The Dark Condos

Last June, the Business Times put together a photo essay of how "empty" some private condos are in Singapore. Certain condos have all their units sold, but comes the night and you will see a lot of the homes without their lights on.

Today, The New Paper has an article about the "possible" reasons why this is the case. The reasons varied from HDB up-graders to foreigners owning several homes in Singapore. I have a better reason for the empty condos; people buy them not to stay but for "investments".

The problem is that the "investments" are not panning out. The buyers don't stay at the condos, but they can't get a decent price for the homes so they hold on to them. Thus the dark condos phenomenon. And it will be that way for quite awhile.

For all the talk about the softening property market, property prices has not really dropped. Now before you starting shouting that I'm saying nonsense, consider this; property prices in Singapore has dropped about 10-15% since it's height (if that), and that's after a rise in property of over 100% in the past 10 years. If you look at the property market in that context, who wouldn't hold on to their property? That's what I'll do. Hold on to them till the market turns. It's the logical thing to do right? If the "softening" of the property market is just 10%, why not hold on to your property? It's not like it's going to crash.

So guess what? Till the market turns, dark condos are here to stay.

Don't Compare To 2009

In the last General Election (GE), high property prices was the hot tropic. The ruling People's Action Party (PAP) suffered it's worst election result in living memory in part due to the sky-high property prices.

So taming the property market was a priority for the PAP and National Development Minister Khaw Boon Wan proudly said on Tuesday that Singapore has managed "soft landing" for its housing market by only allowing property prices to 15% since their lows in 2009. Man, talk about mismatch expectations.

Since when is a rise of 15% a good thing for people who are hoping for a lowering of the price? Now the trick is in the details. Mr. Khaw dubiously used the prices in 2009 and compare them to the current prices; thus you have a rise of 15%. Unfortunately, that's not what most Singaporeans are expecting the PAP to do. They are hoping that the government will lower the property price; but the PAP go tell them prices are just risen by 15%? Isn't that just self-defeating?

I know the PAP don't want to talk about lowering property prices, but that's actually what they should be doing. Yes, people who bought property during the property boom will be unhappy when they read that their property had lowered in value, but if those guys are in the majority, the PAP would never had the result they had in the last GE.

The PAP need to stop comparing property prices to 2009 (at its lows) and compare them to its high during the property boom. They need to tell Singaporeans how much the property prices has came down due to their actions. They should do so because according to the results of the last GE, that's what Singaporeans want. Comparing prices to 2009 helps no one and tell Singaporeans nothing.

The Important People

So the people in Sengkang are against a columbarium being built near their residences. Why? The simple answers are money and property.

Simply put, a columbarium will bring down housing prices. Yes, society need some places for a columbarium. A place for the respectful storage of cinerary urns. Just don’t build them near my flat. I don’t want the price of my condo to go down. Yet I find that some people are siding with the residents of Sengkang because the would-be columbarium being built would be run by a private entity and not a religious organization. 

I must say I don’t get that at all. So the columbarium has an emphasis on providing niches and providing the prayer services. So the columbarium is been run by a company listed on the Stock Exchange of Australia that specializes in providing funeral services. 

So what? Why should it matter if the columbarium is run by a private entity instead of a religious organization? Does that make any difference whatsoever? Not to me; and I believe it would not for the families of the deceased also. If it does, their relatives would not be placed there. 

Ultimately, that's what important. Not money, not property, not politics, and certainly not who is running the columbarium! If the columbarium would help the families of the deceased find some peace, I say build it! Money, property, and nearby residents be dammed!  

New HDB Rules

National Development Minister Khaw Boon Wan’s speech in Parliament on the changes of HDB resale flats has many property owners in an uproar. The rules has been changed so that HDB will only accept valuation requests from resale flat buyers or their appointed salesperson, after buyers have been granted an Option to Purchase (OTP) by the sellers.

Basically, the HDB expect the buyer and seller to come to an agreement first before going to the HDB. Also price negotiations for HDB resale flats will now be based on recent transaction prices instead of Cash-Over-Valuation (COV) figures.

