how can singaporean afford apartments??

[the author]

bloody hell, all i asked was how the singaporean can afford apartments. i got a whole assortment of answers, ranging from personal attacks, inferential statistics, even the pensioners didnt get away, lol how delightful!

[property_expert]

bloody hell, all i asked was how the singaporean can afford apartments. i got a whole assortment of answers, ranging from personal attacks, inferential statistics, even the pensioners didnt get away, lol how delightful!

There is a big fear that prices will go down, especially those investors who took 30 years mortgage to 'snap up' a 1,5 million condo. Post anything to suggest prices would decline and you will see replies ranging from personal attacks to 'we have 2 casinos' jargon. Facts play very small part in this conversation.

[property_experts]

bloody hell, all i asked was how the singaporean can afford apartments. i got a whole assortment of answers, ranging from personal attacks, inferential statistics, even the pensioners didnt get away, lol how delightful!

There is a big fear that prices will go down, especially those investors who took 30 years mortgage to 'snap up' a 1,5 million condo. Post anything to suggest prices would decline and you will see replies ranging from personal attacks to 'we have 2 casinos' jargon. Facts play very small part in this conversation.

There is a big fear that prices will go up, especially by those who missed the boat when they could have bought 2 big condos for $1.5m. Post anything to suggest prices would rise and you will see replies ranging from personal attacks to 'Singapore has nothing but 2 casinos' jargon. Facts play very small part in this conversation.

[property_expert]

bloody hell, all i asked was how the singaporean can afford apartments. i got a whole assortment of answers, ranging from personal attacks, inferential statistics, even the pensioners didnt get away, lol how delightful!

There is a big fear that prices will go down, especially those investors who took 30 years mortgage to 'snap up' a 1,5 million condo. Post anything to suggest prices would decline and you will see replies ranging from personal attacks to 'we have 2 casinos' jargon. Facts play very small part in this conversation.

There is a big fear that prices will go up, especially by those who missed the boat when they could have bought 2 big condos for $1.5m. Post anything to suggest prices would rise and you will see replies ranging from personal attacks to 'Singapore has nothing but 2 casinos' jargon. Facts play very small part in this conversation.

This troll just proved my point...

[saddest thing]

Is these desperate muppets think posting here will make the slightest bit of difference.

[Blaze]

Is these desperate muppets think posting here will make the slightest bit of difference.

Well this is a discussion b....d and many topics here have been useful in real life. Does anything in life make the slightest bit of difference then?

Obviously if someone had a hot tip on shares or property, he would NOT post it on the internet. You can make the conclusions from there...

[Not me]

I tell it as I see it and it is uncensored.

What about you, got any good fortune information to share?

[Bewildered..]

I think there is something seriously wrong with officially quoted data on household income. From my observation of the lifestyle of the average Singaporean, I could have sworn that the the median household income is more like $1M. If this were true, it would explain why home prices are the way they are.

[Kubes.SG]

Bewildered, the answer is simple.  Singaporeans carry the highest personal debt in the world.  This increasing debt is supported by negative interest rates (interest below inflation), and very loose monetary controls, and bubbles in asset prices.  It is the perfect reciepe for financial ruin as the US housing market proved.

[Agent007]

Just because you missed the boat it is a bubble. You lost out because you were too blind and stupid to see the opportunity and now you are bitter and twisted.

Airport!

[Bewildered..]

I have to agree with Kubes on this one. Having such low interest rates in normal times that effectively remove monetary policy as a regulatory tool, and having high personal, consumption related debt puts a strain on economic growth and innovation, in particular. The situation in Singapore is nothing to be proud of. It has done well so far, but sustaining it is going to be difficult. The growth in real estate here is a combination of low interest rates, low returns on investment in most instruments, capital flight to (perceived) quality/safety, the rapid growth in population, the time lag in home building to meet demand, social factors like Singaporeans' obsession with real estate, the government's pro-home ownership policies, the bank industry's insatiable appetite for mortgages. There is nothing magical about the growth in real estate here. I believe that current prices have priced in future growth for the next decade or two. Going forward, the above conditions have to continue to exist for prices to move up. Supply of homes have to be restricted, our population have to keep growing, doubling every 10 years or so, money has to stay cheap (and it is likely to stay cheap anyway). It is a disaster waiting to happen. Real estate is renting seeking, as repeatedly pointed out by Simon Johnson, the economics professor from MIT. It is a sheer cost of production that does not add to productivity. A factory building 20 years ago cost $X to rent. Now it cost, say $10X to rent, but it does exactly the same thing 20 years ago. Whatever productivity gains that happened has nothing to do with the building but technology and more efficient processes. That is why high cost of real estate puts a strain on economic growth, and it does so in many other ways that multiplies the effects. High cost of rent means less capital available for innovation and R&D. High personal debt related to home mortgages means that people are stuck in their day jobs and do not have the capacity or risk appetite for entrepreneurship. The attractiveness of real estate inflates related industries such as real estate brokering, mortgage lending, debt securitization, debt-related derivatives etc. Money and houses get moved around for huge fees and real estate and banking industries become over-inflated. It adds nothing to improving food production, health care, medical research, investments in alternative energy...things that improve people's lives. Real estate and the related industries are again rent-seeking. The most troubling thing is that young, able and bright people become attracted to the money and the glitz in these industries. The brightest people who could have otherwise pursued a career in academia or do research in alternative energy or cancer research or geology end up selling houses or punching numbers for a bank. It is a troubling state of affairs and it has to end someday. When oil runs out or become unaffordable, when food is in short supply, when diseases claim the lives of millions of people, we are expected to microwave wads of cash and eat them, or stare at our investment portfolio and beautiful buildings in place of food on the table. It's a ridiculous scenario and it will never happen, not because we will wise up, but because, as history has repeatedly shown, wars will breakout, a period of calamity will have to be endured, and human civilization will have to be reconstructed. Our current economic and financial model is dysfunctional and cannot carry on this way indefinitely. 

