TR EMERITUS

From our Correspondent A probable China National by the name of He Zhiyu had written to the Straits Times Forum castigating Singapore netizens for being "naive" and "insecure"! (read letter here) Zhang Yuanyuan, a Singapore PR drew flak from the online community recently by proclaiming her undivided loyalty to China in an interview on CCTV Channel 7.  Ms Zhang worked in Singapore for 5 years as a Chinese teacher before returning to China where she participated in China's 60th National Day Parade.  Equipped with only a diploma from an unknown school in China, she came to Singapore on a study pass and obtained a PR within two months. Mr He chided Singapore netizens for being "naive" and praised Ms Zhang as a "motivated" global citizen: "The outcry reflects netizens' naivety in thinking that PRs will renounce their citizenship and show undivided loyalty to Singapore once they obtain their blue identity card. It also reveals the insecurity of Singaporeans compared to the motivation of global citizens like Ms Zhang." Mr He also lent support to Ms Zhang's motives for taking up Singapore PR: "The reasons given by Ms Zhang for her decision show a highly motivated and pragmatic individual who did not forget her roots. She does not hide the fact that she applied for Singapore PR simply to make it easier to travel between Singapore and China, while she improved her English and obtained a degree during her five-year stay in the Republic." Like the Singapore government, Mr He seems to miss the point completely. Singaporeans are not angry with PRs like Ms Zhang for not renouncing their citizenships, but peeved with the government's liberal immigration policies at the expense of local-born citizens. Nowadays, PRs are easily obtained by foreigners who are semi-skilled workers like Ms Zhang with the intention of keeping them in Singapore for the long-term so that they may take up Singapore citizenships one day. The blue NRIC is not for the purpose of easing travel between Singapore and other countries, to save one's trouble for renewing the work permit or buying resale HDB flats which has been systematically exploited and abused by many foreigners. The relentless influx of foreigners in recent years has led to sky-rocketing of resale and subsequently new flats thereby pricing young couples in need of a home of their own out of the housing market. While Singapore does require foreigners to boost its flagging population, PRs and citizenships should not be given indiscriminately to those who only views us as a stepping board. The process should be tweaked and refined to allow only skilled workers and professionals to take up PRs and citizenships. With due respect to Ms Zhang, her job as a Chinese teacher is easily replaceable. During her five years' stay in Singapore, Ms Zhang has deprived one Singaporean of a job. After obtaining a degree here, she now earns more back home in Beijing. Who is at the losing end here? Singapore has no business in helping China nationals improve their English or their marketability. Mr He should realize that there is no free lunch in the world and Singaporeans do not owe him or his fellow countrymen a living.   Related articles: >> Zhang Yuanyuan got her Singapore PR in only 2 months >> Official reply from government on the Zhang Yuanyuan fiasco >> Singapore PRC PR proclaimed loyalty to China publicly >> PRC resident hung China flag to celebrate its National Day >> PRC student in Singapore wants more scholarships for foreigners >> PRC prostitutes solicit for customers on Singapore’s cyberspace >> ERA: 40 per cent of resale flats buyers are PRs   EDITORS’ NOTE: If you like our work and would like to support us, please transfer your donations via paypal to our account ([email protected]). Any amount will be greatly appreciated! Alternatively, you can also help boost our advertising revenue by clicking on the ads displayed. Thank you! Join our tweet at: http://www.twitter.com/temasekreview  Read More →

By Khalil Adis, Social Correspondent [Khalil Adis a former editor of Property Report. He now writes for Property Report, Property Guru and Temasek Review] The rising number of cash rich immigrants to Singapore is pricing out first time Singaporean homeowners from the HDB resale market. Meanwhile, the HDB has been slow to react in releasing new supply in the market. Can the average Singaporean really afford public housing in Singapore? Has the Housing Development Board (HDB) lost sight of its purpose? A recent news report that the cash-over-valuation (COV) for a three-room HDB flat in Toa Payoh which was transacted for a record S$70, 000, has had Singapore’s online community debating just that, with some concluding that HDB flats have indeed become far too expensive for the first time home buyers. Although figures on the median COVs on the resale market for the third quarter of 2009 are not yet available on HDB’s website, this $70, 000 COV is the highest so far (for a three-room flat) since the HDB started tracking median COVs in the resale market since the second quarter of 2007. However, that is just the tip of the iceberg. Property analysts are expecting COVs for the rest of 2009 to continue increasing due to strong demand and a lack of supply. “Increasing cash-over-valuation is a reflection of greater demand than supply. The recovering economy and the fact that private properties are also on the rise, has resulted in this greater demand,” says PropNex chief executive officer, Mohamed Ismail. The rising COVs are a cause of concern among Singaporeans, especially since the prices for HDB resale prices are now at a new peak. Data from real estate firm PropNex shows that the HDB’s resale price index (RPI) for the second quarter of 2009 has climbed by 1.4 percent to an all-time high of 140.2 points. Compared to the first quarter of 2007, the index has now risen by 35.3 percent. The HDB’s flash estimate for the Resale Price Index (RPI) for the third quarter of this year confirmed Mohamed Ismail’s prediction. It is now at 144.7 percent and an increase of 3.2 percent from the previous quarter - the highest level of the index since its conception in 1998. Mohamed Ismail now expects the RPI to rise by 4–5 points over the next two quarters to reach about 145 by the year’s end. So on top of a record in resale prices, Singaporeans now have to deal with rising COV which has to be paid upfront in cash. According to recent reports, COVs for three and four-room HDB flats have doubled over the last two months averaging more than $20, 000.   