Many property owners are unhappy about this as this move would probably force property prices down and Singaporeans who have recently bought their flats with the view to sell their flat for a profit after the 5 years minimum occupancy period would find that their property is not worth as much as they had hoped. I’m not a property owner so I’m on the other side of the equation.

I’m all for this move by the Mr. Khaw. There are 2 main reasons for this;

-          Property prices have remain stubbornly high despite all the cooling measures and a move like this will force it down

-          Property prices have remain stubbornly high despite all the cooling measures because property owners in Singapore have the assumption that Singapore property prices will never come down.

If you bought a property to resell after 5 years, it is call an investment and there is no such thing as a sure-thing. The moment you bought a property with a view to flip it after 5 years, you are taking a risk. Don’t complain if the risk didn’t play out.

In fact, I think the moves by Mr. Khaw didn’t go far enough. Under the new rules, the buyer and seller need to request for a valuation from the HDB after coming to an agreement. That doesn’t make sense to me. I know they did this as a way to stop the prices from going down too much but why would the buyer and seller need to go to the HDB after coming to an agreement already?

To me, it seems that the HDB are trying to have it both ways. They want the price to go down but also want a way to prevent it from going down too much. Too bad they didn’t think of this when prices were going up. 

MAS vs Forbes Magazine

The rising Singapore property has been targeted by Forbes magazine with Forbes contributor Jesse Colombo warning that Singapore is headed for an "Iceland-style meltdown". In 2008, Iceland was brought close to bankruptcy due to the vast over-expansion of its banking system and he argued that Singapore is heading down a similar road.

With the report coming out, the Monetary Authority of Singapore (MAS) moved quickly. The MAS released a statement stating that Singapore is not facing a credit bubble and that "serious observers and investors are not in doubt about the country’s financial health."

Now I give them credit for moving so fast on the report, but that statement is just the wrong thing to say. This is Forbes we are talking about. They don't come any more respected and prestigious than Forbes. You are just not going to get any traction going against Forbes magazine. 

What the MAS need to do is argued against the case Mr. Colombo made against Singapore. Mr. Colombo say that Singapore's ultra low interest rates have led Singaporean households and companies to borrow more, fueling a surge in property prices that similar to the US housing bubble which imploded in 2008. 

The MAS should be arguing against this. They should state the various steps the Singapore government has taken to cool property prices (weak as they are) and that Singapore's position is hardly unique. For example, China's property bubble is far far worse than Singapore's. 

That's what the MAS should be saying, not going after Forbes. When you say "serious observers and investors", you don't get much better than Forbes Magazine.

Not A Surprise

In March, developers in Singapore sold 2,793 housing units, more than 3 times the 712 units sold in February. Going by news reports in Singapore, it seems that I’m the only one not surprised by the figure.

For the life of me, I do not understand why. I mean just a few weeks ago, a mansion along Nassim Road that includes a two-story home, swimming pool and tennis court, was put on the market for a record $242 million. Now the seller might not get that price but it is an indication how bullish people are about the property market in Singapore.

On this, I can fully understand why. Despite all the talk of cooling measures, property prices in Singapore has not gone down. In fact, it has been slowly but steady rising.Prices are up, and they are steadily going higher! This despite all this talk of property cooling measures! What do you do in a market whose chart is on a steady upwards climb? You buy. 

If you are a buyer looking at this market, this is the thing you are looking at. That is why I'm not surprised that Singapore’s March home sales rose to a new record high. And that's why despite all the talk of cooling measures, the market will still be hot for the near future.

Logic Says Otherwise

Today on the first page of the Straits Times, there's a proud proclamation that the "cooling measure" imposed by the Singapore government has rein in housing prices in the country. The Housing and Development Board (HDB) proudly said that prices for both HDB resale flats and private homes grew at a slower pace, at a gentle 0.5% increase in prices.