[Singapore Living]

@Bewildered, I hear your view and argument. What then is your investment strategy or direction? Is there none that we can depend on? Since real estate is potentially a bubble, stock price easily manipulated by large fund managers, dividend from stocks are barely enough to cover inflation, fixed income instruments have even lower returns, and inflation is at least 5% etc. etc.

I mean, we have to invest somewhere. It is easy to say this investment is no good, that investment is a joke, but ultimately that's not really helpful, isn't it? I don't expect you or Kubes to share your surefire investment strategy on an open board, but it is definitely much easier to condemn than to raise good investment ideas.  

[Bewildered..]

@Bewildered, I hear your view and argument. What then is your investment strategy or direction? Is there none that we can depend on? Since real estate is potentially a bubble, stock price easily manipulated by large fund managers, dividend from stocks are barely enough to cover inflation, fixed income instruments have even lower returns, and inflation is at least 5% etc. etc.

I mean, we have to invest somewhere. It is easy to say this investment is no good, that investment is a joke, but ultimately that's not really helpful, isn't it? I don't expect you or Kubes to share your surefire investment strategy on an open board, but it is definitely much easier to condemn than to raise good investment ideas.  

Hi, I don't make investment advice. If you believe that real estate is a surefire investment, you should go with it. Real estate may have some legs to run but in the long term, it isn't good for Singapore's economy nor for global economy, and certainly not for mankind. We have come full circle. In the early days, wealth was concentrated in landowners, which was subsequently transferred to industrialists at the turn of the 19th century. The ushering in of modern society and the rise of the middle class happen to coincide with the end of landownership as a store of wealth, and to the emergence of research, technology and industrialization. That has kept us going for a long time until the last decade when suddenly engineers and scientists are no longer the best paid occupation, but real estate, mortgage lending and banking takes center stage...occupations that don't directly advance (and in many ways, inhibit) human knowledge and well-being. We are fast returning to the medieval feudal societal construct. It so happens that the last major innovation that furthered human society was in the late 90s with the internet. Since then, not a lot has happened. In the past decade, there has been little technological and productivity advances. What is happening is simply the rapid depletion of earth's resources. There has been no advance in energy research, food production and water management in the past two decades. Instead, the earth is dying at an increasingly rapid pace. The prognosis for the next 50 years isn't good for mankind unless the fundamental construct of the global economy and financial system is radically overhauled to focus on research and science. Arthur C Clarke envisaged a world where space travel to the outer reaches of our solar system and mining neighbouring planets is a common economic activity in 2001. We have since overshot that by a decade and we are no where near inhabiting even the moon, and we have not found an alternative energy source to fossil fuels. That is how much the advance of human civilization has slowed down.

I am into policy making and I look at time horizons in the decades. My ethical leanings mean that I don't make a good opportunistic investor, so I don't dispense good investment advice. But if you want me to make a bet, I would go with companies investing in alternative energy. Energy is everything and the sole driving force in the universe (other than the finely tuned physical constants and fundamental physical laws). Going forward, whoever owns the secret to sustainable and cheap energy owns the world.

[Nostra]

We are seeing the start of WW3 now and soon it will be the end so don't worry about the next 50 years.

[Singapore Living]

@Bewildered, indeed, the highest earning people as a group are property developers, bankers, and people who produce consumer goods. The invention of money has made the world worse off on the whole. It encouraged greed and turn people into mindless and faceless "consumers", gobbling up Earth's resources, plants and animals that share our planet.

But I won't go as far as saying that we have not advanced since the invention of the Web.

Anyway, back on topic: The reason why Singaporeans can afford apartments at the current price is mainly because the government has an instrument called "HDB". HDB supply (and to a certain extend, demand) is controlled by the government. Thus the price of HDB can be manipulated to make Singaporeans feel rich.

Take for example, a young couple buys HDB flats direct from government for S$200K in a newly developed estate. After 5 years, the young couple is allowed to either sell it, or rent it out. Selling would bring about $300~400K in current market, so the couple makes $150K on average. With this money plus some cash savings, they will have enough to buy a $800K condo. On the other hand, if they rent out the flat to move in with parents or they buy condo with cash savings, they'll get about $2000 cash a month in rental with minimum expenses.

So it is in the interest of the government to keep the Singapore property price high, else this house of card will quickly collapse.