A record 17,000+ homes are expected to be built.
You kind of wonder what the former Minister of National Development Mah Bow Tan was doing all these years.
But will increasing home supply solve Singapore's housing woes?
Yet again, the PAP is failing to address the root of the problem
What are the reasons for sky-high public housing prices?
1) Like all the other social problems in Singapore, our housing bubble is a result of sudden surge of demand due to PAP's lax immigration policy. Lee Kuan Yew remarked in April this year that we need another 900,000 workers cramped into this tiny island. Even if 17,000 more homes are built, where do we house these foreign workers? And it's not like houses appear instantly as in Sim City, it takes 3-4 years for their construction.
As of mid 2010, data from United Nations put Singapore's foreign population at almost 2 million or a whopping 40% of the population!
Similar data for other developed states: South Korea (1.1%), United Kingdom (10.4%), USA (13.5%), Australia (21.9%), Hong Kong (30.8%)
2) Cash over valuation (COV) is what a buyer agrees to pay the seller when he feels a particular flat is worth more than its valuation. A friend of mine told me that he recently got a foreign couple offering $60,000 COV for his flat in Bukit Panjang. Many richer foreigners from China and Indonesia can easily afford outrageous COVs for resale flats. A young Singaporean couple will have to "outbid" COV or wait several years for a Built-to-Order flat. This overinflates the value of the resale market.
The above is taken from the HDB website. The resale price index has shot through the roof and is at an all time high! It has even easily surpassed the 1996 peak. And we know that prices of new HDB flats do trend the resale index.
And to debunk the PAP's claim that housing is affordable to ordinary Singaporeans, this chart clearly shows that resale flat prices has oustripped median household income by 2:1 in the last two decades.
In November 2009, Member of Parliament Chiam See Tong asked how much HDB flats cost and the profit margin added to the cost when selling the flats to which then National Development Minister Mah Bow Tan replied in Parliament:
“The total cost of building flats varies based on when we build, where we build and what we build. It includes cost of land, as well as cost of construction of the flats and ancillary services. It varies from $230,000 for a 3-room flat in Punggol to $530,000 for a 5-room flat in Tiong Bahru.”
But in order to make a fairer assessment of the costs, we need a breakdown of cost of land and construction which the PAP has refused to do.
Since the government owns most of the land, there is no excuse not to do so.
Besides, the Land Acquisition Act empowers the President to acquire land cheap for public purpose, except that it is not always the case.
There have also been unconfirmed reports that land has been acquired, left barren for years and then sold to private developers to build condominiums, obviously at a handsome profit to the government.
In any case, PAP policies could very possibly lead the country to the point of no return. Although never mentioned in our state controlled media, there is a housing bubble waiting to burst.
In 2008, it was reported that 33,000 or about 8% of HDB households defaulted on their payments. That is about the same scale as the sub-prime crisis which plunged American homeowners into the abyss. Many Americans were (and still are) in a position of negative equity- a mortgage debt higher than the value of the property.
The one and only reason why the Singapore housing bubble hasn't burst is because waves of foreigners come in the shore up demand for flats, this at the same time where the Ministry of National Development has deliberately kept supply low. The result is that property prices continue to trend higher.
So what good will raising supply of housing do when immigrant numbers continue to swell?
And what will happen to home prices when 60% of Singaporeans finally wake up from their slumber and decide to vote for policies that will see significant reductions in foreign residents?
Unfortunately, there is no pain free way out of this mess that PAP has created for Singaporeans.
And as the saying goes, what goes up must come down.
For the sake of restoration of social sanity and to pursue a Singaporeans first policy, and in the interests of our future generations, we have to bite the bullet hard.
This country cannot sustain the uneven proportion of foreigners in the long term as our physical infrastructure and cultural fabric is already at breaking point.
The housing bubble will burst...but when?
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