Saturday, 29 January 2011

Election Watch Part IV - Hard Truths on Climate of Fear

The following article is contributed to the Singapore General Election Portal (SGEP). The articles refered to could be found in the SGEP.

Hard Truths on Climate of Fear

The following were the questions posed by a team of 7 Straits Times journalists to MM Lee and his answers were eventually included as part of his latest book, Lee Kuan Yew: Hard Truths To Keep Singapore Going. [MM Lee, does your food go through a food taster? – 26 Jan 2011 – Local Media]

Q: Is the ‘climate of fear’ Singaporeans feel here partly your doing?

A: ‘Come off it! Are you fearful? If you’re fearful why do you ask me this question? Is anything going to happen to you? Utter rubbish!’

Q: We may not personally be fearful but we did encounter quite a few young people who were.

A: ‘I cannot explain that and I’m not interested whether they’re fearful or not fearful. I think it’s better that they’re fearful and they take me seriously, than if they think I’m somebody they can brush off. That’s all. And if you’re the prime minister and you’re brushed off, you’re in trouble.’

The last sentence, “And if you’re the prime minister and you’re brushed off, you’re in trouble”, must be the most interesting.

The Nature of Fears

Based on theoretical research, the categories of fears may be linked to Maslow's hierarchy of needs – Physiological, Safety, Love and belonging, Esteem and Self-actualization.

Fears associated with the basic needs of Physiological, Safety, Love and belonging are often linked to "Loss". We fear that we will not have “food” if we lose our jobs. We fear we will not have a “roof” over us if housing is not affordable. We fear to lose our loved ones if they are very sick and medical costs are high.

At the higher level, fears associated with the needs of Esteem and Self-actualization is often linked to “Fear of Failure” and “Fear of Success”. We fear about failing our examinations. We fear that once we are successful in our careers, we may have lesser time and freedom.

Obviously, MM Lee is “not interested” whether Singaporeans are “fearful or not fearful”. Who set the OB markers? Who is guaranteed a job and high salary and who is not? Who is guaranteed a “roof” and who is not? Who can “manage” to have a heart operation at $8 and who cannot? And if you had “Already demolished the rivals” [ 25 Jan 2011 – Blogs], what is there to fear about?

And obviously the easiest way an Electorate could be threatened is such as to link “lift upgrading” to the vote when there was no “cooling-off” period, i.e. to capitalise on the basic “physiological” weaknesses and fears of the Electorate. The converse is to offer “Election carrots”.

As the fears climbed to “Esteem and Self-actualization” level, the threat is somewhat more leveled and this is synonymous with a more sophisticated Electorate. We are no more the first generation of “kampong folks” shifting into the satellite town of Toa Payoh.

Fear of Failure

The PAP fears failures, particularly in the face of various slackening performance records by various Ministers in the previous year. Comparatively, the likely Opposition candidates are more noticeable as they have nothing to fear about failing. They are even more noticeable than whom the next likely 4G Prime Minister or President will be.

Fear of Success

The PAP fears about its own success. It fears to have more than 2 opposition MPs. It fears to lose a GRC which is cited as its success to prevent under-representation of the minority races. In contrast, the Opposition has no fears about success. So what if LTK and CST are re-elected again for Hougang and Potong Pasir, the basic fears about losing their lift-upgrading and MRT station is not there anymore.

The “Esteem and Self-actualization” needs of MM Lee must have been to demolish those “duds” he thinks "deserve to be demolished”. [MM Lee on why he demolished rivals...; 25 Jan 2011 – Blogs]. But this is a fear linked to his success. Does it deliver "common good" to the ordinary people of Singapore?

Do you fear when issues are brushed off?

The answer must be certainly YES as the Electorate gets more sophisticated with its “Esteem and Self-actualization” needs.

The high cost of living will certainly be a key Election topic. Inflation here hit 4.6 per cent last month - the highest since December 2008 - due to rising transport, housing and food prices. GST was raised after the last Election and rumoured would be raised again after the coming one. These are basic fears adversely affecting the pockets of the Electorate. [Inflation at highest level since Dec '08; 26 Jan 2011 – Local Media].

At a community event in Marine Parade, SM Goh spoke on rising prices, "I would expect the Finance Minister to come up with some ways to help lower the cost of living for Singaporeans. How he does it - I do not know at this stage, how much he wants to do, I do not know at this stage, but logically speaking, it'll be surprising if he doesn't do anything." [Prices of food items should be stabilized; 23 Jan 2011 – Local Media].

In another event, PM Lee assured Singaporeans there's no cause for alarm… "In 2008, when food prices went up sharply also, particularly rice prices at that time, there was a shortage of supply and wholesale prices went up by 50 percent, even more. And in Singapore we had to make sure that we had enough supplies and we were able to maintain, keep the prices stable, and see ourselves through that period. After a few months, the prices came down again and inflation stabilised. I expect that to happen again this time."