Sorry, but I do not agree that the cooling measures has worked at all. I do not agree because an increase in prices is...an increase in prices. The cooling measures were designed to lower prices so that they would be more affordable to Singaporeans. Housing prices in Singapore are still going up. Logic says that if housing prices are still going up, then the cooling measures are not working! 

Simple right? I mean the Resale Price Index (RPI) flash estimates for the first quarter 2013 is at an all-time high. Clearly, housing prices are continuing to climb.Ordinary families are still having to take 20-30 years loans to finance their flats. That means the property cooling measures have not been working!  

Coffin Apartment

I’m sure most of us have heard of Japan’s capsule hotel. Basically, it’s a small, no-frills hotel where people can rent a bed a bed for the night that resembled a space capsule. Taking inspiration from that, Tokyo now has what the Japanese called “coffin apartments”.

With sky-high rents in the capital of Japan, some young Japanese now decided that it’s okay to live in a glorified closet. The “apartments” are essentially locker-sized sleeping quarters stacked on top of one another, and residents have to share bathrooms and communal living spaces. Rent for these “coffin apartments” can range between $500 to $1000, which is a lot more than the infamous “cage houses” in Hong Kong. Those cost about $150.

With housing prices such a problem in Singapore, who knows? Maybe in the near future, we’ll see this in Singapore as well. Coming to a place near you; Singapore’s Coffin/Cage Houses!

New Cooling Measures?

A Housing and Development Board (HDB) executive maisonette in Bishan sold for $980,000. In the third quarter from the April-June, Singapore private home prices rose 0.5%. Resale prices of HDB apartments rose again by 2% quarter-on-quarter. All these are signs that the Singapore government’s cooling measures had failed miserably. So what does the Singapore government do?

It set new cooling measures! From Oct 6, Singaporeans can only have a max tenure of 35 years!

Uh? That’s my reaction when I heard it on the news. I mean the average loan for residential property is between 25 to 30 years. So can someone please tell me how does a max tenure of 35 years help cool the property market?

The biggest reasons for rising property prices are increased immigration, low interest rates and rapid credit growth. Since when did the length of the loan arrangement became a major factor? If the Singapore government says that this new rule will cool the market, they are either wrong or they are not serious in lowering property prices.

Still Rising

It’s finally here! The fabled $1 million mark! News broke that a Housing and Development Board (HDB) executive maisonette in Bishan had been sold for $980,000. This sale is another example of the failure of the government’s cooling measures.

Already, the Singapore government is in damaged control mode with National Development Minister Khaw Boon Wan coming out to say “more important is the larger picture” and ask that Singaporeans “not to be traumatized”. Alas, the problem is that the larger picture for the Singapore government is not good.

Simply put, despite their best efforts to talk the price down, concrete actions by the government have been slow in coming and housing prices in Singapore have gone up because of it. Data from the Singapore Real Estate Exchange shown that HBD housing prices have gone up 1.8% in the past 2 months. And that’s in the midst of the Singapore government’s so-called cooling measures!

When faced with these figures, Minister Khaw could only say that he’s not too worried about the month-to-month fluctuation and that’s things are better now than a year ago. Well, that may be true but a 1.8% increase is still a 1.8% increase!

When the cooling measures were first announced, Singaporeans were expecting the prices to go down. Singaporeans want the prices to go down. Right now it’s going the direct opposite direction! If that’s not failure, I don’t know what is.

No Tears Expected

Housing prices in Singapore are still high. “Cooling measures” by the Singapore government has failed. And now the Singapore government is announcing that it will restrict the growth of "shoebox" private apartments in the country.

Despite conventional wisdom, most people I spoke to seem to think this is a good idea. You could think otherwise as the population in Singapore has shot up in recent years due to the government's liberal immigration policies and this has caused housing prices in land-scarce Singapore to go through the roof.

Yet despite this, Singaporeans generally has no love for “shoebox” apartments. In fact, most Singaporeans will be happy to see the back of it. A shoebox unit in Singapore is typically only about half the size of an average HDB flat and they were first built in responses to the lack of housing options in Singapore. Some Singaporeans don’t even consider them “real” flats.

