Measures to cool property market have no effect on public housing prices
February 21st, 2010 | 
Author: Written by Our Correspondent
The government had introduced two measures lately to prevent a “bubble” formation in the private property market – a stamp duty will be imposed on buyers who sell their properties within a year and the maximum loan allowed is limited to 80 per cent of the purchase price.
Senior Minister of State for National Development Grace Fu said the time was ripe to introduce them to curb excessive speculation in the market, but added that it will not deter genuine buyers from buying.
“We would like to, in a way, make sure that there’s no bubble formation and can do it before the bubble is being formed. We think it’s a suitable time,” she explained.
The changes are unlikely to affect the public housing sector whose prices have sky-rocketed in the last two years due to rising demand fueled by immigration in the face of limited supply of new flats.
Furthermore, the majority of buyers in Singapore’s private housing sector are foreigners who can well afford to pay the excess stamp duty.
Despite widespread unhappiness on the ground, the government appears reluctant to rein in on the red-hot resale market which shows no signs of cooling down.
Prices continue to increase by 8.2 per cent last year with median Cash-Over-Valution (COVs) doubling to $24,000 in the last quarter alone.
As PRs form quite a substantial percentage of the buyers of resale flats, HDB should consider introducing rules to make it more difficult for them to make a profit out of them.
A minimum residency period of 2 to 5 years should be imposed before PRs can purchase resale flats. They should be means tested to ensure that those who can afford private housing do not compete with Singaporeans in the resale market. And a stamp duty should be slapped on those selling their flats upon leaving Singapore.
Unfortunately, HDB still insists that public housing remain affordable to the masses despite evidence showing otherwise. Singaporeans will have to wait till they are “caught off guard” again.
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The debate point in this article is very OFF the mark. Some point has no logic.
Stamp duty to be levied on sellers ? This is an dis-incentive for property speculators ? Or is it another revenue generating mechanism for the government ? How on earth is it going to dampen speculation when, if someone can make a quick $200,000 capital gain from property speculation what is $10,000 or #20,000 stamp duty to him ? If I can make $50,000 within a month I would not mind paying even $20,000 in stamp duty (if that be the case).
They are always thinking of revenue generating practices under disguise of curbing this and that. Look at the ERP scheme, which originally was meant to control traffic flow in the CDB area. Now it’s a toll scheme covering even distances faraway from the city central.
Everything in Singapore is look upon through the eyes of money. That’s the PAP leadership. I think it’s time to call them the Peoples’ Money Party (PMP).
Grace Fu’s definition of genuine buyers include both owner occupiers and buy-to-let investors.
The government needs to understand that the buy-to-let investors are pricing out the (the really genuine) owner-occupant buyers.
We need to curb the excessive investments, particular from the foreign and institutional investors parking money in our small property market.
This prevents our property prices from drifting away from fundamentals, and protect our property market from the whims of international capital flows and global liquidity conditions.
A capital gain tax on property transactions is necessary.
HDB with its reactive housing supply is the biggest culprit for the current run-up in public housing prices.
HDB resale prices are breaking record levels because new supply from HDB cannot address the increased demand for ready flats, coming mainly from new PRs.
New HDB flat supply in recent years are offered on a BTO basis. HDB put up the project, commerce the construction only when enough buyers commit ,and deliver the new flats 3-4 years later.
As HDB no longer offers completed flats that are ready for immediate occupation, buyers looking for a ready flat can only buy from the resale market.
This results in a pent-up unfulfilled demand for ready flats. Thus the current frenzy in the resale market, ballooning prices and high COVs. Just look at the overwhelming demand when HDB offered some leftover ready flats lately.
In short, there is a structural temporal mismatch of demand and supply of HDB flats, and this situation will persist unless HDB reverts to offering completed flats under walk-in selection as a supply buffer.
But would HDB want to do so? BTO makes their job much easier. They don’t have to plan ahead and manage the inventories. Just wait for committed orders to come in, so that they can never get it wrong!
Why are we paying our ministers and senior civil servants who avoid from taking responsibility?