If you walk into a NTUC Fairprice supermarket and find that a box of 28~30 (XL) Lukan oranges are selling substantially at a higher price as compared to another neighbourhood supermarket, will you logically be surprised and alarmed? We are not talking about “Bakkwa” which cost $48~$50 / kg, at least you have to hold 2 oranges in your hands when you go CNY visiting?

Yong Chun Lukan 28/30 (XL) cost $12.50/box at SHOP n SAVE Supermarket (incl GST)

Same Lukan cost $16.88 / box at NTUC Fairprice (35% more expensive)
What the ordinary Singaporeans need is not just reassurance through good PR, if not propaganda. “PM Lee: Govt knows who the most needy are”; 23 Jan 2011 – Local Media]. And are you just trying to save the trouble by just helping the needy, through the Finance Minister’s blunt “budget axe”?

Look at what the Malaysian Ministers are doing? [11 items on M'sian price control list for CNY; 24 Jan 2011 – Malaysia Media]. Eleven items have been placed on the price control list for the coming CNY celebrations - Among the items are live chicken, standard chicken (slaughtered with head, feet, liver, and gizzard), super chicken (slaughtered without head, feet, liver and gizzard). Also included are graded eggs, imported round cabbages from Indonesia and China (not including from Beijing) bawal putih (white pomfret), udang putih besar (large prawns), pork (belly) and pork (lean and fat).

Items Under Price Control in Malaysia
No wonder Malaysia has an “innovative” ministerial portfolio of “Domestic Trade, Consumerism and Co-operatives Minister”. And this Malay Minister is certainly doing his job well. He said these items were popular with the Chinese community. Conversely, MM Lee is urging Singapore Muslims to “be less strict on Islamic observances” to aid integration. [LKY's concerns about Islam unjustified; 27 Jan 2011 – Malaysia Media].

"When you are a very old politician, younger people will always see you as out of touch, irrelevant, even a hindrance.” [Minister Mentor's remarks on integration draw flak; 27 Jan 2011 – Blogs]. Aspiring to a middle-class lifestyle is not the problem [27 Jan 2011 – Letters] for Singapore. Are our Ministers thinking too much but doing too little basically for the common good of our people? ]. For the Electorate, the "Mother” of all fears must be when issues are simply brushed off. “And if you’re the prime minister and you’re brushed off, you’re in trouble”.

Visit SGEP for more links to interesting articles.

Thursday, 20 January 2011

Speculation, really? - A Belated ex-PM's Dream

I refer to the attached letter (Reference #01) by Mr. James Chi Han-Hsuan to TODAY (Jan 17, 2011).

I agree substantially with his argument except the portion striked out by me, vide "In fact, the high prices of new condos are, to an extent, the result of the growing size of bids under the Government Land Sales programme, rising construction costs and the high development and other charges tied to en bloc projects."

As I had pointed out before in this bloc, the inherent problem lies with the Govt Land Sales bidding system and the final pricing of DBSS and EC.

As for construction costs, it is not really rising. Many are often misled into thinking they are. In fact, some trades are still clinging onto historical low prices. When compared to the high construction costs in 2006 / 2007 due to high "steel prices and then sand ban", current construction costs are really a blessing. Not forgeting that the weakened Euro$ also mean cheaper finishing materials like high quality marbles and tiles.

The problem lies with the integration of "Design and Build" contractors up the value chain into the "development process". It is supposed to provide a cheaper package altogether and more competitive prices for the end purchasers but instead "Design and Build" contractors were bidding excessively for land bids and added to that even if their construction costs were reasonable, would still not press down final prices. Instead the buyers ended up paying higher prices and generally in Singapore, the individual Financial Quotient is not there. Instead buyers take for granted the GOVT has a good system in place to push the price even higher and would save them at the end of the day. This is the fault arising from the "asset enhancement" scheme for public housing. This wrong mindset, I believe is the greatest risk to our Bubble. Imagine "Dell Computers" after cutting the middleman's costs and still selling you at "SONY Computer" prices directly.

I had written about The New Millennium Dream In Retrospective. The present EC Euphoria is a Belated PM's Dream of SM Goh. I tend to agree with what this TODAY online commenter (ERG) said :-

"If there's one man to be blamed for decades of rampant, escalating property prices, it must surely be goh chok tong.

He spoke incessantly, during his seat-warming years, about 'asset enhancement' and how even HDB dwellers were becoming 'half-millionaires'.

Mah Boh Tan has had the unenviable task of trying to put the genie back into the bottle."

