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10/18/2010
Myth 224 - Our land is limited! Property prices must go up!
Everyone is spouting this nonsense daily as if it is a gospel truth. There is limited land, we are land scarce, so property prices can only go up. The supply will never meet the demands. Here is the fallacy or root of this fallacy.
Who says we don’t have enough land? Or why is there not enough land? Land was plentiful at one time. The migrants just go around and build their little attap or zinc roof houses anywhere, on any piece of empty land they could find. Our population then was a few hundred thousand and increasing gradually. At 2 million or 3 million, land is not an issue. It is when we keep piling up the numbers, inviting more and more people here that land become scarce. We create our own problem. We make our land scarce.
We will have plenty of land once more if people start to run away from this land. Or we can stop the inflow and reduce the population. But economic laws and principles will be against any reduction. It means recession and depression. No growth is bad. So we must have growth and growth and growth. This unending growth is good for us. Same as for the whole world. Keep producing more people and more people. Go forth and multiply.
Where will it end if growth is unceasing, unending? Is our limited land a myth or a conjure reality? We have changed from land abundance to land scarce. That is clever from the economics of growth. If Australia will to blindly follow this economic principle of growth, it too will run out of land in a matter of time. The whole world will run out of land. But it does not have to.
The pain is self inflicted. We don't have to go down this road. It's final destiny is self destruct. We need to know our limitations and stop while we can. So is the world. Population growth, economic growth, high consumption, high destruction to environment, depletion of resources and food supply, climate warming etc etc etc. All for incessant growth.
There is actually falling birthrate worldwide. Other than stop selling our land to foreigners, a consequential political chaos or a natural calamity may bring us back to the days of plentiful land. This will happen, it's a matter of time. The smart alecks know, so they make money and had them put in others countries. Some place their eggs(money) in different countries for safety and security. Singaporeans are sold out by fellow Singaporeans. Blame not the foreigners. When one got betrayed by their own, it is not fair to target or blame foreigners. Deal with the traitors.
ReplyDelete> There is limited land, we are land scarce, so property prices can only go up. <
ReplyDeleteYes but only if one condition is present:
DEMAND -- there must be demand and it the pressure of the demand (people bidding up prices) that makes the general price rise.
Price formation: (Market) Prices are formed by the alignment of bids and offers -- the information (settlement price) of the "last sale" being transmitted thru the economic/ finance system. i.e. prices are signals.
So if you find the price of something "high" -- it didn't appear like that out of the blue. Blame the kia su who bought before you and the greedy idiot before that because they BID up the price, or agreed -- without challenge -- to the seller's high OFFER price.
All resources in this universe are finite -- "scarcity" is a idea in the mind, and is a reflection of DEMAND -- which is many people wanting the same thing, all at the same TIME.
You can't neglect time, because price formation occurs in TIME -- i.e. everybody wants the thing now! (Kia su = high time preference)
For e.g. All women's "fun bits" are finite. Which of the 2 examples would be more "scarce" than the other and thus command a higher (bid) PRICE due to DEMAND (by red-blooded heterosexual men)?
Bid this #1
or
Bid this #2
Back to Singapore. Sure land is finite and becomes "scarce" and therefore "high" in terms of price because the players are all KIASU and have the "I want it now" "I'd better grab it ASAP before the price goes up further" attitude.
But we have seen prices in S'pore COLLAPSE -- like after the double-whammy of the Asian financial crisis and SARS.
You forget: at the time semi-d's in Bukit Timah dropped to around 750k, and condo's rented for 5k were struggling to attract rentals at 2k.
Although the kia su's and the whinging complainers can't see it -- property prices can collapse even in Singapore. The land-resource will still be finite, and compared to the population -- "scarce" -- but because no one in the maket is BIDDING above a certain level, the PRICE will stagnate at a substantially low level.
Can it happen again? Of course.
It is not so much "a myth" that property prices MUST go up because of "limited land", but a misunderstanding of how markets work and how prices form.
Have no fear that property prices in Singapore won't collapse.