The bubble is already formed. The current property prices are jacked up because of the speculation on IR and also the influx of foreigners. There are various groups of foreigners such as India, China and also from Philipines.
If you look at the spending patterns of these new comers, many are spending beyond their means or not familiar with the local practices.
There are no long terms sustainability. Genting IR is not attracting as many people as expected, and its shares are dropping.
Wait until Sands opens 2nd IR, we have two IRs fighting for the same group of people – mainly Singaporeans or tourists (one time perhaps). The joke is, majority of the IR customers now are the PRC workers.
2010 or perhaps 2011 will see another big crash of the Singapore property market. Banks had been giving out billions of cheap loans. When the IR don’t work, prices come crashing down, good luck all those who bought properties.
lips service as usual
I am a 3-1/2 years PRM, 29 year-old, stay in Singapore for almost 5 years. Earning Mid-income (household income in 2009 around $70,000).
I had planned to buy a HDB since 2007.
Due to “Sandwich” family form, i got to consider parents and future children expenses (bought some insurances + saving for future); felt very pressure went come to the HDB price. Very tough to save money, i already cost down a lot in my expenses since recession, but future still “grey”…..
Actually we almost achieve the minimum amount of money to buy a HDB cost around 320k+20k COV by loaning 90%, but because the new rules (that only can borrow 80%); we have no choice but to wait and save more….. may be 2 more years or more years…..
I really can’t understand who the hell is / are so rich to pay all the crazy-like super-high COV + the super expensive Valuation. This will cost us 35 years (whole working life) just to EARN A HOME TO LIVE in Singapore. We pay income tax + whatever Singaporeans pay. Is understandable PR have to be “different” in some ways. But PRs are also human being, just want to HAVE A BETTER LIVING. We like Singapore (may be in future i got to put in a word “used to” in front of “like”)
I admit, “surrender” to say that Singapore is “hard” + “tough” for engineer like me to live…. Do any engineer agree this?
Fed up with renting a room (and the rental is so high for a couple, cost $700-$800) that “consumed” most of my savings!!!!
But I get stuck, still not affordable to buy HDB.
Now I understand why many Malaysian starts going back to Malaysia, especially to WP holders. The main reason is the living cost….
I feel very petty to Singaporeans especially who has mid-low or low income….. They would feel the same or even more pressure like me, but can’t do anything….
During CNY, I visit my sister’s home in Penang Island (16 years old Flat, Freehold, about 900 sqft, fully-newly renovated, move in condition, 2 mins walking distance to market+bank+shops+ ++++, near town, very convenient). She just bought 2 months ago at RM 151,000 (SGD $63,000). Her house hold income is around RM130,000 (SGD $ 54,000).
I can see why she live so convenient.
And i am considering to go back to Malaysia… Good news for Singaporean, 1 more new job for about $55,000 p.a. …. Good luck for all. Happy Chinese New Year.
May all the luck come to you all, May all the wish of you all come true.
May Singapore be prosperous and all the residents be healthy, happy and prosperous like what the country got….
don’t expect the tail to wag the dog
To prevent “bubble”??? HOW TO?? The bubble is there!
Has it occurred to you that the great increase in price is caused more by real demand rather than by speculation?
Since this is election year, the politicians want to appear to be doing something to solve this problem. Perhaps they know that as long as they cannot supply enough housing units to meet the demand, nothing can be done in the short term.
So here we have a grand pre-election wayang. What better way than to tax the people even more. Who doesnt want MORE $$$?
Oh… dont forget.. after the wayang is over, expect them to use their propaganda machines to flog statistics in order to paint the illusion of how successful this move has been.
I for one agree that the measure will not really have effect. But this article argument quite poor, some of the point not very logical.
新加坡真的有如MML所说得那么好吗？
它的房价真的有如现在市场价格那么值钱吗？
GDP的增值真的有如报纸写的那么高吗？房价的增长有没有拉高GDP?
Correspondence wrote : As PRs form quite a substantial percentage of the buyers of resale flats, HDB should consider introducing rules to make it more difficult for them to make a profit out of them.
Fellow singaporeans, stop you whining and start thinking how to compete instead.