And imagine and look at how this "multi-million" boss of our GLC developer (Reference#02) is crying foul himself when they also play a part in the bidding process and join the speculation fray:-

"We are amazed at the prices that come out (in government land tenders)," he said. "Not that we are jealous but when we look at the numbers, we know that we can't do it. So in a way, we agree that there is some speculative chasing for land."

You should ask him how the D' Leedon at Farrer Road is priced?

Spiralling Towers, Spiralling Prices.

As a "pre-emptive" measure, even if they came slowly, the new measures are necessary. Unlike China, where the property market is in a Bubble but the stock market not relatively heated up last year. Most China property speculators are into a few properties, and they are hoarding to hedge against inflation. If one Chinese owns 3 properties, I can bet you, he has at least paid up 2 of them. So only the last property is at risk. In Singapore, many are just owning one and the richer one is trying to have 2 but both not paid up. Few own as many properties as the Chinese mainland investors. This exposes another risk in our property Bubble.

Our stock market is very much heated up right now and as S$ appreciates further, more capital inflows are expected into our "safe haven" and our Govt will take it positively as a plus for Singapore as a financial centre. Nothing will be done to curb such captial inflows. The Govt may even allow to appreciate the S$ at the expense of our costlier exports. As I explained before, after the stock market is played up, the gains will be re-invested in properties and then inflate the property market further. If the condo resale market heats up further, the EC market will climb to new heights although new buyers have to observe a MOP of at least 5 years. It will push prices higher in the long-term which our Govt proudly calls "asset-enhancement".

So cutting short-term gains by pushing up the SSD rates to 16%, 12%, 8% and then 4% is a way to stop further price escalation. But I see prices as still high until new benchmarks are set in with a consolidation of prices in the current property market. Prices of "leftover" units should fall. No control measures can be more effective than banning speculation in sub-sales before actual physical completion of residential properties or obtaining TOP. This has a better impact to prevent spiralling prices in the long-term.

Reference #01 :-
TODAY Jan 17, 2011
Letter from James Chi Han-Hsuan

I refer to the property cooling measures, which are supposedly aimed at curbing market speculation. Between the last cooling measure on Aug 30 and the latest one, there is no clear data to show that the upward movement in prices has been due to speculative activity of any sort.

The latest price hikes can be attributed mainly to the new property launches by developers, and since the prices are not within the control of buyers, how could the uptrend in transacted prices be deemed a sign of speculation?

There is also no way it can be proved conclusively that buyers of properties after Aug 30 were speculators, since few who bought a property then would likely have sold it off before the latest measure. In fact, the high prices of new condos are, to an extent, the result of the growing size of bids under the Government Land Sales programme, rising construction costs and the high development and other charges tied to en bloc projects.

Resale property prices are in part influenced by prices of new launches, as valuers would factor in transacted prices of condos in the vicinity when valuing a property. In short, rising property prices are not just a matter of "willing buyer, willing seller".

Reference #2:-
Yahoo News
Propertyguru - Monday, January 17

Friday, 14 January 2011

The Property Bubble & Investment Trap Part XIV - Opening Shock in 2011.

The following article "Revisiting Housing Supply" published in TODAY Jan 07,2011 contained data which I was anticipating for sometime and they were indeed an "opening shock" for me for 2011. No, the property market is not going to collapse immediately, so do not be unduly worried yet. But after I explain to you why it is shocking, you may want to decide whether or not to.

The caption said "Based on URA and HDB projections, there could be a deluge of homes in 2013 and 2014". When I am presented with a report with data, my usual reaction is always to look at the data first before reading any write-ups, notwithstanding that the statistics may be released officially by statutory boards. Note the obvious errors as follows :-

(a) Although there were minor typo errors in Tables 2 (Year 2007) and Table 3 (Year2013), these are still acceptable though the Tables are not complex at all.

(b) What I could not accept was the glaring errors of the annual totals given in Table 2 for (BTO+DBSS) units. The small error for 2008 : (7,793+1,711) = 9,504 against the given total of  "9565" might be excused. The typo error for 2009 : (8,893+1,563) = 10,456 against the given total of "10,6456" might again be excused. But how could one pardon the error for 2011* : (22,000+7,000) against the given total of "71,026"? Obviously a primary school kid would add these up as only 29,000 units.

As a precaution, I printed these out and checked with TODAY's website again to verify. I have "cut-and-paste" them below to show you how ridiculous it could be for our statutory boards to present you with simple yet misleading data. I wonder if this figure is linked to any other calculations in a speadsheet! And yet one of our Minster, Lee Yi Shyan, had boasted that PAP has "a system of xiang shang bao gao xiang xia fu zhe" or "reporting to the top and being responsible for the bottom". [PAP absent everywhere, present everywhere; Straits Times Dec 18, 2010]. I am indeed amazed by such misleading data.