So high housing prices notwithstanding, there will be no tears for the demise of “shoebox” apartments. Now maybe, property companies can get back to building “real” flats for Singaporeans!

A Good Warning

Strangely, I have found myself to be in a position of defending and praising a Minister once again. I recently praised Khaw Boon Wan for taking firm quick action over the tender of NParks’s purchase of their bicycles. Now I have to praise him again for his statement of caution on the newly launched 50-year property loan.

Now, I know of some home buyers who like the idea of a 50-year loan. To some home buyers, they will almost always take the maximum loan tenure available as this enable them to stretch their purchasing capacity. Mr. Khaw's statement saying that the 50-year loan is a gimmick is right on the money as there is almost no way anyone can pay a 50-year loan in its entirety.

Even if someone take the loan when they are 20 years old, by the time the loan is finished, he will be 70! That's past the current retirement age! The 50-year loan is just a gimmick by property agents and developers to entice home buyers to folk out cash they do not have to buy a house beyond their means. In fact, you can argue that this 50-year loan idea is to encourage property speculation as the only way it will work is if the home buyer flip the property in a few years time after purchase.

So I fully appreciated this warning by Mr. Khaw. I agree that the government can't ban banks from offering the loan but this official warning should be more than enough for home buyers. If home buyers ignore this warning, then they only have themselves to blame. The government, and Mr. Khaw, has done all they can.

The Real Sign

Last week, retired businessman Goh Poh Ket, 65, got into a fight with his neighbour over parking space outside their homes along Jalan Chulek. Some people had commented that this is another sign Singapore is bursting at the seams.

Sorry but you guys are wrong. This incident is about bad neighbours fighting over a parking space. It happens all the time, even before the open door policy for foreigners. However do you want to know a real sign of Singapore bursting at the seams?

It’s reports that Singaporeans are now buying properties and moving to Malaysia. Now, Singaporeans moving to Malaysia is nothing new but what’s new is the type of people moving to Malaysia.

It used to be only Singaporean Malays who go to Malaysia but nowadays, we have Singaporeans Chinese buying properties and staying in Malaysia. And we are not talking about retirees here; Singaporeans in their 30s and 40s are moving north of the Causeway and moving their families along.

You want to know a sign of Singapore bursting at the seams? When young Singaporeans decide to vote with their feet and move their money and family out of Singapore because they believe they will have a better future away from Singapore. Now that’s a sign!

Silly Mistake

Stupid! That’s the first thing that sprung to my mind when I read in the Straits Times newspaper that Mr. Khaw Boon Wan, Minister for National Development, stated that the Housing and Development Board (HDB) has never shrink the size of HDB flats. In fact, the headline was "HDB flat sizes have remained unchanged the past 15 years: Khaw Boon Wan".

Sometimes our ministers just don’t help themselves. I mean talk about stupid! Even I can tell you HDB flats have gotten smaller over the years. My parent’s 3-room flat bought in the 1980s is just a little smaller than my sister’s 4-room flat bought a few years ago. Worse; even the HDB admit the flats has gotten smaller. Just look at their website and it will show that a normal standard flat in Farrer Road built in 1974 is 120 sq m while a normal standard flat at Yishun to be completed 2015 is 110 sq m. It’s a matter of public records!

I can only imagine that this was a slip of the tongue or that Mr. Khaw was answering a question from the audience because it is such a silly mistake that it’s hard to imagine anyone putting something like this in a written speech.

What Easing?

Housing prices in Singapore are still high. “Cooling measures” by the Singapore government has not made a dent in the prices. Yet we have Minister of National Development, Khaw Boon Wan, saying the housing prices are showing signs of “easing”.