Causes of rising COVs According to government data, Singapore's population has grown to almost 5 million. Of this, approximately a quarter of that is foreign workers. The number of foreigners getting permanent residency status also surged more than 11 percent in 2009. It is no rocket science that the reasons COVs are rising are due partly to the influx of foreigners to our shores. PropNex notes that permanent residents in Singapore were taking advantage of the initially low COV to buy flats which has now escalated. In fact, property agents acting on behalf of permanent residents have been busy dropping flyers in the heartlands promising high COVs. Even in far-flung areas like Jurong West, COVs are between $20, 000 to $35, 000. Whilst foreigners and permanent residents are eligible to buy private properties, the HDB resale market is only open to permanent residents and Singaporeans. Data from real estate firm ERA shows that about 40 percent of the buyers in the resale market are permanent residents. The increase in demand for HDB resale flats versus the lack of supply is also helping to fuel the high COVs with the highest bidder having a distinct advantage. Usually when the COV is higher, first time homebuyers would look instead to Build to Order (BTO) and Design, Build and Sell Scheme (DBSS) projects. However, buyers will have to wait three to four years before they can move in. For the cash strapped singles or young couples who cannot wait for three years for a new flat, they will have no choice but to defer their purchase, resulting in deferred marriage for couples. Could this perhaps explain the nation’s low fertility rate? Otherwise, as Minister for National Development Mah Bow Tan had advised, their other option is to look for HDB flats that offer no COVs in far-flung areas like Woodlands. But how realistic is this?   Case study one: Singles buying from the resale market Dean Shams, a first time homebuyer, recently found out that it wasn’t as easy as Minister Mah had suggested. The 37-year-old publicist started house hunting early this year. As he is a bachelor, Shams is only eligible to buy resale flats from the HDB. He looked at four resale three-room flats in the Bedok area. Being a mature estate, all the prospective sellers were asking for COVs. In July, Shams was lucky enough to land his dream home for $221, 000 just at a time when the resale price index was on its record rise. The seller had initially asked for $9, 000 but agreed to lower it to $3, 000 as they were desperate to offload their property as they were no longer able to afford their monthly mortgage. The trade off, however, is a run down flat in which Shams had to spend a further $20, 000 on for a basic renovation. The total upfront cost came up to $23, 000. In another scenario, Bob Boon, a 36-year-old human resource officer in a bank, bought his three-room flat in Serangoon for $255, 000 with a COV of $25, 000. On top of taking a housing loan, Boon also had to take a bank loan to cover the COV as well as a $30,000 renovation loan. Despite the hefty loan amounting to $55,000, Boon says a resale HDB flat is still affordable by his standards.   Case study 2: Young couples buying from the resale and/or direct from HDB Luqman Hakim Abdul Khir and his wife have been trying to get a flat this year. Being a sole breadwinner with a gross salary of $1, 488, he is eligible for an HDB loan of $120, 300 with $482 in monthly installments. He has two options: Buying from a resale market or buying direct from the HDB via a balloting system.   Option 1: Buying from a resale market. As Minister Mah had suggested, Abdul Khir had looked at over 30 three-room flats in Woodlands, Sembawang, Yishun, Ang Mo Kio, Toa Payoh, Hougang, Serangoon, Ubi and Bukit Batok. He could not afford option one as agents were asking for $2, 000 in agent fees with $5,000 COV minimum.   OPTION 2: Buying direct from HDB by balloting Abdul Khir found this option cheaper than the resale market price as it depends on the queue system. The first time he went for balloting, his queue was the last two numbers at 148. This means he will be given cheaper priced flats. However, the only available three-room flat left was one in Queenstown priced at $250,000 – way beyond his HDB loan eligibility. He tried the second time where the subsequent queue numbers were higher than the number of allocated flats. His queue was 632 during the second ballot, pricing him out from the primary market. “I grew fed up and decided to give up on buying a new flat. I am now applying for a rental flat in Bedok and Tampines area,” says the 27-year-old technical specialist.   