9/30/2008

Reaching for the Pinnacles

The Pinnacles in Duxton Plain and many of the new HDB flats in town are priced to resale market prices, at a small discount. When has the policy of selling HDB flats at a subsidy, to selling at market subsidy, and now to market price discount took effect? What the latest policy means is that the price will keep going up depending on the demands. If people are still so crazy about pushing HDB prices to the pinnacles, let me remind them that the main cost of the current US financial crisis is due to high property prices, prices beyond what the average Americans can afford. Even the top traders in Lehman Brothers who were buying million dollars homes, more than one, were caught in the crisis. They borrowed money using their Lehman shares as collateral. When the shares became worthless, they were stuck with million dollar debt. Some several million dollars in debt because of the high gearing and high mortgages. We are in a similar situation. It will screw us when the time is ripe. The hardlanders' income is not going to rise like the million dollar man. In fact many were told not to expect any increases or employers were told not to raise their pay. How could they afford HDB flats that are going to cost more and more? Now, why must HDB flats keep going up just because the market prices are up and not because of cost? Profit is one reason. The next is the need to shore up the property prices so that those with expensive private properties can sell them at ever higher prices. Who are these people with vested interests to keep property prices going one way, up, up and away? The real losers, yes they are the losers, are the hardlanders. They will have to keep paying for the same little space in the air at higher prices. It will come, the bubble must burst. When salary does not rise as fast as the prices of HDB flats, prepare for the bust.

25 comments:

Anonymous said...

Who is going to suffer? Your children of course, when their turn comes to buy those 'affordable' flats. All this means their whole life savings in CPF will go mostly into the flats, which also means all their CPF savings will end up with the Government eventually. So, why should they even want to stop blowing the bubble? And would they care when the bubble eventually burst? We Singaporeans can die out and it is still not the Government's business.

Anonymous said...

Why are you people so pessimistic. Look on the bright side for a change. The govt is doing the best in this volatile economy. I think Singporeans moan too much. Nothing is good enough, always moaning and want more and more. It is a free country and you are free to leave if you do not like it here. There are many other places in the world where you will find whatever that make you happy. Just go and no one will stop you. However if you choose to stay then help by not complain so much.

Anonymous said...

Homeowners' assets that rise with the country's growth, is a matter of time. Everyone (well almost) are happy campers, it is fine.

Anonymous said...

If hdb prices are suppressed, the new arrivals (read; immigrants) would benefit, the incumbent populace (read; you and me) would not.

redbean said...

the hdb prices cannot be suppressed. it has been ballooned and any suppression will cause a deflation of prices across the board. this is one of those things, like population growth that once running is very difficulty to unwind.

but still possible to hold the horses and not letting it runaway.

the young homemakers are the one to be hit. specifically these are the children of the hardlanders who are unable to buy a property for every of their children.

and the millstone they are hanging around their necks are getting bigger and heavier with each price increase.

is this what the govt should be doing to the young? pricing to the market? making profit for what? more F1s to feel good?

redbean said...

or more bonuses and higher salaries?

Anonymous said...

This is anon 4.53
If you do not like it, you know what you can do. There is always that option called immigration.

Anonymous said...

Not trying to be rude, but wtf is redbean trying to say? That we are a handouts society on clutches that deserve cheap housing unlike the rest of civilisations? Or that we shuldnt leave housing to the markets becos we are special? Excuse me brther, but are you in twilight zone?

Anonymous said...

Hi perpetual whinning shithead, if you think this place is too uncomfortable for you, you may be pleased to know that the door is always open and you are not restrained here against your wish.

Anonymous said...

Hear hear, well said.

Anonymous said...

The difference between holding the horses to not let them runaway and suppressing the prices is a confused mind. The sooner the govt reform the market to do away with the current market anomaly between hdb and private properties, the better it is for everyone. Almost.

redbean said...

if singaporeans stop moaning and complaining, we will still be living with NKF. the malaysians feared to complain, and UMNO was able to bully them with racist politics for the last 40 years.

the americans failed to moan and complain, and they have the financial crisis.

anonymous is advising singaporeans to keep quiet. we should put a gag in the mouth of all singaporeans. singaporeans need not think or speak.

Yen said...

It's interesting that whenever people start to offer a different viewpoints, many Singaporeans will pin these down as complaints and whinings, and quickly offer the best "solution": accept the "facts" or migrate... I can understand this because I used to be very much like this and unfortunately still have the tendency (habits need time to change). I am more aware of this now, attributing it to my own isecurities and defensiveness due to lack of knowledge on certain subjects/ issues like politics and economy, and my science background which made us to think that facts are facts, emotions and social perceptions just get in the way of the "best way" to solve a problem....

redbean said...

hi yen,

welcome to the blog.

if i am not mistaken, those who are asking singaporeans not to think and move out are people waiting to displace them. if more singaporeans leave this place, they can come in and take over. of course there are insurgents around who will only repeat a few standard phrases.

the singaporeans should decide for themselves whether to keep quiet or to kpkb for their own good. never trust anyone who says, 'trust me'. saw the advert about the guy who wanted his daughter's piggy bank for gambling? trust me, one last time : )

Matilah_Singapura said...

redbean,the whole capital structure of HDB is riddled with contradictions and "bad" decisions.

When there is 'central planning', which rests on controls, regulations and subsidies, that introduces distortions into the price system.

HDB is a huge 'vote buyer'; heavily politicized and highly emotional with people. The PAP has remained in power for a long time because there has been over the years the feeling of "security" based on the massive program to get people into public housing.

