Say only the good stuff

Last week I wrote about the prices of properties in relation to the income of the average workers and the reports and comments by industry workers that property prices today are affordable. The statistics from the industry said that the cost of a mass market flat is equivalent to 20 years income of the average Singaporean, median or mean in this case will not make any substantive difference. This means that it will take 40 years to service the mortgage from a single income or 20 years from dual income, the latter amounts to paying 50% of the double income to the loan. Subsequently some forumers wrote to say that normally a borrower will use 30% of his income for such purposes as living requires a lot of expenses in other areas. This would mean that it will take virtually the whole life time to service such a loan. Accepted that incomes will grow and things will be better along the way. Today we have further clarifications by the professionals as to their reasonings and methodologies for concluding that today’s prices are affordable. I think this is only expected as they have vested interest to talk up the market and get the crowds rushing in to buy. Would anyone in the industry be objective enough to tell the other side of the story, that the prices now are way too high, unrealistic, and unsustainable? Reports on new launches for 99 year lease are talking about $900 to $1100 psf. This means a 500 sq ft studio is going to cost about $500k. Whether this is affordable or not is relative. But the fact that it is going to cost a bomb relative to the average income of the workers cannot be changed. Could it appreciate higher? It could if the income of the buyers are going to keep going up. Of course the professionals will cautiously mentioned about a bubble in the future, unsustainable in the future, but not now. It is affordable. Buyers beware if you are going to listen to the sales pitch of people with vested interests to want to sell the properties.


Anonymous said...

Redbean, please do not pour cold water on all the euphoria that have been created by the property developers and the government. Property prices in Singapore are all affordable and Singaporeans are so very lucky. Pay your mortgage in 20 years using 2 income is so affordable. So why are you trying your hardest to burst the happiness bubble. Most Singaporeans I have come to know own at least 2 properties, one for rental and the other to live in, and many do own more than 2 properties. Those who have to live in HDB flats and own their shoe box in the sky and have a 20 - 40 years mortgage, tough luck.

redbean said...

my apologies. i have been invited to a party at the Sail. this friend of mine bought two units there.

bless him.

Anonymous said...

Do congratulate your friend for the good buy and that's really saying the good stuff.


Anonymous said...

Some say only the good stuff. Some hear only the good stuff.

You can guess who sells and who buys.

Matilah_Singapura said...

If the average Jo and Jane are not being screwed by their govt, and then "placated" by thhe soothing words of a govt controlled media, then you can concluded that the govt in power is not doing its job properly.

Any govt worth it's reputation for being in total control must be the ultimate arbiter of all things in the territory. They shoud hnot only legislate when people can take a shit, but they should have edicts on how people should wipe/clean themselves. "Wipe your arse the official govt way or face a fine. We have the authority"

Anonymous said...

I really dont quite understand Minister Mah

When the developers are having such a fun time laughing on the way to the bank,here he poured more money to them

Mr Mah is truly a man for HDB dwellers,that is for sure.But he also did vow to look after them,haha,you believe?

Truly uniquly Singapore leh!

31.august 2009
Singapore Government Cuts Charge For Residential Developments By 2%

SINGAPORE -(Dow Jones)- Singapore's Ministry of National Development said Monday that it will cut a tax on residential property sites that are developed into more valuable projects by 2%, on average, islandwide.

The revised charges will take effect Sept. 1, and will last until March next year, the ministry said in a statement.

The highest tax cut - 17% - is for residential developments on the island of Sentosa, which has seen a decline in buyer interest since the property market started to slow in 2008.

The government also cut the rate for commercial, hotel and hospital developments across the island by 4%. The same cut will apply to sites being developed for commercial use in the business zone.

Singapore's property market dropped sharply earlier this year as the island fell deep into recession. The market has been recovering, however, as buyers take advantage of property price cuts.

-By Patricia Kowsmann, Dow Jones Newswires; 65 6415 4157; patricia.kowsmann@ dowjones.com

(END) Dow Jones Newswires
Copyright (c) 2009 Dow Jones & Company, Inc.

Anonymous said...

It is precisely because we have ministers of Minister Mahs' Character that the Rich gets RICHER.