes for some "social purpose", the people who end up getting screwed the HARDEST are the poor and middle-class.

Let's say the measures to curb speculation are successful and prices fall. That means most people will experience a fall in the value of their real estate assets. Who will be hit the hardest, in terms of the real impact on their lives: the rich dude living in Tanglin or a struggling low skilled worker living in the heartlands?

The govt has sold the image of S'pore to foreigners as a "free market" place—low taxes, heavy govt policing of the society, but essentially a free market—i.e. you can have economic freedom, but not civil liberties. Most international rich players don't mind this—in fact they favour it: "Let us make money, but someone stomp on those rowdy riff-raff and get them out of our way."

But now, the govt is willing to interfere with the market fearing political backlash from a growing segment of the population stressed out over the affordability of housing.

What happens when the international players get cold feet and liquidate their properties? The bloody price will FALL, and those who had bought when it was high lose money, banks foreclose on loans and all sorts of economic mayhem ensues.

The conclusion is this: government interference in free market mechanisms do more harm than good, and eventually when the price has to be paid, unsuspecting individuals get to bear the cost—directly or indirectly.

Anonymous said...

So err... nothing should be done?

What about home ownership schemes, or increasing housing supply at the fringes of the island?

Anonymous said...

Don't you think the poor will be hard-pressed? Especially with rent going up along with property prices, wages being stretched between the skilled and unskilled, and with rife speculation unlikely to cease anytime soon.

Matilah_Singapura said...

To the anons:

EXACTLY. Nothing should be done to "curb speculation" in the property market. The govt must stay out of this, and every market for that matter.

About the poor:

If you are really concerned about these people, the right thing to do would be for you to go out and help them yourself. This would benefit everyone, most of all your own self, and you'd be setting a great example to everyone else.

WHY?

Because everytime you give the govt an excuse to "help", they will impose upon all our lives. The people who feel the deleterious effects of govt interference THE MOST are those who lack economic means.

To cure any "social" problem, the govt—an agency which does not "produce"—must (STEAL)seize resources (TAX) the general population to redistribute the confiscated wealth to those who claim "they need it". This is not necessarily just the "poor", it could be BIG BUSINESS as well ("We "NEED" to be bailed out by govt because we employ lots of citizens", or "we need to be internationally competitive")

Why is this morally and ethically BAD? Because it suggests that "NEED" is a standard of value. Therefore if your friend has a car and you "NEED" to get to town, your friend has AN OBLIGATION to satisfy your "need".

And, if you are claiming to be "poor", and you have "needs" for money, or a job or free this that and the other, then anyone you judge as being "wealthier" than you is OBLIGED to come to your aid to "rescue" you.

Which means simply this: That if one is "poor" or "needy" in some way, one has an AUTOMATIC CLAIM upon the property of others.

Taking the property of others without their consent or by force (through politics—i.e. the state) is called THEFT. Of course throughout human history man has been "conditioned" to accept that it is "legitimate" for The State to do this, by ordinary human beings are forbidden (by The State, and quite rightly punished by law) to seize their fellow man's property for any reason.

In my opinion, THEFT IS THEFT, there can be no exceptions nor excuses.

Therefore, it follows that anyone earning his living from re-distributed stolen property (i.e. drawing a government paycheck) part of the same gang of criminals who perform ARMED ROBBERY (why "armed robbery": If you fail to pay The State when you are required to do so, uniformed persons, agents of the state, will be paying you a visit, and they will be carrying weapons—lots of weapons, which they are allowed to use if you resist them) on unarmed (or disarmed in most cases) PEACEFUL PEOPLE going about their lives, minding their own business.

redbean said...

i still favour some regulations on the HDB market with the key objective of providing a decent and affordable homes for the people. affordable being measured by the income of the average singaporeans, no the top 20 or 30% income earners.

there should also be some regulations to make sure that land properties are not sold to foreigners lock stock and barrel.

at the same time, some private sector properties can be opened up to speculators, foreign and locals.

as to how to do it, don't ask me. i don't have the resources, the talented staff and the million dollar pay check to do the job.

Anonymous said...

I think the deferred payment scheme should have been removed at the earliest sign of speculative activities instead of at its peak.

This scheme was introduced when the property market were in the doldrums and sales were very low. But the scheme is double edged, as it provides the leverage that can be used to support speculative activities in an uptrend such as property flipping and subsale very effectively in terms of ROI with minimal cost of funds.

Property prices started moving at the beginning of 2006. Towards mid 2006, prices were already recovering rapidly. With all the figures and stats, it was clear that the market was on an uptrend. Cpf was disallowed use for the purchase of commercial properties, the market was starting to get hot. Yet the scheme was retained despite these signs.

At the beginning of 2007, prices started to accelerate and speculations were rampant. The authorities should have taken notice and done what they did today. Becos of that hesitation, the speculators lost no time to take advantage of the scheme to reap huge profits for themselves thus causing a sharp speculative run on the market.

In May, there were exponential rises in both sales and rent transations and prices were shooting thru the roof. Again the deferred payment scheme should have been addressed at least then.

Instead, they are only addressing this problem today, near November, months after major property speculators and flippers have made huge profits and cashed out.

Anonymous said...

But had the speculations ended earlier there might not be the current windfall on stamp fees taxes; at least now it is win-win for the developers, govt and speculators.

redbean said...

i would like to see a policy statement on housing for people, housing for foreigners and housing for speculations.

Anonymous said...

The angmohs were clamouring for us to liberalise and open up our landed properties to them. But even in a vast country like Thailand, foreigners are not permitted to own land or landed properties. Therefore I cant imagine how we will ever be liberal with ours.

Anyone knows where to get the figures that show the number of foreigners approved to purchase landed properties here?

Anonymous said...

A senior agent just mentioned it is becoming common to find foreigners at open houses viewing landed properties for sale; some accompanied by their local partners, most were not. Someone even joked the russians are getting active here... therefore I wish there are more facts and stats available and that the market is more transparent to the public, so that no one shud be clueless about what goes on.

Khiat Han Hwee Adrian said...

I disappointed to know that our super-talents take so long to realise that the property market is overheated.

Perhaps a tax on the foreign investors if they sell within 5 years?

redbean said...

if money can buy everything, think how much will it need to buy up all the landed properties here?

and no need to. just buy up the city area and tanglin/bukit timah area will do.

Matilah_Singapura said...

redbean:

It doesn't matter WHO owns private property, as long as it is privately owned.

I'd sooner see foreigners own S'pore real estate thasn it being held in govt hands.

I doubt if many people will agree with your assertion that HBD is "affordable"—being the politicised scam that it is.

And just a reminder: the reason property prices are soaring quickly is because of inflated money supplies—locally and globally, creating credit bubbles in the capital structures.

Matilah_Singapura said...

anon 1025

> The angmohs were clamouring for us to liberalise and open up our landed properties to them. But even in a vast country like Thailand, foreigners are not permitted to own land or landed properties. Therefore I cant imagine how we will ever be liberal with ours. <

It is easy to own landed properties in S'pore or anywhere in the world. All you need is the right corporate and legal structure.

Technically foreigners are "not allowed" to own property in Thailand.

But so many do, and the market it HOT at the moment.

Govt's like to smoke screen their public. They know it is unwise to chase away foreigners who come with cash, but they have to assuage a bunch of useless locals who know shit-all about anything.

I say the more foreign ownership the better. Having rich foreigners in the country benefits everyone who is worthwhile. (not everyone is worthwhile)