Profit before public service? The HDB has served the nation well when it first started by providing affordable homes for all. This has generated wealth for Singaporean homeowners to upgrade to bigger houses as their properties increased in value. Malaysian urban planners and authorities recently cited this wealth creation system as a role model for public housing which has enabled low-income families to move up the wealth ladder. However, the system in the current climate, has shown that it does have its limitations. For the first time genuine homeowner trying to move up the wealth ladder, the barriers to entry are now higher. One cannot help but feel that the HDB is now acting like a private developer by offering flats at market prices. HDB has defended itself by saying this is the fairest way of pricing new HDB flats while ensuring equitable distribution of subsidies. But the fact remains. HDB flats have become too correlated to the private property market with the highest bidder having a distinct advantage. The price gap between an HDB flat and private home prices have now narrowed. Currently, a five-room HDB flat in a mature estate fetches between $500, 000 to $600, 000, while some two to three bedroom condo units in the heartlands are going for $600,000 to $700,000. In a recent reply to the Straits Times Forum, HDB also said a five-room resale flat in a non-mature estate is priced at an average of $364,000. (read letter here) However, statistics from HDB’s website show that the only areas having a price close to what it mentioned are Woodlands ($340, 000), Sembawang ($362, 000) Choa Chu Kang ($360, 000), and Yishun ($365, 000). Even five-room flats in non-mature estate like Jurong West are priced at $372, 000. The HDB has also defended its track record saying public housing is still “affordable” by spewing data on “affordability”. However, these data mean nothing for the average man on the streets, who feels that HDB flats are no longer affordable. If the current trend were to continue, would our future generation then be able to afford a roof over their head? If HDB flats are indeed affordable, why do Singaporeans feel the pinch? In addition, the HDB has failed to increase supply to keep up with the influx of foreigners, pushing property prices upwards. Perhaps, in their bid to soothe frayed nerves and improve public opinion, Minister Mah recently announced that more flats would be built to keep up with increased demand. However, this measure has come a tad bit too late as COVs are set to continue rising. Did the HDB not envisage this problem in the beginning? The fact that COVs for HDB resale flats has doubled in a month amid the most severe recession in Singapore suggests that there are anomalies in our public housing system that needs to be fixed. Minister Mah had also said that Singaporeans are choosey by wanting to live in certain places that are near to their parents’. But isn’t this in line with the government’s pro family public housing policy? Perhaps the real issue runs deeper. "Maybe what Singaporeans are telling the government is that they are unhappy that permanent residents are pushing the COV prices beyond the affordability range, not because HDB prices have become less affordable per se,” says Shams. What say you? Note: Attempts have been made to contact the HDB on the average cost on building a unit of HDB flat. HDB responded asking for the reasons for this request which we subsequently replied. Since then, we have not heard from them.   About the Author: Khalil Adis was a former editor for Property Report magazine covering Singapore, Malaysia and Indonesia. During his course of work he has travelled to all three countries to cover their property markets extensively. He has also interviewed politicians like Singapore’s Minister for National Development Mah Bow Tan, Kuala Lumpur’s Mayor Dato’ Ahmad Fuad Ismail and Malaysia’s Energy, Green Technology and Water Minister Datuk Peter Chin. He now writes for Property Report, Property Guru and Temasek Review. You can read more of Khalil's articles on: www.property-report.com and www.propertyguru.com.sg   Related articles: >> Number of applicants exceed number of flats >> HDB to increase supply of flats >> Mah: don’t compare with prices in the past >> ERA: 40 per cent of HDB flat buyers are PRs    Read More →

I refer to the Straits Times report "Hard to get that first flat?  Not so" dated 8 Oct 2009. Mr Mah reportedly said that some of the assertions made by home seekers are "not entirely truthful".  According to Mr Mah, it is not that buyers aren't getting their flats but rather buyers have gotten them but have rejected them.  To support his case, Mr Mah cited HDB figures which showed 8 in 10 first time buyers of build-to-order flats getting their flats on their first try. However, a Straits Times report on 7 Oct 2009 showed 12,728 bids for 2,132 flats with analysts predicting the number of bids to hit 20,000.  How can 8 in 10 buyers get their flats first time round when there are 10 buyers for every flat on sale?  More likely than not, 9 in 10 buyers will be left disappointed instead.  So it is probably Mr Mah himself who is "not being entirely truthful" by focusing only on build-to-order flats which forms only a fraction of the total demand for new flats. Mr Mah also highlighted the case of Mr Soh Say Kiat, who claimed to have applied 18 times since 2001 but HDB records since 2002 showed only 12 applications.  Since HDB records is from 2002 onwards, is it not possible that the 6 unaccounted applications were filed in 2001?  So it may be Mr Mah rather than Mr Soh who is "not being entirely truthful". Furthermore, in the case of Mr Soh, out of 12 "recorded" applications, only 3 resulted in invitations for viewing.  So the success rate is only 3 out of 12, hardly the 8 out of 10 depicted by Mr Mah.  So again it seems like it is Mr Mah who is "not being entirely truthful" rather than Mr Soh. To Mr Mah, as long as a flat has been allocated to you, it means his job is done, never mind if the unit is facing a rubbish dump or on the second floor.  Mr Mah should set a good example by choosing one of those unwanted units for himself to show us what it means to be "not choosy".  And in the spirit of "willing buyer, willing seller", as far as Mr Mah is concerned, whether you're willing or not you better "take it".  "Leaving it" would be tantamount to giving up your opportunity to a flat. Mr Mah also advised couples to plan ahead to cut waiting time as though people can plan when to meet their future spouse and when to fall in love.  Perhaps we should have build-to-order brides and grooms too. Thank you Ng Kok Lim  Read More →