Stop me if I sound like a broken record but uh…where? Mr. Khaw pointed to figures released by the Urban Redevelopment Authority (URA) showing a 0.1% slip in housing prices in Q1 as a sign of prices easing but he must be the only who thinks that. I mean how is a miserable 0.1% a sign of easing? Not only is it only 0.1%, but this “slip” is just the first time the figures went down since Q2 of 2009. Yes, hosing prices have been going straight up for 3 years and a 0.1% is a sign of easing? Hell, that 0.1% doesn’t even cover the 0.2% rise seen in the previous quarter!

Come on! If the Singapore government wants to showcase that their “cooling measures” are working, they need to do something a lot better than a 0.1% “slip”. I mean if a 0.1% is the best you can come up with, that just show how desperate you are.

Why The Surprise?

That’s my questions when people are surprise that private home sales still rising in the month of April. Why is there any surprise at all that private home sales in Singapore are still rising?

Despite all the talk of cooling measures by the Singapore government, private home prices have never went down. Prices may have risen more slowly since the cooling measures but it is still rising.

Despite all the talk by government analysts saying there will be a 30% drop in property prices this year, this has not happened because rich foreigners are still buying Singapore homes. They do this no matter the price because they do not believe the Singapore government is serious about making home prices in Singapore more affordable. Why should they bother about the price when they do not believe the Singapore government will allow the price of homes to drop substantially?

To be fair to them, most Singaporeans don’t think the Singapore government is serious about making home prices in Singapore more affordable. It had been pretty obvious for months that all the cooling measures has not work because private home prices never went down (a drop of 0.01%? Don’t make me laugh) but we have government agencies like the Ministry of National Development (MND) insisting that the cooling measures “are working”.

That’s why people (Singaporeans and foreigners) keep on buying homes in Singapore. As long as the Singapore government refused to admit their cooling measures are NOT working, as long as the prices do not come down (HDB house at $900,000), as long as people don’t think the Singapore government is serious about making home prices in Singapore more affordable; home sales and housing prices will continue their upward trend.

To me, not only is the rise in private home sales not a surprise; it should be expected!

Not In Our Dreams

Recently, a report from Bloomberg state that at the current average salary of a Singaporean, it will take him 43 years before he can manage to buy a luxury home in his own country. Some Singaporeans have already taken this as proof on how pricey homes in Singapore is.

I can’t help but laugh at this.I think everyone has sort of miss a point in this. A luxury home? Whoever at Bloomberg who wrote this report don’t know Singapore or Singaporeans very well. Most Singaporeans don’t bother with luxury homes; we can’t even afford a normal flat! Even if a normal couple were to buy a flat in Singapore, they will usually have to take a 20-25 year loan from the bank. A luxury home? It’s not even in our equation; hell, it's not in our dreams! 

So Singaporeans who take this report as proof on how high home prices are in Singapore; don't bother. Most Singaporeans can't be bother about prices of the homes in Sentosa Cove, they just worry about the prices of HBD flats. 

Once Upon A Time...

Recent reports showing that sales of residential property by developers had surged in February made some people in Singapore wondering if the Singapore government is going to put in new rules to cool down the market.

I look at these people and ask two simple questions; “What do you mean by new rules?” and “Why are you surprised by the increase in sales?”

Once upon a time, HDB (Housing and Development Board) flats were built primarily to provide affordable housing for the masses. Public housing in Singapore is still currently managed by the HDB but the term “affordable housing” has become an oxymoron.

I mean how else can you explain a HDB flat in Toa Payoh selling for $894,000? A few months before that, a bungalow at Sentosa Cove sold for a record $39 million. Since last year, after the General Elections, the Singapore government has been talking about cooling the property market in Singapore. However that’s all they have been doing.

The current government policy seems to be trying to talk down the market instead of doing anything concrete. Any measures the Singapore government had put in place, like the stamp duty rule, have been half-hearted at best and both Singaporeans and foreigners know it. That is why housing prices has been holding steady since the end of the year and why it is slowly creeping up now.

What new cooling measures are people talking about when there were hardly any old cooling measures in the first place? As for the increase in sales…well, with all the half-hearted attempts, is anyone truly surprised by that?