ReplyDeleteLook at the private property condo launches. There are at least three every week. Don't be hook winked by the sales ploy that so many percentage is already sold. They are not. Most if sold are bought by the dumbass speculators with a minimum deposit down payment and if you pass by some of these condos, many many units are empty waiting for tenants.
The above is even repeated for China, the so called engine of growth for the rest of the world.
Let me tell you folks this. What we need is another big columbarium because two years down the road, many will commit harikari and banks will go belly up with all the non performing loans piling up. We didn't learn from the US sub prime crisis and instead of emulating smart countries like Australia to control inflation and capital inflows by interest rate adjustments, we use exchange rate monetary policies which in actuality makes every little man in the street, financiers for the risky adventures of the reckless with super low interest rates.
Two years down the road at most three, I am going to hunker down, enjoy my double upsized Burger King meal and watch the greedy sods sailing pass my window into the morgue.
Hehe.
Today no one is talking about non performing loans. They do not want to know. They want everyone to turn speculators.
ReplyDeleteYes, the Aussies are too smart and protecting themselves from the ruins of greed. They want to keep the good life to themselves.
The way we encourage speculation in property is sinful and destructive. Short term gain for long term bust.
'Our land is limited! Property prices must go up!'
ReplyDeleteTruth is, neither can it afford to come down substantially without resembling the ugliness now happening in USA.
There are a lot of housing loans for HDB flats taken from banks now, not all from HDB as in the past, and the banks are not going to sit still and just watch prices collapse. Many may lose their homes in that event.
And the Government is not going to allow such a collapse either, if they can help it, because so much money from CPF is tied to HDB housing, which means life savings will be totally decimated if there is a housing collapse.
The Government isn't as deaf as we think, and the tweaks that we hear of are never going to be too far reaching to trigger a collapse, especially when there is so much money the Government can make from land sales, resale levies etc.
Regimes can only control their own territories, none has the power to control the global market and none are immune from global economic developments. There is no god in Sin as well.
ReplyDeleteredbean:
ReplyDelete> Yes, the Aussies are too smart and protecting themselves from the ruins of greed.<
You must be sleeping lah.
Greed is alive and well downunder. Australia is a very different country now, especially after 16 years of spectacular economic performance.
Just about everyone I know is out chasing the Almighty Dollar. Unfortunately we have a govt and a tax office that are hell bent on relieving individuals of their "greedy" acquisitions.
But if you think Australia is somehow "compassionate" and "selfless" you need to kena hammer by one of our world-class con-men/ women to learn your lesson.
Well, many in Oz still stand for the quest to leave behind an Oz they inherited from their parents to their children. Whatever little liberalisation and change, they will be kept within control. Nothing wayward and dangerous, or whacky.
ReplyDeletethey will be kept within control.
ReplyDeleteYes, but that is not because to The Government. It is because of The People.
The people of Oz are no smarter or dumber than anyone else on the planet who gets the govt they deserve.
The fundamental difference btw Oz and say, Singapore, is that in Oz if the govt assholery becomes to much to endure, we the people just throw the motherfucker out of office...and sometimes we don't even wait for election time.
John Howard got thrown out during one of the biggest boom times -- so what? People -- for that moment -- came to their senses and said "I don't care, the present govt are ASSHOLES, and the country will do fine anyway without them".
And so Aust threw those cunts out, and voted in a dick head. Now he's gone and we have a REAL CUNT , and a neo-Marxist as PM now, and she's also an atheist!
Having the same govt for a super long time is a myth which I doubt will go away from S'pore political culture anytime soon.
Good. Carry on believing in bullshit. I don't care.
You are right in some ways. Here, the people believe that the govt is indispensable and without the govt the country will collapse. Or at least that is what they have been told.
ReplyDeleteSo unless they are confident enough to believe in themselves, they will have to continue to believe in the infallible govt, and keep voting for the infallible govt.
I think,it is correct.With limited land,there is no other way to meet real estate demands.Naturally prices will go up.
ReplyDeleteThanks for sharing, I will bookmark and be back again
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