It is strange that when we are faced with difficulties, we clamor LOUDLY and like idiots for PAPpy to come to our rescue. And at the same breathe, complain that PAPpy treat us like daft. No wonder !!
Would you like PAPpy to wipe your backside too ?
I have paid my 2.5 yrs due, live overseas 1/4 of my life, and I can only shake head on how idiotic singaporeans are trying to make PR the scapegoat of their woes. Unseen on any other planet. Another first ?
To the MYS PR struggling to survive in SG – go back to your country. The citizens of this country only loves you when all your hard earned money is used to pay taxes, rent, shopping , COE , ERP and everything that enrich us lazy and daft singaporeans only.
They are very bitter and jealous when you make more money than them. You deprive them of a job, and you deprive them of an opportunity to make a killing in the property market. Go, go .. go ….
willing buyer willing seller.
economics my dear.
supply and demand.
go study some more.
why no one wants to buy property in Batam or JB???????
Aiyah.. end of the day.. you all should know who is the blood $$$ sucker… Do you thing they really care abt us…. ???? Wait long.. long..
“There are two ways to increase your wealth. Increase your means or decrease your wants. The best is to do both at the same time.”
by Benjamin Franklin
Fellow Singaporeans, stop blaming the government, your bosses, your parents, PR, Foreign Workers etc. for whatever problems you think you are facing. Be grateful for the many good things we take for granted now – much better standard of living than our parents’ generation and a competent government that has done a good job considering our challenges. (Don’t get me started on Gerrymamdering though)
Focus on what you can do to make things better for you and your family. Take positive and decisive actions today. It’s a rather level playing field out there and most are just passing time. Be hungry and hardworking even though we are living in comfort.
Hi SC,
well written. The move is to generate revenue like a toll scheme, no different from ERP. It will not address the years of inadequate public housing supply.
Now HDB is in panic mode launching projects one after another. At this rate, the public housing prices may fall drastically 3 years from now. Not that lower public housing prices aren’t good, but a sudden collapse in asset prices has serious wealth effects.
To Malaysia PR – please go. Will be very happy to see the last of you and the likes.
There is a former-Malaysian-turned-Singaporean who managed somehow to buy 4 HDB units and 2 private units. He has since returned to Malaysia living on rentals collected on his Singapore properties, living like a lord.
“Fellow singaporeans, stop you whining and start thinking how to compete instead.”
When you have upgraded your skills to death, yet employers will hire foreigners because they are cheaper and younger – how to compete? Don’t even get through the door for an interview once you are past 40. Be your own boss – but where is the capital? I seriously doubt if you are truly Singaporean.
Notice? Every solutions that this gov comes up with involves them making more money out of nothing. Introduce a new tax to solve a property problem. Create a new cert called COE to control car ownerships. Build money sucking gantries and sell us card readers to reduce traffic jams. Really million dollars minds coming up with these policies. Make money, “solves” problems (or at least FORCE people to not cause any problems)
dont think it’s totally the PRs’ fault, we must not forget very poor planning by u know who.
We can only hope for the IR to fail to save Singapore !!! The IR has not benefited Singaporean in anyway except the skyrocketed property price. It was created to give high GDP figure but most real Singaporean have not benefited. Those employed in IR are mainly foreigners who are given PR status easily in short span of time so that the government can classify them as local to deceive real Singaporean. The government should note that PR is still the citizen of another country and so classify them as local is a big lie !!!
Looking back 1 to 2 decades ago, resale HDB flats weren’t easily within reach of PRs. I cannot recall the detail policies back then, but I know my parents who toiled in Singapore since their teenage won’t able to purchase a resale HDB flat even when they have gotten their PR-ship (both has more than sufficient in CPF to get a small 3-room unit back then).
Vote LHL out is the best measure to cool the property market !!!
Just to share a case I am aware of how foreigners profited from the rising HDB flats.
An India national, who worked in Singapore for a handful of years, gotten PR-ship and a resale HDB flat, sold it in late 2007 (or was it early 2008) and return back to India. The profit from the sale of HDB flat was sufficient to live luxuriously back in India or even start a small business.