Let's be very gracious and not question if there is  intention behind these errors. The "deluge of homes in 2013 and 2014", as argued by the analyst, is not going to there due to the above errors. Next, let me explain and focus on what seems more worrying to me after I had discovered these errors and make necessary reconciliation for analysis.

I like to focus my analysis on new HDB units first (BTO + DBSS) first with reference to Table 2 and 4 which were based on official figures released by HDB and URA.

(1)   "Physical" Supply vs Backlog

Firstly, I don't think there will be a "deluge", given that supply figures are not physically "real" as given in Table 2, 3 and 4 which are based on build-to-order system for both public and private properties. Now, that MBT had promised to complete BTO flats in about 2.5 years, down from the previous 3-year long lead time, let's still assume an average completion time of 3 years for all projects. E.g. units launched in 2008 will only be physically completed in 2011. In parallel, I do up the following comparison table which show a backblog of HDB units to be built.

From Table 2 (Source : HDB), we know the number of actual units launched from 2007 ~ 2010 based on actual walk-in bookings. Only the number of units (29,000) indicated for 2011 with an * is unsure "demand". The corresponding number of units of HDB (BTO+DBSS) estimated to be completed 3 years later from 2011~2014 as estimated by the analyst (IPA) could be taken from Table 4. Without looking into private residential units including EC, the backlog of HDB units can be worked out as shown in the last column of my table. There will be a total backlog of 14,263 units comes End 2014, assuming positively that there is no backlog for Year 2010.

Table : Backlog of HDB Units (BTO + DBSS) 2011 ~ 2014.

We all know BTO projects launched now are about 3 times oversubscribed, compared with a previous high of 6 times. Let's take the average number of HDB units launched per year from 2007 to 2011. [5,916 + 9,504+10,456+16,089] divide by 4 = 41,965/4 = 10,491 units. Let's take the minimum "demand" condition of 3 times the applications for new HDB flats = 3 x 10,491 = 31,473 units, not forgetting it can go up as high as 6 times. Say current demand of 31,437 units can be pared off with the 29,000 units launched in 2011, there will still be a backlog of at least 14,263 units  based on the analyst's (IPA) estimate. With  due respect, we have to take his projection of "physical" demand as accurate. But certainly, I could not agree that there would be a "deluge" in HDB (BTO + DBSS) units in 2013 ~ 2014.

(2)   Impact of Backlog on Price

Other things being equal and income elasticity permits, this backlog of 14,000 over units will certainly "cross over" to the  private condo + EC sector. Based on current private condo demand + EC of about 7,000 units plus 14,000 units = 21,000 units (private including EC) which more or less match URA's projection for 2014 in 2010 Q3 report. What is more important will be the take-up rate for the 7,000 units of DBSS to be released in 2011 by HDB land sales. If there is good take-up, I would expect a "deluge" of at least 7,000 units of EC + private condo. But the EC or private condo sales work like the BTO system, so at the end there will still be no "physical" supply if there are no purchasers. But if developers bid for land aggressively and are unable to sell them like "hot cakes" as it is now, I would expect price for EC and private mass market condo to fall drastically, when they are forced to go ahead with the development after a successful land bid, whether DBSS, EC or 99 yr LH condo. This will signify the start of bargaining power for buyers of such properties, which back up my view so far that there is no hurry to buy at the moment.

It is then a question of affordability for HDB upgraders and how expensive EC and private condo prices will be driven. I see the risk in EC prices because in 2010, there were supposed to be no DBSS launched as per Table 2. Say 7,000 units of EC launched in 2010 enter the market in 2013, the total demand of 30,700 units predicted by IPA will be absorbed. But for units to be launched in 2011*, HDB will push out 7,000 DBSS and hence the 20,500 predicted for private condo including EC will not be sustainable. But actually there are no physical units.

(3)   Caution With Data and News Reports

Without looking at data closely and presenting objectrively, how could MBT match demand and supply conditions with the BTO system? It will only push up prices higher and higher because there are no "physical" units when developers continue to bid for land excessively and price units expensively while pushing developement costs to the ignorant purchasers. I see a "catch" for buyers especially those who are earning marginally above $8,000 and upto $10,000/month combined household income. Some are forced into buying an EC especially if they marry late and does not have a cheaper HDB flat to leverage on.

The other factor which will aggravate a fall in price further as I had predicted before is a possible major correction due to external drivers, say a crash of the China Bubble in 2012~2013. When this takes place, there will certainly be  a major correction of close to 30%.

