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7/14/2007
Legacy of the babyboomers
This is the generation that sees the transformation of the world and this island, from war to peace, and from poverty to wealth. And they are the ones who are holding on to all the wealth and power, and not letting go. They will cling on till their deaths whatever they have, position, money and power.
On their passing, in 10 or 20 years time, we will see what they have left behind. One thing for sure, they will be a lot of properties passing down. Many have several properties for their children and themselves. At the worst each will have a HDB flat. Their children or grand children will be the beneficiaries of the wealth.
The next generation will not be roofless. They will have more than one roof or a better roof over their heads. Any demand for housing will be more of a case of upgrading. But there will be a net increase in the availability of housing/flats in the market and a dwindling demand for various reasons. Other than the many already well provided for by the babyboomers, or inheriting an extra unit, the population is not growing at such a healthy rate to generate a growth in demand for more residential properties.
Can there be a continuous demand and a running away of property prices? It can, with another 3 million foreigners coming in to grab up all the high end properties. The demographic pattern will change. Today it is the old and new rich that are holding onto their landed properties and the masses in HDBs. This may changed when the bulk of high end properties in expansive downtown be all owned by foreigners and the citizens living in the outskirts of town. And living in downtown will be so expansive that it will be a truly foreign city within a city. Singaporeans could be alien in downtown other than workers in the hours of light. When darkness falls, Singaporeans will return to their HDB estates away from downtown.
Would we see a day when the new choices part of the island, the new downtown, be a paradise of foreigners?
With so much displacement and competition coming in at so short at time, it wouldnt surprised me to see more and more people sleeping on public benches and making it their homes.
ReplyDeleteThis may sound nonsensical a decade back, but I believe it has a real chance of happening here. Already I am seeing people lying down to sleep at the void decks scattered across the estates. Some are old uncles, some look foreign. I am not sure why they are sleeping there, but I am sure they didnt do it for fun.
From observation, I am convinced that the number will increase like an attrition thing where the useless ones will be replaced by the useful, foreign ones. Just my thought, and a serious one too.
One of the main reason for the increase in pte property prices is due to rental increases which in turn led to almost panic buying by some of the foreigners of singapore properties. Many are single or dual income families.
ReplyDeleteOne innovative but BOLD solution would be for the government to consider opening 3 room resale flats to these category of foreigners according to the previous restrictive singles scheme ie certain locations and 3 rooms only.
This way, it will lessen the mad rush for properties that is causing alot of concerns abt supply and demand problems as well as the sharp rise in prices. It will have limited impact on the hdb market and help to even out the sharp spikes in property prices in the pte property market.
Most imptly, it will have a more balanced wealth effect for both the pte property class as well as the hbd heartlanders FOR ONCE.
If foreigners are allowed to buy 3 room resale HDB flats, it will certainly push up prices of HDB flats which is good for the present flat owners. It will also push up the prices of new flats which is certainly a windfall for the Government as well. But the younger generation, particularly your children, will soon find it even more difficult to own and pay for a HDB flat. Is this good or bad? Your guess is as good as mine.
ReplyDeleteYour thoughts are clouded. You seems to assume that the HDB market are protected from the current rise in the property market and that ONLY a controlled liberalisation such as suggested will bring up the HDB prices. It is a naive assumption. Here's why.
ReplyDeleteThe present spike in the pte property started with geniune foreigners buying the HIGH END properties in 2006. Opportunistic flippers came into the picture to take advtg of the situation thus bringing the prices higher resulting in the MID END pte property mkt rising sharply beginning 2007.
cont'd
This in turned prompted the pte property owners to UP the rentals with some doubling within a short period of time. Becos of the sharp rental increase, expats and PRs who are normally renting now found it urgent to enter the pte property mkt directly as it makes sense to own the property instead.
ReplyDeleteAs a result properties in the MASS MARKET pte proprty sector suddenly began to surge with almost maniac like panic buying as the locals also RUSHED in simultaneously...
for eg $300k in 2005 $400K in 2006 now going between $500 to $700K. This is exponential growth, not gradual nor steady, thus implying a panic in the market right now in that sector.
