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3/25/2010

Calling a spade a spade!

Finally someone with the guts to stand up and tell the truth that everyone pretends not to see. It is govt intervention in the property market that caused high prices in property, not market forces. Simon Cheong, President of Redas, 'argued that the Govt's land sales programme has, in some instances, in fact accentuated the mismatch between demand and supply and contributed to higher pricing....His candid comments - which he said he had been "advised" against making, "for fear of it being a sensitive topic" - found resonance among some industry watchers, while others still argued for the State's role in curbing market volatility.' For someone in his position to take such a stand is a sign that he could not take the nonsenses anymore. The lip had blown off. He has to tell it as it is. Let's see if any more professionals have any balls in between their legs to repeat his stand publicly. Simon quoted the case of a plot in Tampines with a bid of $118 psf but rejected and now sold to a top bid of $421 psf and the Ten Mile Junction which failed at $162 psf and now sold at $437 psf. How not for property prices to go up? But it is wrong to say that the govt interfered with property prices. The govt only manages the property market to ensure that HDB prices can only go up. And that is an election position. Vote for the govt to protect the value of HDB flats. So, with a little management of land sales and building of new flats, the prices will simply and nicely go up. Then when new flats are built, they are sold at 'market prices' and with a 'subsidy'. So nice. The equation in simple form is to manage prices of sold HDB flats to make sure it can only go up. This in turn will create a synthetic market of higher prices for newly built flats. Another option, as a national policy, is to manage the new flats to be really affordable and let 'market' forces determine the prices of sold HDB flats. Both involved interference. Sorry, cannot use that word, a little managing at one end and pretend that the other end is the real market forces. The advantage of the present system is that prices would likely to keep spiralling up and makes owners happy. But new flats would also be equally expensive. The problem comes when there is a crisis and prices plunged. Buy high would mean losing big. In the latter option, prices may not go up too fast and also may not go down much. In a crisis, with smaller outlay, the losses will not be too heavy either. Which is a better policy? One is an illusion of wealth, manipulated and with the danger of people falling flat on their faces. The other is more prudent and less adventurous and less likely to bankrupt the owners.

6 comments:

Anonymous said...

Funny; how come me feels that everything and everyone in SIN is being controlled, manipulated and exploited.
Me no specialist in anything but a very lay citizen. Can it be that me does not have the knowledge to understand the going on of state affairs ?
Do i have perverse understandings of the leaders who me feels interfere with the live of all their subjects all the time ?

Anonymous said...

In Animal Farm, if the pigs did not say so, who else dared to say so, even if they knew.

Chua Chin Leng aka redbean said...

Just hope LKY is still around to oversee the next GE. If not, many will even lose their deposits.

Simon Cheong's comment is a sign that the people are just too fed up with the nonsensical explanations.

Chua Chin Leng aka redbean said...

How much would a developer price his properties for sale if the land price is $118 psf and how much will he priced if the land price is $421?

The answer is... same price.

How much will HDB price its flats if the cost is the same? Answer can be found in the two launches of Pinnacles.

Chua Chin Leng aka redbean said...

The MND is defending its policies and rebutting what Simon Cheong had said with well thought out answers. And Redas and all the developers have no replies, probably conceding to the good reasons of MND. And as one real estate lecturer said, the govt should have the last word and that it. Let's move on.

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