Currently, developers are still trying to push up the prices by a $200psf benchmark. The obvious being for EC launches where I see the greatest risks, since the DBSS and private 99 LH condo sub-markets are somehow marginalised. However, a recent report by Xin Ming Daily did show some "correction". Since it is a night paper, I would still "factor in" a 20% "discount" for the accuracy of their news. Readers should learn how to digest and interpret data objectively notwithstanding they are from "reliable" sources.

The Xin Ming Daily (6 Jan, 2011 ) reported prices are softening with another 4,000 EC units to be launched this year. 3 plots of EC land will be released in 2011 H1. For Esparina Residences, 90% of the 573 units launched are sold. For the Canopy and Prive, upto Dec 2010, only 52% and 40% are sold respectively. For Austville Residences prices have dropped to $620 psf, from $650 psf; and the developer is offering the DPS, "freebies" like a fridge, and 10 pairs of air-tickets for lucky draw. As I mentioned before, as long as a project is near to 50% sold, it is self-financing with the early buyers' fund. But if response to the remaining units are sluggish, the prices for the unsold units may become "negotiable" and this is what buyers should look forward to if there is still no "market-forced" correction in price. This Xin Ming Daily report seemed to dismiss the "favourable" picture painted of the EC market in a Straits Times article on Jan 1, 2011 New Year Day captioned "EC Living" by Tay Suan Chiang.  It demonstrates how distorted the market can be, just based on news reports, which are under the same SPH Group.

(4)   Population Growth

Table 1 shows the population growth for residents and non-residents for Singapore from 1995 ~ 2010. To be undoubtedly, I check it against the Singapore Department of Statistics website (Reference #04).

In Part IV of this series, I wrote "Coincidentally, the baby-boomers went through the ups and downs of the Singapore boom-and-bust cycles soon after they graduated from university. (1987 Black Monday, 1997 Asian Financial Crisis, 9/11 2001, SARs 2003, 2008 Black Monday, Sub-Prime/Mini-Bond 2009). Not coincidentally, this is also the period I had followed construction costs and property prices."

Now I want to super-impose our population and demographic trends on these dates and timeline to assess the impact of population growth. Table 1 looks consistent with the population data from the Singapore Department of Statistics website. Total population comprises Singapore residents and non-residents. Resident population comprises Singapore citizens and permanent residents. The majority of non-residents would include those working on work permits here and are unlikely to purchase properties. They only rent or live in quarters provided by the employers. We shall focus on the growth of residents for purchase of property.

Year 1998 - Post Asian Financial Crisis

(a) Non-residents = 747,200
(b) Residents = 3,180,000

Year 2003 - Post SARS crisis

(a) Non-residents = 747,900; Growth from 1998 = negligible (0)
(b) Residents = 3,366,900; Growth from 1998 = about 186,000

Year 2007 - Boom (Post Announcement of 2 IR projects in 2005)

(a) Non-residents = 1,005,500; Growth from 2003 = 257,600
(b) Residents = 3,583,100; Growth from 2003 = 216,200

Year 2010 - Census (Current Situation)

(a) Non-residents = 1,305,000; Growth from 2003 = 557,100
(b) Residents = 3,771,700; Growth from 2003 = 404,800

Popultation Growth 1998 ~ 2010
Total resident population growth from 1998 ~ 2010 (12 years) = 186,000 + 404,800 = about 590,000.
No of Births Below Estimated based on birth rates given in research paper in Reference #5
Birth ( Baby-Boomers ) 1961 ~1965 (5yrs)
1961  annual births = 60,000;   1965 annual births = 55,000     Avg =57,500
Avg 57,500 x 5 yrs = 287,500
Birth ( Baby-Boomers ) 1966 ~1970 (5yrs)

1966 annual births = 55,000; 1970 annual births = 50,000 Avg =52,500
Avg 52,500 x 5 yrs = 262,500

Total births 1961~1970 = 287,500 + 262,500 = 550,000
Total births 1971~1980 = Avg 45,000 x 10 = 450,000

In Part XIII which has now overtaken Part I as the most read posting on this topic in my blog, I wrote "It buys the PAP Govt 10 more years to react by the coming Election and at least another 2 more years in the following one, in one Chinese zodiac cycle. You may also recall that the baby boomers (Post 60s) were also badly hit by the PAP's policy of lowering CPF contribution rate and income ceiling cap following the SARs crisis and previous recession, notwithstanding current income stagnation, ever rising cost of living, current high inflation and imminent cut of CPF when baby boomers hit age 50.".

Now you can see from my analysis above, how in one zodiac cycle from 1998 to 2010, the PAP Govt had brought in some 590,000 residents + 557,100 non-residents to replace and cover-up the future "loss" of  550,000 baby-boomers of the post 1960s. There is always another 557,100 non-residents to "standby" or to cover the loss of 450,000 borned between 1971~1980.