That run in the MASS MKT PTE PROPERTY SECTOR has filtered out and affected the Hdb mkt directly. It means that the Hdb mkt will move up tremendously even if there is a status quo, ie no change in policies. I repeat, the HDB mkt will move up even in the absence of any measures due to mkt demand and expectations.
cont'd
The suggestion to release and liberalise in a control manner the hdb 3 rooms flat is hence only to relieve the urgent almost maniac buying in the mass mkt pte property sector at the moment, so that it will not escalate so fast that it will in turn accelerate the hdb prices artifically.
ReplyDeleteThe number of foreigners in this sector who would enter the hdb 3 rooms mkt will not be huge as not many expats with families would like to downgrade their living standards that way.
But it will help in a small way to lessen the mad rush for mass mkt pte properties that is reaching almost maniac proportions and if not controlled will in turn impact the Hdb mkt exponentially in a matter of time.
The suggestion is only a stop gap measure to ease the mkt, although it will benefit some hdb owners indirectly. The suggestion was not to accelerate the Hdb market as you implied. Again Hdb prices will rise whether there is any policy changes or not. Dun be naive.
A fast movement in the MASS MKT PTE PROPERTY SECTOR will cause a fast run on the Hdb prices becos they are both in the mass mkt sector.
ReplyDeleteConversely a slower movement in the MASS MKT PTE PROPERTY SECTOR shud result in a slower movement in Hdb prices.
Hence the rationale of this Stop Gap suggestion to delay a sharp runup in the Hdb prices.
Maybe you have a better suggestion of a non-intrusive way to smoothen the current spike/escalation in the property mkt?
a roof over our head is a basic necessity to many citizens. only the rich can afford to have more than one property for investment, speculation and capital gain.
ReplyDeletesuperficially, a rise in property price is good for the owner. double your asset is a good thing, on face value. but this feel good effect is a one time effect for many. they can only realise the value by selling and downgrading. after that, they must wait for another run only to sell and downgrade.
but as basic housing goes up and salary does not, basic housing may also be put out of reach for the new buyers. it will end up not only with a higher cost of living but also young people unable to pay for their first flat.
double the value of your asset or triple the value is a dangerous game.
the end result is sell out and get out. for most singaporeans with only one property, they must sell out and move out of singapore, or the money will either be tied down in the flat or have relatively very low purchasing power here.
Redbean, I think you have made a good point which I think they are aware of.
ReplyDeleteWhen our real estate assets and costs of living grow too quickly, it becomes more attractive for these people to want to cash out and move abroad.
They can easily transplant themselves to malaysia or thailand to live like dukes and kings with hordes of servants with all the modern creatures of comfort and to fly back to a hotel here now and then without missing a thing.
hey redbean,
ReplyDeleteIt is important to define who the baby boomers are. There is some disagreement on the years, and the boom in the US was slightly different (in time) to the booms in Europe and the Far East
http://en.wikipedia.org/wiki/Baby_boomer
matilah is one of them. enjoying the hotel.
ReplyDeletein our case the baby boomers are those born between 1945 and 1955. these are the people that participated and grow with the transformation of singapore from fishing village and entrepot to a modern city.
If that is your definition of babby boomers, then I'm not in the "group".
ReplyDeleteBut you are right, I am enjoying the "hotel".
...and I still hold the immutable opinion that Goh Chok Tong is and will always be an idiot.
i still remember this old russian jokes about krushchev.
ReplyDeletethis russian guy was shouting like crazy in the moscow square, 'krushchev is an idiot, krushchev is an idiot.'
of course he was arrested.
he was sentenced to life imprisonment not for public demonstration but for letting out a state secret.
matilah, you may be just outside the perimeters of the baby boomer group. but a few in your age group still made it and did very well.
ReplyDeletegenerally, the bulk of those that really did very well are within that band.