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.