Buyers feeling the squeeze
By Seah Chiang Nee from The Star
As foreigners with PR status compete with young Singaporeans for public housing, impacting also on private development projects, prices rise and the government limits the entry of foreign arrivals.
Singapore’s public housing, which has gained world acclaim for creating a nation of homeowners, is sagging under the weight of a wave of foreign arrivals.
In recent weeks, the government has been peppered with complaints from Singaporeans — some of them newlywed graduates — about insufficient new subsidised flats despite repeated applications.
One claimed he had failed 11 times while others talked of two or three failed attempts.
The latest public offer of 2,132 new flats for sale drew 20,394 applicants, which means that nine in 10 will be disappointed.
Another 5,000 units will be launched before the end of the year.
The rejected Singaporeans who cannot wait any longer will have to turn to the dearer resale market, where they will face stiff competition from rich foreigners holding permanent residency (PR) status.
PRs made up 40% of buyers in the open market during the past five years, resulting in prices rising by 40%.
One local benefit, however, is that a newly married Singaporean couple is given a S$40,000 (RM97,121) grant to buy a HDB resale unit.
The squeeze is due to two factors: firstly, a PR population hike of 51% to 553,000 since 2004, and secondly, more citizens demanding central or mature areas.
Today’s inadequacy is a far cry from the previous generation’s when the Housing Development Board (HDB) successfully mass-built cheap homes for hundreds of thousands.
One of the earliest stories I wrote as a reporter was about the HDB’s world record of building one housing unit every 45 minutes.
The question of subsidised housing is of crucial importance to Singaporeans who are trying to cope with one of the highest costs of living in Asia.
The passion Singaporeans have for property can only be understood by people living in land-squeezed cities.
After independence in 1965, then Prime Minister Lee Kuan Yew announced the objective of creating a home-owning society.
“If every family owned its home, the country would be more stable … I believe this sense of ownership was vital for our new society,” Lee said later.
Today, 86% of Singaporeans live in HDB flats and more than 90% own their home.
It was Lee’s housing programme that endeared his party to the old generation of squatter-living Singaporeans.
Now, the HDB is facing a strong challenge, catering to a new generation with higher expectations than their parents.
“Its achievement made the PAP (People’s Action Party) one of the most successful parties in Asia; it can also bring it down if it stumbles,” said a professional, who is still paying off a 30-year HDB loan.
Critics have accused the HDB of trying to replace the social task of providing cheap public housing with one dictated more by market forces.
Government officials say the HDB is building enough flats for local needs, and applicants failed to get one — even repeatedly — because they were too choosy, not because of inadequate supply.
“We promise every eligible citizen an affordable flat, nothing about meeting his choice location,” one official added.
There are regulations against speculating on HDB flats but there is no ban on it.
As a result, many Singaporeans and PRs — including those from Malaysia and Hong Kong — have made profits buying and selling resale apartments after a few years.
No foreigner may buy HDB flats but may rent them, also indirectly pressuring supply.
However, PRs are allowed to buy resale units.
Several years ago, there were stories of Hong Kong businessmen settling here as new PRs and making a killing selling their HDB units (the second time entailing a levy on the profits).
The slow building rate is not entirely due to poor anticipation of demand — but also to shrinking living space, particularly in choice areas where prices rose the sharpest.
The older generation was happy to accept any home offered to it, but not today’s.
“Now, people want only new units in a mature estate,” an official said. “Unfortunately, such places are becoming fewer.”
The foreign influx is, of course, the biggest cause of recent price increases.
With Singapore out of recession, financial consultant Leong Sze Hian has predicted another 10% hike in resale HDB prices.
Minister for National Development Mah Bow Tan insists there are sufficient public flats for Singaporeans and prices “remain very affordable”.
Eight out of every 10 first-time applicants of HDB flats would succeed in getting one on their first try, the board said.
In a recent online poll, however, 65% of Singaporeans described HDB prices as totally or slightly unaffordable.
Three out of 10 said they were “barely” so while 5.19% found them comfortable.
The sharp price rise in public flats is generally good news for the vast majority of existing owners, allowing many to sell out and upgrade to private properties.
In a speech during the generation change, Lee likened life in Singapore to a marathon race in which the second lap was about to begin.
For all who finish this race (not merely the “winners”), Lee said one possible reward was to provide everyone a second property.
That was, of course, before the massive arrival of immigrants.