Now of course, the govt in its occasional 'wisdom' is moving HDB to a more open and free market, and thus market forces (which are simply individuals acting) come into play.

All the 'bad stuff' in the capital structure is coming to bear.

Solution: suck it up and deal with it. It's time the "free ride" came to an end.

Anonymous said...

had redbean really understood about the perils of price distortions in a developed free economy, he wouldnt have cooked up this argument for suppressing the competitive market forces in the property sector.

Anonymous said...

and fretted about insurgency and subversion in his midst.

redbean said...

is ours a free market? prices can be moved up and down at whims. we can even double your asset value if needs be.

ours, especially the domestic economy, has always been a managed economy. allow it to go free, we will have riots and subprime crisis of our own.

Anonymous said...

I do not think you know what you are talking about Redbean. The prices of commodities and assets such as hdb flats or landed properties are largely dependent on the how much the rich foreigners are willing to pay. I hear the Orchard Rd developments are going for $5000 psf. If people are willing to pay, that will be the price. If the Singaporeans are priced out, then tough. It is a hard and unforgiving world and there are no such things as free lunches. In this dog eat dog environment of Singapore if you cannot make it then it is tough for you. Sorry - no free handouts.

redbean said...

hi anonymous,

when you want to engage people in a serious discussion, you must first learn to read and understand what people are talking about. my post was about HDB flats, not private properties. those can play in the free market, no issue. the one sentence i included about private property market is only a passing comment.

two, the HDB was reported to say they price the market below the resale price of similar flats. this is not free market. this is price fixing according to whatever formula.

i hope you can understand these two simple statements.

October 02, 2008 11:27 AM

Matilah_Singapura said...

There is only one market: The General Market.

The general market is the vast spontaneous order where 'values' are traded — most of the time freely and sometimes encumbered — usually by the state, sometimes by nature.

Those encumbered by nature are more readily fixed, because of technological development under a profit-driven (and therefore sustainable) system aka "capitalism". For e.g. Gravity is a natural constraint. You want to "buy" your way out of that. Lucky for you capitalism exists and therefore there are producers who are making such goods (values) available — like aircraft. All you have to do is to buy your own aircraft or "rent" a place on an aircraft which is going to be flying.

Encumbrances by govt are almost impossible to move because they tend to stick simply because people SUPPORT them, and by democratic process make sure their govt consistently delivers these "free lunches" — something everyone wants, but no one is willing to pay market prices (reality) for.

Public housing is religiously defended by the majority voters — except on the occasional dissension of a "rebel" ward during elections.

So deeply rotted in the culture is public housing that most people consider it A RIGHT to be provided with a house by no less than The Government.

No one questions the IDIOCY whereby the culture holds that by being Singaporean, you are entitled to a dwelling and it is the constant job of the state to make sure everyone is properly housed.

redbean, as I said — this lunacy is getting old. It should be euthanized ASAP. It's time ALL property was left alone to go up and down according to market movements.

Facts of life:

1. Not everyone can own a home

2. Some people will have to rent

3. Some people will have to share

4. People adjust to their circumstances, and make it by their sheer-effort and purpose-driven life anyway — happy, successful and content — in spite of 'setbacks'.

5. If you are going to be jealous of people who have more than you — power, money...whatever (especially money), chances are you're a sad bastard who deserves the pain you're bringing upon yourself!

Anonymous said...

IMHO during the formative years of our development, the priority was to get the majority housed. Now that has been served, the argument for affordable housing is turned to the new generation of cohorts entering the job market. That these people, perhaps as a birthright, be given cheap and affordable housing.

But for this argument to be congruent, we should not just hold property prices alone, but also the prices of transportation, power and water as well. Better still, food and other incentives and bonuses for those born later. Which developed country in our vicinity or otherwise does that?

On the other hand, if the prices of public flats were to be privatised as the HUDC did, the assets of 85% of the population can only go up. This will undoubtedly bring about a tremendous boost to the economy for the banking or finance sector, goverment duties and more importantly consumer spending. This huge wealth multiplier effect can only be positive for everyone. Except the rare outsiders who may have
chosen not to act despite all the assistance and housing balloon schemes that have been extended them time and again.

Anonymous said...

5. If you are going to be jealous of people who have more than you — power, money...whatever (especially money), chances are you're a sad bastard who deserves the pain you're bringing upon yourself!



Not sure if it is true, but it sure sounds to me like redbean has sold his flat at the wrong time and wanting to get back in or something of that sort, but what I am sure is that he is particularly touchy about the issues of CPF and HDB flats. The last time I was that touchy was when somebody owes me something and I was really desparate to get it back by hook or crook.

redbean said...

asset inflation is an illusion of wealth. in the 1970s, a semi D cost $50k. Today it cost $2 mil. which owner is richer? it is LPPL.

asset inflation is good only if one is selling out and move on to a cheaper place.

why do you think our 5 rm owners, practically half a millionaire are crying for help?

in the early 70s, with $2k salary, one can buy a 4 rm flat, own a car, bring up a family with a single pay check.

today, you would need two pay checks of at least $4k each to afford such a lifestyle.

are we better off with higher property prices?

redbean said...

just to add on this. in the early 70s, a major could afford to buy a semi D and raise a family with his single income, and owns a medium size car.

today, a major with his inflated salary, can only afford maybe a hdb 5 rm flat and maybe a korean car, with two incomes. don't ever think of a semi D or even a private condo.