Citizen questioned why Singapore did not follow Hong Kong’s example to cool the property market
October 27th, 2009 | 
Author: From our Correspondent
A disgruntled Singaporean has written to the Straits Times Forum questioning the Singapore government why it has not done more to cool the property market.
Hsu Chong Pin used the example of Hong Kong to illustrate the measures taken by its government to curb the rapid price hikes and asked why Singapore has not followed suit.
Hong Kong has increased the down payment ratio to 40 per cent for properties above HK$20 million (S$3.6 million). For those priced below HK$20 million, the maximum loan of HK$12 million applies.
He wrote:
“…the down payment ratio of property purchases in Hong Kong seems to be at least 10 percentage points higher than Singapore’s. Two, an increase in down payment ratio is the most effective measure to curb property price increases in Singapore as a direct demand-side measure.”
The property prices in Singapore have sky-rocketed in recent weeks with those from the private sector increasing by more than 15.3 per cent. Prices of resale HDB flats also hit a record high with median COVs of more than $10,000.
While there are fears from some quarters that a property bubble is evolving, the general sentiment remains buoyant and positive with the opening of the two integrated resorts next year.
Singapore’s low entry barrier of 20 per cent in down payment ratio which is lower than Hong Kong’s will continue to attract investors and speculators alike into its private property market of which 70 per cent is owned by foreigners.
The rise in private property prices also spill over to the public housing sector leading to sky-high prices in resale flats.
Despite evidence on the contrary, the government is adamant that HDB flats remain “affordable” to ordinary Singaporeans.
Over 100 protestors marched in the streets of Hong Kong last week to protest against the surging housing prices. In contrast, Singaporeans restrict their complaints chiefly in cyberspace which is largely ineffectual.
An online petition launched two months ago to the government to cool the property market has garnered more than 1,000 signatures, but it is unsure if the government is even aware of its existence.
The government has been using the state media to defend itself against charges of incompetency and negligence which has led to the runaway inflation in prices, especially that of public housing.
Buyers who are unable to obtain a flat of their choice are blamed for being too “fussy”.
Mr Hsu ended his letter by asking the government what it is doing to cool the property sector:
“What will the Government do to cool the property sector, in view of the similarly strong increase in property prices in the third quarter? Will there be an increase in the down payment ratio and if not, why?”
He is unlikely to obtain a clear answer from the authorities, if any at all.
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26 Responses to “Citizen questioned why Singapore did not follow Hong Kong’s example to cool the property market”
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MBT is another useless minister who only know how to collect astronomical salary without doing anything good for the citizen!!!
The saying now is -
Who ask you don’t buy earlier?
Now so expensive already !!
Cannot buy already !!
it just consipiracy..
private property price rise
hdb property price will follow
ur property appreciate and feel happy, u vote for them
New house owner loan increase, work harder
“…hdb is affordable…”… by payback in 30 years…
oops… u r “owning” something which u never “owned”
when u r old, no more saving coz all paid for hdb, hdb give u “lease buying back scheme”..
means what…u rent an hdb for 30 years…then when u old, government let u stay until die…
so what u gain?
Mr Hsu Chong Pin is right.
He is echoing the concerns of most Singaporeans.
Just looking at the housing situation and the bubble-bursting property prices, you can’t help but ask yourself ‘what’s happening ??’
Even prices for PUBLIC housing (HDB) are rising at breakneck speed, like a bullet train running out of control.
Why aren’t the Minister of Housing doing anything about it ??
When our Minister of Housing is paid more than 2 times the salary of Prez Barrack Obama you would expect the guy to be super active, super smart, super efficient and a super problem-solver in his job, wouldn’t you ??
LKY says that if we pay his Ministers ‘peanuts’, Singaporeans will get monkeys.
We now know that paying his Ministers diamonds we still get a monkey as the Minister of National Development.
The last FY 2008 saw this Pay-And-Pay gahMENt benefiting OVER 6 BILLION FROM The Property Market… And a large part are from our FAMOUS En-Block sales!!!… Which adds “instant Millionaire to that pool!!!… Something And One MORE THING FOR this P-A-P gahMENt to BRAG about too!!!…
So.. why should Pay-And-Pay gahMENt… who PAY-AND-PAY themselves so AASTRONOMICALLY HIGH… Want to COOL This MARKET???
Some very senior people will say: Hsu Chong Pin is complacent, while the price was low, HCP’s eye was wide open and choose NOT to go in eye open, so if the price went up, what to do, it had happened and move on.
As it stands you cannot take a loan out for the 1% deposit and the 4% down payment has to be paid in cash after the bank approves your loan application. There is a further 10% down the road once building commences.
private property loans are handled well enough by banks locally such that speculative behavior is more or less within reason. As it stands now a T.O.P property with a tenure of 999 years or freehold properties can command 900+++/PSF. Ready to move in types are reaching the heights of 1000++/PSF. The recent development released in a central area was launched at 1200/psf despite being a 99 year tenure property. That rose some eyebrows and the changes were put in place.