To ‘Typical Malaysian PR’,
Seems like you are very much in the same shoe as I am, with the only difference that I am a citizen, thus no where to go back to except staying put.
I am sure you would be able to understand how we citizens feel. At the least, you are still able to move back to Malaysia. We, the middle or lower income citizens have no where else to escape to.
They’re not fixing the problem at it’s cause. It’s entertaining though.
Chick, u can always migrate to Jb as well.
Singapore is trailing HK closely in the property sector: While the HK property market started taking off much earlier in mid of 2004, Singapore only follows behind the move in early 2007.
In Oct 2009, the HK Authority imposed higher initial deposit downpayment and on 11 Feb 2010, HK announcement to raise stamp duty from 3.75% to 4.5% on high end condos.
In HK, 70% owns private property and 30% living in govt cheap subsidized flats whereas Singapore majority of people upto 85% living in HDB flats leaving only a small 15% in private sector.
In Singapore, MBT is stimulating the whole property market due to HDB being the biggest property owner (or “speculator”).
mr mah now says there is potentially ‘high risk’ of bubble forming in private property market? his opinion was very very different a short while ago.
is he changing his opinion to the opinion of the ground? like that we’re the ones that need to be paid the 6 peanuts for helping him come to his conclusion?
The property market is about to crash! The government realizes this and quickly introduces some measures to “cool” the market so that when it finally crashes, the government can claim credit for it and say “we pricked the bubble in the interest of Singaporeans”. The government is known for it’s manipulation of people’s minds like this.
But the government was the instrumental in creating the bubble in the first place by opening the floodgates to foreigners, by pegging HDB prices to market instead of cost, and by keeping silent on widespread market belief (spread by people with vested interests) that the government is always supporting the HDB market.
The government’s interest in pushing up the property markets is short-sighted and self-serving. It is causing widespread speculation in the property markets and is a drag on our productivity. It is selling our future away for its current short term gains. It’s like a free-for-all grab for our scarce resource, leaving nothing for posterity.
@asiaone online — Rachel Chang
PRIME Minister Lee Hsien Loong yesterday urged Singaporeans to treasure their homes and not use them as an easy means to make a quick buck or settle a debt.
He disclosed that MPs have been approached by many residents who have sold their homes for cash to pay off loans or make purchases.
‘They have a problem finding another home or getting a loan to buy another home…it is not easy to solve the problem,’ he said, in a speech underlining the importance of treating a residential property as a long-term investment.
1. the hdb home is leased
2. if you have debt what to do , if don’t sell , how to pay debt?
3. if you need a home, you need to purchase, if not where to leave?
4. If PM can leads by example and give up his $m ,, problem can be solved in a way.
5. since propty is an “long-term investment” , it’s an investment where you sell if you gets return. What is long term? 1 year can be long compare to 2mths, or 200 years can be short compare to 500years.
The fact is this. If you are going to buy a 4 room now and pay 500K for it. borrow for 30 years at hdb rate, how much would you want to sell at the end of 5 years? assuming they borrow the max. I know many young couples who do so. Now if the property market falls, what happens, they will have to make up the difference if the price falls to say 400K or less. What will happen then? HDB evict? there is nothing the govt can do right now given that the bubble is already here. They can only hope to slow it down.
http://lushhomemedia.com/
“Yesterday, Mr Mah noted that there was a ‘high risk’ of a property bubble forming in the private homes market.”
Viva Democracy on Mon, 22nd Feb 2010 2:14 am said:
They’re not fixing the problem at it’s cause. It’s entertaining though.
it’s amazing how a super-elite organisation can bungle so spectacularly, and it’s indeed entertaining how Mah has to keep changing his excuses and opinions every few weeks to eventually come in line with what TR has been saying for almost a year. i suppose if they do it suddenly, it’s like saying TR was right and that would make them look damnnnnn stupid.
and it’s quite entertaining to see him make silly statements. and having to change them. but it’s less entertaining when i see people i know delaying their home purchase waiting for the “govt to do the right thing as they have always done” except this time, their pride has made them drag on so long that these people are losing hope / patience and are practically succumbing to these prices. not everyone can really hold out until the slow govt reacts.