Prime Minister Lee Hsien Loong, whose priority is to contain the problem, has announced that the intake of foreigners will be slowed down.
As Singapore’s population hits five million, the space squeeze is also being felt in the private market.
In the past year, developers have been selling tiny flats of less than 46.45 sq m — the latest on offer being a 26.48 sq m “Mickey Mouse” flat. – The Star
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John on Sat, 24th Oct 2009 4:05 pm
If they are permanent residents, they are not foreigners then.
XeNoooooOOOphobe on Sat, 24th Oct 2009 10:56 pm
I would like to point out a major fallacy in the article:
FOREIGNERS ARE ALLOWED TO BUY HDB FLATS, resale AND direct.
according to the Residential Property Act, PRs ARE FOREIGNERS.
a citizen+pr couple can buy new direct flats from hdb. so foreigners are not only competing in the resale market, they are also competing in the queue for new subsidised flats sold by hdb.
Pure breed citizens out there should decide if pap should be allowed to continue working against the nation’s interest this coming elections.
cy on Sun, 25th Oct 2009 12:06 am
pap is still living in yesterday years when citizens are not choosy, its pap’s thinking that should be examined.
i remember the govt once set a target of more percentage of private home owners, but they didn’t mention it now.
BuiTaHan on Sun, 25th Oct 2009 2:40 am
We will continue to suffer with our immigration policy i.e. quantity instead of quality. Next GE is our last chance to reduce the damage !!!
Seraphine on Mon, 26th Oct 2009 10:28 am
I got a queue number of 1200+++ even though pinnacle @ duxton is just behind my mum’s home, plus i’m a 1st timer and i have even included my parents’ name in the application to increase the ballot chances.. in addition the flat there is almost half a million.. all of the money can used to pay the flat already, there’s no need to have children…
blue on Mon, 26th Oct 2009 10:53 am
To make sharper difference between PR and citizen, i would suggest that a levy of 20% be imposed upon them when they buy resale flats over the price that they paid. This 20% shall go to help needy singapore citizens. This is very fair to citizens who built this country and will stay and fight come what may. Talented PRs are welcome but not those half bakes ones which add unwanted pressure to our limited resouces be it on land supply,housing, water, electricity and other social services
cy on Mon, 26th Oct 2009 2:04 pm
check this out
PR distribution in HDB estates to be monitored
The Housing and Development Board (HDB) will consider measures to prevent the congregation of permanent residents, if necessary.
MediaCorp had contacted the statutory board after Member of Parliament Lim Wee Kiak filed a parliamentary question on the total number of PRs who own HDB flats and the distribution of PRs in various public housing estates.
While his question is being held over from last week – it could not be reached within the 90 minutes given for question time – an HDB spokesman said: “It’s important that PRs can integrate into the larger citizen community and to have a good mix of PRs in HDB estates. HDB will monitor the distribution of PRs in HDB estates.”
While it will consider measures, the spokesman added: “The number of PR households owning HDB flats is a small proportion of all HDB households.”
To Dr Lim, who may get the numbers next month when Parliament is in session, “10 to 15 per cent” would be “significant” enough – “as big a group as Indians and Malays” – to warrant introducing a quota system to ensure “even distribution” of PRs across estates, which will help the efforts to integrate and naturalise them.
PRs will otherwise “remain separated”, he said.
PR households are subject to the same HDB rules, including the Ethnic Integration Policy, and can buy any type of resale flat but are not eligible for any housing and mortgage subsidy, which only Singaporeans can receive.
MP Ho Geok Choo cautioned against introducing a quota, however. “The numbers (of foreigners) are not so intimidating or threatening yet,” she said.
“We have to share the need to house these foreign residents among us in Singapore.”
Dr Lim hopes his colleagues will raise more questions when National Development Minister Mah Bow Tan gives his reply in Parliament. The issue should be addressed now, he said, rather than later.
“Eventually, a lot of (PRs) may become Singaporeans and they’ll have a chance to exercise their vote and will become a political voice,” he said.
Foreigners, PRs a more common sight in heartlands
A Singaporean walking around Boon Lay Shopping Centre could be forgiven for thinking he is in a foreign land. It has six minimarts – four Myanmar, one Thai and one Indian – while seven remittance shops and Internet cafes dot its aisles.
Shop owners estimate that foreigners form about 70 per cent of the patrons there.
At Clementi Avenue 5 and 2, two Myanmar minimarts are located under HDB blocks, while Chinese nationals enjoy discounted $8 hair cuts at a shop in West Coast. Other patrons pay $12.