Number of Deaths

Crude death rate of 4.3 per '000 Population x 3,771,700 Residents (2010) = about 16,200 per year.

Crude birth rate of 9.9 per '000 Population x 3,771,700 Residents (2010) = about 37,300 per year.

Although annual births more than replace deaths, the demand on housing by babies on housing is minimal, and so we can assume the replacement as almost equal. hence, the figures above for both residents and ono-residents may be used directly to gauge housing demand without adjustment for nett number of births.

And if all 557,100 non-residents are renting accomodation or provided with quarters, the additional demand for housing would be about  590,000 residents. Say there are 3 persons per household, the number of units required = 590,000 divide by 3 = 197,000 units totally or about 16,400 units per year. Considering some household may have 4 person, this bring us close to the backlog figure of 14,263.

Hence, I do not see a deluge especially in the HDB sub-market. At most I would only expect a "deluge" of about 7,000 units of (EC + private condo). But physically this is not going to happen and there will always be a shortage which will drive prices upwards if resident population continues to grow with foreigners imported. As such I tend to agree with Ng Ya Ken in his letter to TODAY [Reference #03].  As for the other letter writer, Christine Wong [Reference #03], it is a matter of bad HDB policies rather than a Demand vs Supply problem. My empathy goes to them as our policies are outdated. I also feel the old benchmark of $8,000 combined income to permit purchase of BTO is out-dated. As a result some maybe be forced into buying ECs which they can hardly afford at current high prices. Those with combined income of $10,000 is allowed to buy downwards into DBSS with policy relaxation announced last August but why not those who are marginally earning above $8,000 combined income? HDB should permit them to buy BTO too. The policy adversely affects singles who marry late and are trapped by ridiculous rising property prices. And the HDB and MND Minister are just watching and doing nothing for this group who are "caught-in-between" by our housing policies. And this group is expanding fast based on the latest Census.


I had wanted to put up this posting earlier but the new control measures were announced last night and the statistics also took me some time to verify. Let me just briefly mention something about this round of control measures.

The Govt had announced the latest set of control measures w.e.f. 14 Jan 2011. This must be the belated New Year present after China announced a rate hike as Christmas present in China. I believe both existing owners and new buyers, particularly short-term speculators; will be hit. Perhaps, now you will "appreciate" why SIBOR was lowered. As I said before, the Govt. was to open and then lock in foreign buyers and capital flow first. If they exit early, then pay a high punitive Seller's Stamp Duty (SSD) upto 4 years. A very punitive rate of eight per cent and above basically creams off all the profits that a short-term investor hopes to gain as remarked by an analyst. When interest rates eventually rise, it could strain purchasers who have over extended themselves financially. And when the prices do consolidate later, that is the time to buy.

Channel U also announced the latest sale figures for the following ECs as of 13 Jan 2011.
(1) Esparina - 92% sold
(2) Prive - 75% sold
(3) Canopy - 60% sold.
(4) Austville - No figures but price for Level 1 units with PES had dropped to $585 psf.
We can see how hard the Govt and private developers are pushing ECs. They must make money from the land sales.

Finally, I like to quote a few lines from what Collin Tan said in his commnetray in TODAY [Lay down the cooling measures to be taken upfront; TODAY 14 Jan, 2011]. I think he probably wrote this piece before the latest round of cooling measures w.e.f from today.

Quote :-

The finalised set of market numbers will determine whether a new round of cooling measures is forthcoming.

However, even if prices remain stable, if sales of new homes continue to be very high, then the concern is that a lot of it may not be owner-occupier demand. This has strong ramifications for the rental market. If the cost of borrowings should suddenly shoot up, a crash cannot be ruled out even if our track record shows that we have always managed a soft landing.

To outsiders who are not familiar with our housing market, all of our current market indicators, including those on the economic front, are gelling together to produce what can be considered to be the perfect property bull run if there is such a thing.
It is a sign of the anxious times, when single-property owners have mixed feelings even as many are made millionaires on paper.

Personally, I am not so sure the effects of the latest set of cooling measures will last. Our housing market must be among the most open and attractive to investors all over the world.

Is it time for some measures regulating the amount of liquidity flowing into Singapore and into the local housing market? Can there be more focused cooling measures without affecting genuine buyers and sellers? Is it time to pool together all the data of all the various government bodies to get to the bottom of the "problem" if it has not already been done yet?


On this note, particularly the last sentence above; you will know why I had started writting this piece even before the new measures were announced. Next, I will be watching for "rising" interest rate, and whether the present low rates will stay for another 2 years till 2013.

In the next posting I will be revisiting the issue of UNEMPLOYMENT and the $10,000 monthly salary issue.

