Is there a property bubble?

The commercial cum residential site at Choa Chu Kang and Woodlands junction fetched a cool $164m yesterday. Two years ago the bid was only $64m and not accepted. What does this tell? Cheap don't sell, no bubble? When is a bubble a bubble? As can be expected, there will be all kinds of definition of what and when a bubble is formed. For the moment, one can expect 90% of Singaporeans between 30 to 40 years and owning a property to be in debt of $200k to $1m. This is likely to be the bank borrowing to acquire their dream home, a roof over their heads. Presumably they are servicing their mortgages at 30% of their incomes. As long as the economy is running smoothly, no crisis or wars, they will have no problem paying their loans. When there is a crisis, two things could happen, one, losing their jobs, and two, property prices plunged. This double whammy will suddenly reveal that their properties are worth so much lesser in value, and they have no income to pay for their loans. Maybe then people will say, it was a bubble. At current prices, most properties are priced way too high and this will give them ample room to collapse when the time comes. The gap between the current price and the value it will settle is another measure of the balloon that has been built in. Inflated prices in good time and realistic prices when people will not dare to splurge. Do we have a bubble now? From $64m to $164m in two years! The developers will keep pushing the limits thinking that they can keep on charging more. And when in trouble, hoping that the govt will help them out so that they will not go bust. In the meantime who is going to help the people who need a roof over the head from having to pay a lifetime for it, at the prices the developers demand? Who is the profiteer or who is causing the price to shoot to the sky? Must be the developer lah.

BTO is the best system

Ho Geok Choo asked Mah Bow Tan whether HDB should return to the old system for flat application. Mah Bow Tan said negative. The BTO is the best system and it even reduced the waiting time from 7 or 8 years to the current 3 to 4 years. How can anyone argue against such logic? In the past the queue was 150,000 long and ended up with 31,000 surplus flats that needed 5 years to clear. Today we still have many times oversubcribed flats on launching but still not all flats are sold? How come? I think I can try to explain about the old system, the 150,000 queue and 31,000 surplus flats built. It was badly managed in the first place. There was genuine demand in the early stages when the baby boomers were starting to grow up and having families. And there was acute housing shortage. Of course some idiots allowed the flats to be overbuilt to the extend of 31,000 flats. If we have the talents like we have today, no such thing will happen. And the facts speak for itself. No more surpluses and more more 150,000 queue today. So Ho Geok Choo must have been satisfied that her question was answered. No more question. I ponder again on why there was no queue when a new launch was often oversubscribed many times over? Phantom buyers I think. And all the kpkb about young people not getting their flats are just false noises. What about those who could not afford to buy the affordable flats and thus never even make it to the application stage? Would they be considered as not applicable to the demand equation? What about those that were ruled out of the HDB scheme by virtue of their income, those exceeding $8k or $10k, or those who may meet the money criteria but because of their family commitments, could not afford to buy the flats they wanted to? These are not demands since they did not apply to HDB. And all the singles and those that cannot get together a family unit but still needing a place to stay, not part of the demand too? The BTO scheme is indeed very neat and clean. Those who for whatever reason, needing flats, but ruled out or cannot afford to, and never apply are not part of the demand and no need to bother or look at. So, since there are no application, so no demand and no need to build. Where got housing problem?

Another amazingly pro people and pro business budget

The budget is out and it is goodies time for all. Alright some will still sieve through it with a comb and nit pick at why no this and why no that. Overall, it is another angpow budget of at least $10b for the people. So, want to complain again? Where on earth is there a govt that always give angpows to the citizens? My only little concern is where is the money coming from? Our reserves or surplus profits from GIC and Temasek? After announcing mega billion losses and adding on another few hundred millions more recently, I think I can safely conclude that surplus from our investments can be KIV for a long long time to come. But money cannot come from nowhere. Can we expect to have another round of raising taxes, more ERPs, raising GST to help the people(in this case help first and raise later), more expensive public flats, more savings from our CPFs being set aside to fulfil the 'tan ku ku' fantasy? Unfortunately the answers are still over the horizon, maybe after the next general election. And the answers no need to 'tan ku ku'. Mesti akan datang.

High property prices no good!

Today I feel quite 'tulan'. Only on Sat I posted an article saying that high property prices good. This morning I read Mah Bow Tan saying high property prices no good. How can he disagree with me? And he said that he has some more things planned to curb property speculation and high prices. But there are good news for those who could not afford to buy HDB flats because of high prices. So far, no bubble has formed, despite the fact that anyone buying a property from HDB ten years ago will now see the same property appreciated by 200%, there is no bubble still. Well, good then, as this is due to normal price appreciation in a good economy, low interest rate and a confluence of other factors. But HDB is not going to go to sleep. It is doing a review to see what it should do to prevent speculation and bubble building. Hsien Loong has joined in the discussion by saying that HDB flats are not for speculation but a long term investment and for the buyers to live in, even to hand down to their children. Is this a policy statement? If it is, it will signal a major change in where public housing is heading. But he must get this message to the HDB first. Then hopefully, things will change and people will really be able to afford affordable HDB flats. I always cringe when I mention the word affordable. Probably developing a phobia for it. It sounds so cheap. By the way, the General Election is around the corner and maybe we have some real policy changes for the good of the people. And no changes after that.

Singaporeans are getting richer

I was reading Goh Meng Seng's latest post in which he quoted an official statistics that reads like this, 'The average household income from work had also risen from $4,238 in 2003 to $5,680 in 2008, reflecting the growing affluence of HDB households.' Isn't this good news, that the average household income was $5.680. Today, two years later, it should be more than $6,000. Singaporeans no need to go to the casino to shout 'huat ah!' They can now do it at home. My friend's household income in $9,000! Lagi huat. 6 pay checks, average about $1,500 each, and two more paychecks akan datang. That would put his household income to more than $10,000 when the youngest two children start working. Goh Meng Seng argued that the household income surge is due to children unable to buy HDB flats and are forced to stay with their parents, thus boosting household income higher. Tiok boh? With $9,000 or $10,000 household income, can start to buy private property liao. How come ah? Still staying in HDB flat.