Foreign banks and remittance services are sprouting up in estates such as Ang Mo Kio, Woodlands and Marine Parade, too.
The heartland landscape is changing in tandem with the influx of foreigners. Last year, 79,167 took up permanent residency, up from the 63,627 new PRs in 2007.
From their house visits, Members of Parliament attest to the increase in foreigners and PRs moving into their estates.
MP Ho Geok Choo told MediaCorp that in her Boon Lay ward, they sometimes made up half of a floor consisting of 15 to 18 units. Likewise, MP Lim Wee Kiak has come across PRs of different nationalities occupying six out of the eight units in one of his Sembawang blocks.
The presence of the new arrivals in the heartlands has not gone unnoticed by Singaporeans. When retiree Sim Ai Mei attended a recent folk singing class organised by her residents’ committee in Woodlands, she found she was a minority: Of the 20 participants, 12 were Chinese nationals.
Living close to one another, they decided to enrol for the class together, the 64 year old later learnt. “I was surprised,” said Mdm Sim. “I didn’t expect them to turn up as a group.”
Mdm Sim’s friend, who wanted to be known as Mdm Lim, was more direct. She said: “There are just too many (of them). I can’t take their habits sometimes.”
Singaporeans’ complaints range from the smell of alien cuisines wafting through their flats, the noise levels and the hanging of clothes along the common corridors.
The new arrivals also chose to congregate with their fellow countrymen over locals, noted MPs and residents.
Choa Chu Kang resident Chow Zhihong observed that Chinese nationals at his estate have held gatherings at the common areas for their friends on occasions such as the Mid-Autumn Festival and National Day – but did not invite their Singaporean neighbours.
“They tend to stick to themselves,” said Mr Chow, who has lived in the estate for seven years.
The increasing numbers means that immigrants do not need to integrate with locals.
Mr Dong Liquan chose to live close to other Chinese families in Woodlands so that they could accompany his family when he is at work. “Our neighbours don’t understand our accent and some even laugh at us,” he said.
Dr Terence Chong, a sociologist at the Institute of Southeast Asian Studies, believes that migrants have moved into the heartlands for economic reasons. “A foreigner who moves into the heartlands may not want to integrate by local life. It’s just cheaper,” he said.
Accommodation costs do make a difference – which means the likes of Bishan, for example, would not have the numbers being seen elsewhere.
Compared to 2006, property agent Daniel Koh, who oversees 60 associates, has seen a 20 per cent rise in PRs looking for flats in the Woodlands area. Other estates that new arrivals have been eyeing include Sembawang, Punggol and Sengkang.
Some new arrivals think the economic downturn has accentuated the differences between them and Singaporeans.
“They think we’re out to take over their jobs and their housing,” said PR Liu Zijie.
“It creates an uneasy tension.”
When one Chinese national hung his country’s flag outside his flat, netizens blasted him for being culturally insensitive. In another incident, a group of foreign workers received an invoice with obscenities written in English.
It used to be easier to get along, feels Mr Pyaa Phyo Kyaw, 20, who came here three years ago from Myanmar after his parents obtained PR status.
Then, his Whampoa neighbours used to chat with his family in the evenings at the common corridor. The family shifted last year to Toa Payoh and getting to know their new neighbours has become harder.
“Their doors are always closed,” said Mr Pyaa, who is now a Singaporean.
Burden of Proof on Mon, 26th Oct 2009 3:03 pm
I hope to gently remind readers , in case it slipped your minds, that Percentage is not the same as Quantity.
high percentage but base on how many citizens only?
can singapore achieve the same if its population is the size of china or even malaysia?
the question is can or cannot.
whatdemocracy on Mon, 26th Oct 2009 4:04 pm
Mr Pyaa Phyo Kyaw, 20, is a sporean now? He better be serving NS like the rest of us do……….
Bai Hu on Tue, 27th Oct 2009 11:49 am
@ XeNoooooOOOphobe
U have pointed out a GOOD one. Rite, PRs can also buy new flats through a Singaporean spouse. My case is one very good example & somemore, we pay a much cheaper first-timer price for that. My husband feels very thankful for this advantage of which i had mixed feelings, as i also think about the mass of fellow S’poreans who have to compete for a flat.
So….. PR with S’porean spouse + Both PRs couples, With 40% of PRs in the market…… no wonder there is stiff competition for the newly weds S’poreans.