2/27/2010

Stop the crap about relative affordability logic

Several MPs are going to Parliament to kpkb about housing affordability. They are going to question HDB about its original role in providing affordable housing for the masses, high prices, supply and demand, inefficient system and allowing rich private property owners to buy HDB flats. These are reported in the ST today. Are they crazy or what? Do they take all the kpkbs in the internet seriously and really think that there is a problem? Didn't they read the reports of HDB and Mah Bow Tan about how affordable HDB flats are and how efficient and perfect the system is? Even this morning, two eminent scholars from NUS Dept of Real Estate, Tu Yong and Yu Shi Ming, reported that 'Housing in Singapore still affordable'. And they have authoritative figures to prove their point. How could MPs ignore such well research reports even if they don't believe in the comments of politicians? Unbelieveable! Why did these two academics say that housing is affordable here? They compared housing data of London and Hongkong and found our data much better than theirs. 'In terms of affordability, Singapore has achieved a lower housing price to income ratio. On the whole, the figures reveal that the housing system here does deliver comfortable and affordable housing to the majority of Singaporeans.' Brilliant conclusion. Flawless arguments backed by indisputable facts. So, who is still complaining about housing here not affordable? The MPs should better withdraw their intended questions in Parliament. They are going to get the same answers. Period. According to the two academics, Hongkong and London's housing ratio are 19.8 and 7.1 respectively while ours is 5.8. Housing ratio is housing price to median annual household income. See, ours are cheaper and more affordable. Tiok boh? In terms of comfort, we have 27 sq m for one person while Hongkong and greater London have 12.5 and 31.9 sq m per person. Ok London has bigger space than us because Europeans believe that comfort means more space. Don't compare with Australia when comfort means 300 sq m per person. That is not comparing apple with apple. Using this kind of #$%@ logic of relativity, when Hongkong's housing ratio is 30, then we can push up the prices of HDB flats to 20 and pat ourselves that we are still cheaper. And when Hongkong is squeezing their people into 5 sq m dog kennel, we can build smaller flats and sell at higher prices and say we are still comfortable. The same logic goes to the toxic bonds. Other people are selling it, especially the West, then it should be ok for us. The Americans are designing their stock markets to fleece the small investors with programme trading, and unfair advantages for the big funds to cheat the small investors, would these also be acceptable for us? Can we use a more independent set of criteria of our own to define what is affordable and comfortable for our people instead of relatively logic and shifting goal posts? My simple definition is 30% of one income and repayable in 20 years and a space of 50 sq m person. No space? Who is the bum that said we have a lot of space? Or stop the influx of more immigrants to this little piece of rock. Our population density is now more than Hongkong, 6,814 to 6,460 and greater London's 4.761. Want to make it worst? It is madness. And some MPs going to Parliament to ask why so many traffic congestions on the road? Wait till the lunatics increase the population to 8 million, then you will know what is congestion. Now it is so good, relatively speaking of course. Can't call it congestion. Even the packed MRT trains are soooo comfortable.

10 comments:

Wally Buffet said...

Redbean,

To be fair, housing affordability when comparing our population density which is almost the same as Hong Kong's but with a housing ratio one third that of Hong Kong is actually quite reasonable. I think what you can't get over with is the sudden and steep price escalation. Well, that's the natural order of things. Supply, demand equation bro. And housing is no different than doing your groceries. Having said that, I think many Singaporeans are pissed because of the unnatural and bizarre population increase within such a short time, depressing their real incomes via lowered wages and thus having to fork out more for housing.

A more measured approach and not pandering to the demands of employers to be allowed to import workers on the whimsical excuse of not being able to find Singaporeans to fill the vacancies would have gone a long way to soothe ruffled feathers.

This issue of the explosive population increase is going to be the incumbent's waterloo, though not final within my lifetime if left to fester without resolution.

Matilah_Singapura said...

The argument quickly degenerates into "he said she said, his fault, she's to blame" because the reason that real estate is in a bubble is not addressed.

If MAS stopped inflating the money supply, you'll find real estate prices would not hit such levels.

The idea of "affordability" will always be subjective, but when prices are no loner "reasonable" then any argument about the definition of "affordability" or the philosophical construct on which the definition is based is unlikely to be "reasonable".

Those who are price out of the market are naturally pissed with the fact they cannot afford a home. Who can blame them? And it is reasonable to assume that those who can afford a home are going to exhibit occasionally an attitude of "smugness".

Being pattern-seeking primates, our emotionally-run human brains always llok for a "story" or a narrative behind a phenomena. Ancient humans immediately ascribe causes of phenomena they coulf not explain to "gods" or "spirits". If someone got ill -- evil spirits. If the tsunami or earthquake came -- angry gods.

We can't help it -- our brains are made so that neurons seek to make connections looking for patterns in the stimulus they get (visual, abstract etc). We can't help but associate this with that, and if we can;t find a plausible explanation or minds just "make it up".

...and we believe that what we've deduced is CORRECT, i.e. "the truth".

Anonymous said...

The reason such a feeling about HDB affordability arising of late could be due to the fact that CPF contributions over the past decade or so have been reduced compared to the 80s and 90s.

To compound the problem, more CPF contributions have been diverted to other uses, like medisave and special account, such that the amount left in the ordinary account for housing use alone is now only about half of what those people in the 80s and 90s were able to utilise. It is much lesser money, no doubt, despite the higher salaries earned nowadays.

$pap$ said...

I like the definition 30% of income and repayable in 20 yrs.
The tricky part to consider is the ratio of minimum income against price of smallest HDB flat.

Incidently, the bum who says there's more space was probably thinking of building homes vertically downwards, as deep as MRT tunnels maybe even deeper ?

Chua Chin Leng aka redbean said...

We have the best talents and it is no secret or rocket science to manage housing for the public at a decent cost.

If they can't do it, they don't deserve the millions.

Anonymous said...

'If they can't do it, they don't deserve the millions'

Well, even if they can't do it, they, without shame, guilt or conscience will still pay themselves millions and still have the cheek to ask for even more.

They know we are hapless, toothless and are mere slaves.

Chua Chin Leng aka redbean said...

Maybe. There is always a time for change. When the doctor could not feel the pain of the patient and keeps telling the patient it is acceptable and normal, the patient will soon change doctor.

Kaffein said...

When a Londoner feels that living in London is too expensive, he can choose to go to the suburbs.

When a Singaporean feels that living in Singapore city is too expensive, the government tells him 'housing is still affordable'.

Go figure.

Kaffein

Anonymous said...

"Stop the crap", unquote.
Well said ! Cut the acts(by parliamentary members) as well.

Chua Chin Leng aka redbean said...

In the blog Yours Truly Singapore the author made a glaring and disturbing revelation of the distorted comparison of housing affordability index between Singapore vs Hongkong and London.

The main problem is that the data from Hongkong are those of private housing and Hongkong island without the New Territories and Kowloon. Unbelieveable for academics to confuse private housing with public housing.

In the case of London, it was London city and not greater London.

What would these revelations tell about academic objectivity and integrity if true.