Reference # 01 :-
TODAY Jan 07, 2011
Based on URA and HDB projections, there could be a deluge of homes in 2013 and 2014
by Ku Swee Yong

[Note : Read TODAY for full text, the following Tables are abstracted]

[Source : All tables abstracted from TODAY]

Reference #02 :-
TODAY  Jan 10, 2011
Letter from Christine Wong

I refer to the commentary by Mr Ku Swee Yong on revisiting housing supply and welcome the news that there could be a deluge of homes in 2013 and 2014.

As low-income singles, my brother and I are priced out of the market and have to each rent a room at exorbitant rates. At our age, we really hope to have a place to call our own, so I disagree with the measures proposed by Mr Ku to dampen supply.

I am sure Mr Ku's high-net-worth clients will have no problem buying two to three properties but spare a thought for us low-income earners!

Reference #03:-
TODAY Jan 10, 2011

Forecast of housing supply should include immigrant impact
Letter from Ng Ya Ken

MR KU Swee Yong predicted that there would be a deluge of homes in 2013 and 2014 in his article "Revisiting housing supply" (Jan 7). He derived his view based on the projection that 106,745 homes (50,786 public and 55,959 private) would be completed between 2011 and 2014, or 26,686 per year on the average, compared with the average of 22,543 in 1996-2010 and the average of 12,620 in 2001-2010.

Public and private houses constitute two quite distinct markets. It is inappropriate to combine the supply of the two and draw such a conclusion .....

The current market imbalance, especially in resale public flats and in rental flats, was contributed to by an unexpectedly large influx of immigrants in recent years - when new citizens and PRs increased by over 70,000 yearly, though the number has eased now.

We need to consider the strong demand for houses by immigrants in our study. To forecast better, we need more detailed data - especially of the cumulative impact of those who had arrived here earlier and are ready to buy homes now or in the next few years. The snowballing effect may be huge.
In the public flats market alone, a deluge of supply is unlikely especially if our economy grows at 5 per cent or higher in the next few years.

Reference #04:-
Singapore Department of Statistics

Reference #05:-

Reference #06:-
Commentary by Collin Tan

Reference #07:-
TODAY Jan 14, 2011
Commentary by Collin Tan

Saturday, 8 January 2011

Election Watch Part III - Changing Our Mindset With The New Year?

I enjoy reading the articles listed with links in the Singapore General Election (SGEP). I contributed this article based on a few related "article" links in  the SGEP which had provoked and construed my thoughts for a necessary mindset change in Singapore. The "article" links referred to are found in the SGEP by category.

Changing Our Mindset With The New Year?

On Jan 5, Tan Kin Lian wrote to ST Forum on “Unfair Train Penalty” [Jan 5, 2011 – Blog]. In this letter Mr Tan expressed his opinion that “SMRT should treat its commuters fairly and not impose an additional cost for an unintended mistake” when a commuter makes a wrong exit and re-enters the fare gate.

This same letter had prompted someone to comment in the ST Online Discussion Board, “Tan Kin Lian, why do you expect SMRT to cater to your carelessness? Get on and not harping over a few cents. If all commuters are like you, it can becomes chaotic.” What a “generous” response from a public, one may say so, but is the logic behind the response and the mindset correct? If we expect an ordinary layman not to harp over “a few cents” with our monopolistic public transporter, then why should we not expect the same or a more onerous standard from a cash-rich corporation?

Another commenter asked, “How to prevent commuters from cheating if MRT train allows grace period for passenger who exits fare gate by mistake?”. Wow I thought Singaporeans were “daft”, I did not know we are also “cheats”.

Just because Singaporeans are quite affluent but apathetic, they tend to give way to the “Leviathan” mindset. As such local Authorities and big companies tend to cover up issues and mistakes to push away responsibilities by capitalizing on this mindset. It also becomes a way to avoid costs “at all costs” in a lopsided fashion stuck with a Third World mindset. Ironically, a Third World may not even behave this way.

It is not about "making life difficult for Authorities and big corporations" but "life could be made simpler and more graceful" for the ordinary people. This is more suited for a First World country. Those who travel overseas often may appreciate this point. In similar light, you may then ask, it “Work there, why not here?” [Jan 4, 2011 – Letter].

The whole issue and its solution may then rest on proper “education and culture building”. Education ? – Yes, then our “education system”. Building culture? – Yes, then our “leadership”. Wow, it seems PM Lee's New Year Message [Dec 31, 2010 – Local Media] had it all in Paragraphs 10 ~ 14.