Another good for nothing million-dollar nerd, at first, she proclaimed vociferously in the parliament that it is very difficult for the mnd/hdb to predict the housing demand and now, after consolidating certain information from the unhappiness of the main-street-men especially though TR, TOC, SDP website, etc, she is so confident that it is the ripe cum suitable time to introduce policies to curd speculation of properties!
Does she has her own view and knowledge?
If you can’t predict the demand how you can acknowledge that there are speculative activities going on in the property market?
Another good example of a nerd getting millions of dollars but without knowing what is going on in his/her own respective field of profession!
Do we really need this bunch of million-dollar nerds of the miw clique to guide Singapore through the millennium by devouring the scarce state-coffer relentlessly?
“PRIME Minister Lee Hsien Loong yesterday urged Singaporeans to treasure their homes and not use them as an easy means to make a quick buck or settle a debt.”
interpretation:
If you know, for sure, that the HDB flat prices now are at the max, and the next few months/years it’ll be lower, what would you do?
Ans: sell now, rent somewhere or live with parents, buy again later
If you’re the country leader and you know that the above will happen, and you want to cushion the collapse, what would you say?
Ans: don’t sell. don’t contribute to the collapse. if everyone sell, earning the money, the collapse will fall more. if some of you “believe me” and not sell, you don’t earn from this high (just too bad). only those who sell will earn at the high. and you don’t sell because you are convinced by my rhetoric about your house is your home and not whatever. and you see your friends sell and take the money and rent/run, but you didn’t. and therefore I make this speech to urge you not to take profit, i mean, not to “settle a debt”. it’s ok to not join in the profit taking, money isn’t everything. otherwise the collapse when everyone sell together will be so much, i’ll look pretty bad.
So? Be a good citizen and don’t sell. let the PRs do it. it’s not their Home anyways. Money isn’t everything, even if it’s $100,000 and you can buy back a bigger flat when the selling is done and the market is lower.
When it comes to property bubbles, the government’s action is “always too little too late”! Remember the 1996 bubble? When it finally burst, foreclosures took place in waves, and bank auctions of foreclosed properties took place every week.
To Micebreeder on Mon, 22nd Feb 2010 12:24 am,
Some more examples
Increasing loan-sharking activities? Impose registration requirement for subletting of room
Too many foreign labors? Impose levy (soon)
People grumbling about property speculations? Impose new stamp duty on seller (if sold within 1 yr, for now)
I smell another money making opportunity for the PAP!
It was reported that MBT said new measures for the HDB market to stamp out speculation could come as soon as next month.
The continued rise in HDB and mass market condominium prices since last year is due to a general supply shortage. Speculative was not of alarming levels, and not the main driver behind housing price increases.
HDB’s reactive supply of new flats is to be blamed.. not speculation.
Mah Bow Tan, not only are you incompetent.. you are also a big wayang!
sounds like we are going to work forever, that’s exactly what our dear gahmen wants
IF shortage and not speculation is the source of the problem
then why all this noise about PR/FT buying flat at high price thus driving singaporean out of the market??
Yea agree it’s quite a poorly written article. If you guys want to continue to have impact, you gotta stop publishing articles like this one
Singapore private property still relatively low price, still has lots of momentum to go north.
Currently the super-RICH has nowhere else to park their billions of dollars.
But it will be catastrophic if the bubble burst….
I fully agree with teh writer , specially when it was said taht 75% of workers of sentosa resort world are singaporeans , which means teh hype that casino will bring lot of wrokers to singapore & they need housing & hence the price moved up can easily change direction .we have seen what happened to dubai prices corrected 70% from peaks. One more point to keep in mind is we shoudl not be foolish when we know teh commercial rental has dropped from 20 p.sq feet to $8 now in cbd & $6 in cbd & so this is bound to reflect in housing mkt but only its matter of tiem when 2010 4th qtr or 2nd qtr 2011? be carefull my friends.
ven