Had HDB flats not been resaleable then the entire thing regarding resale prices would have been a misnomer. Hong Kong’s situation is slightly different. They have a subsidization program which can be joint-ventures with a developer or fully government built flats. Both are relatively cheap, thing is they kinda halted building new subsidized flats which created a flow of demand onto the private sector.
We however on the other hand have a public housing program that can be resold. This creates a semi-private situation. Resale flats have several advantages.
1) its ready to move in bar renovation time.
2) amenities have been built up around the area depending on maturity of estate.
3) you can choose where the flat is in general and take several looks before deciding. If there are more flats on sale than you get more to choose.
Sadly, during the last 8 years or so there had been a rather steep climb in population levels. Before the BTO programs and DBSS programs, flats were built and could not be sold. So HDB used a demand based scheme to determine whether to build or not. MOP is primarily designed to curb home-buyers who treated their flats like an investment equity.
Those will continue to do so till the day flats cannot be resold. The steep climb in population will mean a steep climb in demand, this caused the first spike in resale prices which was finally put down with some measures from the HDB. Subsequently, Admiralty and several Northern satellite towns sprouted. According to my rough understanding those areas are still relatively not so popular amongst home-buyers. Its hard to keep everyone happy with our space limitations.
I agree with the majority of Singaporeans who say MBT is incompetent. Therefore, I expect that he will be voted out in the next GE.
However, this is not enough. Singaporeans must ensure that the opposition win at least 5 or 6 GRCs. Only then can they play an effective role as a check against the abuses of the MIW.
MBT has no control over his salary. He just take what he is offered.
I agree that getting millions doing government job is too high.
The problem of housing bubble forming is real. However, based on HDB’s statistics, the problem is still not alarming enough to warrant explicit intervention. Change has to be gradual. I am sure some of the KAHs in HDB is monitoring the situation closely and considering implementing certain controls once the situation starts to get out of hand.
When it comes to housing normal singaporeans never come out winners, sell cheap buy cheap, sell expensive buy expensive.
So long as you can afford one property you will never really prosper, in paper value you may look ok but in reality you end up working your life for the bank.
The real winners are HDB, developers and the banks.
Hi All,
I think Mah Bow Tan is in a quandary now.
If he listens to this writer’s suggestion and increase the payment ratio, what does it make him out to be?
The writer should as well be the Minister and save us the millions we are paying to Mah right now!
Expect Singapore govt. to follow HK’s example to cool the property market? You must be joking or day dreaming!HDB is the biggest housing property developer in Singapore! Even the housing bubble is bursting at the seams, they will turn a blind eye!How many times have we encountered this type of situations? Have they learned their lessons? NO! Japan was pulled down due to the housing bubble and till today they are still struggling to find their footing!The most recent
case is the sub-prime thingy in USA.Will it not happen to us
‘cos we have the multi-million ministers and the ‘elite’ team to custion the impact? Just wait and see how they react & say when the bubble burst- please don’t give us the
same crap ‘we didn’t see it coming’ or ‘its a honest mistake’!
As TR has pointed out in a previous article,govt is in a quandary, to prick the bubble now implies loss of votes in coming election expected before Jun 2010. however, if they don’t do anything, bubble will just keep on growing, leading to a big crash to clean up, which is also detrimental to their rule.
We should not monkey-see-monkey-do. Increasing downpayment ratio is not going to help us because unlike HK, our problems are caused by TOO MANY FOREIGNERS.
Increasing the ratio would only forced most of the mid-high income foreigners (especially PRs) to buy resale HDB thereby pushing the mid-low income citizens to compete for the limited “new” HDB flats.
The solution is very simple.
1. Limit foreigners purchase of private property to one per adult person.
2. Slap a percentage levy (which has to be hefty) on sales of private property which is bought less than 10 years.
Once market cool, such measures can be removed.
@cy
The quandary you describe is emblematic of what is wrong with our system as it stands.
The govt is here to formulate and implement for the benefit of its citizens, NOT to perpetuate incumbency.
Of course it is just speculation such a quandary exists, surely our incorruptible leadership will not place their own political interests before the welfare of citizens?
since MBT said HDB flats are still “affordable” to Sporean, what is the need to cool the property market?
U people vote PaP MP to parliament not to voice out for the people.U vote them into parliament to fill full their pocket.
The problem lies with our PM who increase the intake of foreigner too fast and too drastic that caused excessive surge in demand for property and thus property price. He should be the one get voted out !!!
maybe TR should have some coverage on HDB flat owners who go into arrears and how/why they go into arrears or face compulsory acquisition. some face-to-face interview to post on youtube would be good.
here’s some background material:
http://groups.yahoo.com/group/Sg_Review/message/5239
“Citizen questioned why Singapore did not follow Hong Kong’s example to cool the property market”
Head or tail, you still lose, right?