10. We are also investing heavily in education to prepare our students, who will be the workers of tomorrow. These investments have paid off. Results of the 2009 PISA (Program for International Student Assessment) just released show that among 65 countries tested, Singaporean students rank within the top five countries for reading, mathematics and science. But other Asian economies like South Korea, Hong Kong and Shanghai (representing China) had high scores too. This shows the quality of talent in Asia, and the competition we face. To hold our own, Singapore must continue to upgrade our schools, teachers and pedagogy, as well as attract and integrate talent into our society.

11. Beyond education, other important intangibles influence our performance as a nation, including the quality of our leadership and the spirit of our people.

12. Other countries may have more resources or bigger talent pools, but we can maintain an edge through superior teamwork and leadership. Our system has produced strong and effective government, fostered national consensus on key issues, and focussed our efforts to achieve national goals. It must continue doing this, so we can maximise our collective performance and stay ahead.

13. This calls for leaders who deliver good policies, create opportunities for the people, and rally citizens to work together for a better tomorrow. The team must lead Singapore competently today, while grooming potential successors for the future. Ensuring continuing capable leadership for Singapore is a vital priority for the nation.

14. Success also depends on Singaporeans having the right spirit - the daring to try new things, the confidence to face fierce competition, the willingness to always give our best.


On a separate occasion at Teck Ghee Bursary and Scholarship Award Ceremony, PM Lee as reported by CNA, “Singapore's education system faces fierce competition: PM” [Jan 02, 2011 – Local Media]; repeated the same message “to continue to improve its education system to make further progress” with reference to Singapore’s ranking in the PISA survey which tested the reading, maths and science abilities of students.

But finally, does it means “we cannot get over a few cents”, even if our spirit is right? Or are we “investing heavily in education” to prepare our students only in the said subjects just to be “workers of tomorrow” and not necessarily as politically conscious responsible citizens tomorrow.

Former NCMP Mr Siew Kum Hong in an article for TODAY, “When school and grassroots work do not mix” [Jan 04, 2011 – Local Media]; wrote :-


I actually see student activism, in and of itself, as a good thing, and a necessary foundation for an active and concerned citizenry.

But partisan activities that favour a specific political party or politician should not be officially sanctioned and endorsed by the Ministry of Education (MOE) or schools.

And that is where I think MOE and RI(JC) got it wrong with BLYC.

I believe most Singaporeans would agree with me that it is inappropriate and undesirable, if not harmful, for schools to be used as vehicles for partisan political activities.


The above had triggered a reply from Mr Tan Ah Teck, “It is not about politics at Boon Lay Youth Club at all” in a letter to TODAY [Jan 05, 2011 – Letters]. He said :-


As I watched how my "little" girl grew up into a more mature and tolerant young lady during her time in BLYC, I cannot help but beg to differ with Mr Siew.

She was never involved in any political parties, neither was she invited to join one.

Contrary to this, she was involved, among the many programmes organised by the BLYC, in helping the less fortunate younger dwellers of the area by giving regular tuition and organising both indoor and outdoor activities for the young children.


This might prompt one to ask Mr Tan Ah Teck, “If it was as if what you have said, why can’t our schools just do it on its own and you had to let your RJC girl did it at BLYC?” Will not our schools’ education programme benefits more students than the BLYC with its limited membership?

The Malaysians are “moving on” by calling out “Practise change management” with policy changes [Jan 04, 2011 – Malaysia Media]. This article cited Wikipedia to define “change management” as “a structured approach to shifting / transitioning individuals, teams and organisations from a current state to a desired future state”. What are our Singaporean leaders waiting for?

PM Lee had once commented on the United States presidential election: “The opposition party campaigns on the message of ‘change’: Change, change, change. Never mind change to what — just change ... The new government comes in on that message and then they start to think change to what.” … He asserted that change in Singapore should only come from and within his party, the PAP. If what he said was fair, what is the PAP waiting for? Daring to try new things? Or will we be doomed from the start because we are moving with a negative mindset towards “works there, why not here”?

In Singapore, we don’t seem to see a need to let life live gracefully by letting things evolve naturally and positively on a broader scale, but to live a life in a way “dictated by” or “to be dictated” on others in restrictive ways, just because somebody may know it best politically.

Contributed to Singapore General Election Portal (SGEP)

Wednesday, 5 January 2011

HDB cooling: Having the cake & eating it too?

Read this interesting article from the TOC.

HDB cooling: Having the cake & eating it too?

"The king and the cake

Suppose that the king of a small kingdom has a problem of rising cake prices, which is causing a lot of unhappiness amongst his subjects.

So, he decrees all sorts of restrictions on who can buy or sell cakes.

However, the king wants to have his cake and eat it too. So, he continues to raise the prices of cake ingredients and their supply, which is his sole monopoly, to continue to increase his coffers.

So will cake prices drop?" .......... [ Source : The Online Citizen ]