What They Should Do

A comment by Singapore Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam has become a butt of jokes for all Singaporeans. The DPM said in parliament on Thursday that a family with a household monthly income of just $1,000 can buy a flat in Singapore.

It did not take long for Singaporeans to make jokes out of that. Even when you read the Strait Times newspaper, you can literally hear the laughter from the reporters writing the stories. This was from the Strait Times, a mouthpiece of the government. Then without giving a chance for the flub to die down, Minister of State for Manpower and National Development Tan Chuan-Jin made things worse on Friday when he took to Facebook to “clarify” the comment made by the DPM.

Mr. Tan “clarified” that the DPM was talking about a 2-room flat and then went on to breakdown how his statement is correct. He said that if the family wants to buy a 2-room flat with a selling price of $100,000, he can get 2 grants. One is the “Additional CPF Housing Grant” of up to $40,000 for first-time applicants and the other is “Special CPF Housing Grant” of up to $20,000, which is used for the down payment for the flat purchase. The person can then apply for a loan from HDB for the remaining $40,000, making a payment of $161 per month for the next 30 years.

There are so many things wrong with that clarification I don’t know where to start. Like can you get a flat in Singapore for just $100,000, even if it is a 2-room flat? Like who in Singapore would aim to buy a 2-room flat in the first place? Like can you get 2 grants from the Singapore government when you need to clear a mountain of paperwork just to get one? Like would the HBD give you a $40,000 housing loan when you earn just $1,000 per month? Like how the Additional CPF Housing Grant is only for first-time applicants and is only “up to $40,000”! Chances are you are not going to get the full $40,000. Like how after paying off a 30 year loan, what are your chances of retirement?

Look, this is a simple matter.

The DPM made a mistake. He wasn’t answering a trick question or anything. He was trying to put the screws on Workers' Party NCMP Gerald Giam on Thursday and got caught giving a bad example that had little to no basis in reality.

It was a mistake made on record, in parliament, and in public. The DPM should just dish out some apologies to the public and this will blow over. Any further “clarification” on the matter will just increase problems for the government. It’s a simple matter with a simple solution; just say sorry!

The Case of Mr. Lu

One of the main problems Singaporeans have been harping on is the high housing prices in Singapore. Most Singaporeans are either unable to afford a flat or have to take on loans up to 20-25 years to buy a flat in Singapore.

After a long time, the Singapore government had finally began to take action. A new stamp duty of up to 10% will now be imposed on foreign buyers of Singapore properties. It is hoped that this would cool foreigner demand and lower property prices for Singaporeans.

Personally, I have doubts on how effective this would be as property prices are already so high. It’s like closing the door of the barn after the horses had bolted but it’s a good beginning.

Of course, foreigners in Singapore are unhappy with the move with one foreigner named Norman Lu been quoted on Channelnewsaisa that he was very disappointed with the move and he has options which includes leaving Singapore "because I can easily find another job opportunity in another country”.

If Mr. Lu was trying to gain sympathy for the position of foreign buyers of property; man, did he mess up or what! Singaporeans have reacted badly to Mr. Lu comment about foreigners having the option of leaving Singapore. I assure Mr. Lu on this; we know that!

Frankly, Singaporeans do not expect any loyalty from foreigners working in Singapore. We know fully well that the vast overwhelming majority of foreigners here are economic migrants who came to Singapore in search of better jobs. Once the better economic opportunities in Singapore disappear, they would go too. Foreigners in Singapore have no real commitment to Singapore outside this being a place to make money.

Singaporeans accept this. However to have a foreigner working in Singapore complain about a stamp duty, which almost every other country in the world has, and say that he will leave because of it grated on the nerves. Simply put; foreigners have it good in Singapore. Some might argue they have it better than Singaporeans in our own country! So if Mr. Lu has an option of leaving Singapore due to a better opportunity elsewhere; please go!

I don’t this out of anger but simple acceptance. Singaporean don’t expect any loyalty from you to stick it out during bad times, so if you believe you have better opportunities elsewhere, we will not stop you. Please go…and don’t come back.