Turn it around and you’ll have another write-up on copycats:
“Citizen questioned why Singapore followed Hong Kong’s example to cool the property market”
We’ll be true & honest to ourselves. That’s the best. For circumstances and makes are diffrent even between identical twins, right?
@btan
I feel that the raise in PR population is a contributing factor. However, to pin it all on them is hasty. A quick check on wiki shows that the non-resident population makes up around 25%. The last figure taken at 2000 was 18%, that is a big spike but these non-residents cannot purchase HDB flats, resale or otherwise.
What has made the situation as bad as it is now to me is a combination of a sharp rise in population (non-residents who became PRs, who then became citizens) pushed demand for housing up very quickly over the 9 year period from 2000 to now.
In that same period of time, the HDB has slowed down their building of new flats via the use of BTO and DBSS projects. The DBSS porjects are largely in the more popular areas compared to the BTOs which are mostly in the satellite towns. Add in the fact that each new block needs around 3 years to complete before T.O.P the squeeze on resale flats showed itself.
Compound this with a baby bonus drive and the family friendly programs from the government wanting more people to settle down and start families the need for housing gets more intense. This year alone there had been more marriages registered than before. I really feel that somewhere along the line NDB failed to see that residents will need housing as the government pushes to increase the population via importing. It is true the BTO ensures occupancy in new flats but the number of BTO exercises that fail to go through also accounts for the shortages.
Limiting non-resident purchase of private property will not solve the problem affecting HDB resale flats. Its a chicken and egg thing with regards to the demand and supply. Quite simply put the NDB had a offday while the population was increased artificially. Its still not too late to push out more land parcels so that prices come down as supply increases.
My response come after yours quoted following…
“qussl3 on Tue, 27th Oct 2009 5:14 pm
@cy
The quandary you describe is emblematic of what is wrong with our system as it stands.
The govt is here to formulate and implement for the benefit of its citizens, NOT to perpetuate incumbency.
Of course it is just speculation such a quandary exists, surely our incorruptible leadership will not place their own political interests before the welfare of citizens?”…
MBT himself… his press secretary… A staunch MBT AND PAP supporter… even one of his children OR relative… A ‘close colleague… Or friend of his AND them… AS YOU are…
SO… VERY Cock-Sure that PAYING ASTRONOMICALLY HIGH TO Ministers like NOWHERE ELSE In THIS WORLD… IS in ITSELF… A Way of proof that It IS An Assurance of COMPLETE Cleansing of MIW for incorruptibilty?… Have you read and heard of ex-PAP MPs who fell flat on their faces in this area??? And by what YOU said… DO YOU MEAN THAT… MIW… INDED ARE THE ONE & ONLY EXCEPTION TO The Reality of man’s GREED FOR MONEY & POWER???… Heavenly types on earth and for all time to come???… Then…
If INDEED MIW ARE SO VERY Serving and Humble… WHY???…
1. Need SO High Salaries???…
2. Need to SPIN about STRAIGHTFORWARD stuffs???…
3. WANT TO RIDE IN GRCs to GETINTO Parliament on another’s credentials or MORE APPROPRIATELY… POLITICAL influence???
4. Anymore???… This list can run for at least 44 years long!!!
It is in the PAP’s interest to allow property prices to increase. What’s the number one concern of Singaporeans with the PAP at the moment? The massive losses suffered by Temasek and GIC. How to create the illusion that Singaporeans are wealthy again? Cause property prices to increase. Remember, the PAP knows it has screwed up with Temasek in particular and they need to craft a new illusion that they’re in control of the economy. The easiest way to do that is to boost property prices and then use those higher prices to suggest that the economy is going along very well and how prices are increasing when in most OECD economies they are decreasing. Once again the masses feel grateful to the PAP and, most importantly, to the Lee Family and their corrupt hegemony is allowed to continue.
although he is right. I doubt he would be making noise..if he had bought early and made money from it.
@csl on Wed, 28th Oct 2009 10:46 am
[[Limiting non-resident purchase of private property will not solve the problem affecting HDB resale flats.]]
All these are linked. The group of people who can afford both private property and HDB flats will make their decision based on availability and costs of private property. We want more people to buy private property, hence less people to buy HDB flats so that those who can only afford HDB flats will have fewer competition. Couple with tightly control of foreigners (PR, new citizens or otherwise) purchase of property, the demand will reduce and the price will naturally cool off. I think this is basic economics.
@HAH! “quss13″… YOU MUST BE 1 of those MULTI-MILLION Ministers or perhaps YOU ARE…
Someone left their sarcasm filter on high today. lol
Read my comment again before jumping to conclusions mate.