Before you guys get so fixated on the price for this flat, you need to consider the size of the flat, it is a lot bigger than your average 5 room HDB flat (at 110 sq m) and that extra 37 sq m is like having an extra living room. So if you are not prepared to pay this kind of price or a flat, then pick a smaller one. As we say in Chinese, 一分钱一分货, you get what you pay for. In fact, according to the ST article, "in the past 12 months, five-room units in Punggol have been resold for as little as $355,000 and no more than $544,000, until now." Hence this price for this flat is indeed an exception (as is this flat). Now at S$355,000 (about £168,000) for a 5 room HDB flat in Punggol, that actually sounds very affordable to me when you consider the size of your average 5 room HDB flat and the distance of Punggol from the CBD. Heck, if you want a smaller HDB flat in Punggol, prices are as low as $285,000.
Your first step on the property ladder will be modest.
You may be thinking of getting your first step on the property ladder: well, I can tell you that it won't be for a property like the fabulous flat which is the subject of the ST article. No, it will be for a far more affordable piece of property that will cost a lot less. After all, unless you have very rich parents who are willing to give you some money to help you onto that property ladder, you are limited by how much money you an borrow from the bank in terms of a mortgage. You can get on the property ladder, but your expectations have got to be realistic. How much you can borrow will depend on your income - so if you want a nice home, then start thinking about your career path. You don't want a 30 or 25 year mortgage? Simple - pick a cheaper property and work hard to earn more money. Nice properties will cost more - am I telling you something that is so shocking or can most people figure that out with just a bit of common sense?
Well, I have a friend from university, let's call him Ralph (not his real name) and he has three children. Ralph has a good job in IT, but every penny he earns is spent: a lot of it goes on his mortgage and what is left is spent on his children. He has virtually no money left for himself - he has to wait for special occasions like birthdays or Christmas to buy simple things like a new shirt or new shoes. Ralph and his wife live in London, a long way from their parents, so his wife only works part time, juggling childcare needs with her work. Ralph's family just about gets by, they somehow manage to make ends meet but money is very tight. I know they are not happy where they live (noisy neighbours, I feel their pain), but the possibility of moving to a nicer or better home is just not possible given their financial situation. Would Ralph's family be better off if they had fewer or no children? Of course - but that's a hard choice for him to make and hindsight is 2020. You want to afford nice things in life like a big house? Simple: avoid having children, then you can spend every penny you earn on yourself. It is not rocket science: do the maths.
What steps can the Singapore government take to improve the situation?
The rising property prices in Singapore are caused by the government - simply, land in Singapore is very limited, the country is already so densely populated, yet the government still wants 6.9 million people in Singapore. What do you think increasing the population will do to property prices? You want property prices in Singapore to drop? Let me make some suggestions: invade Johor, get more land for housing. Perhaps new technology will allow Singapore to reclaim more land to build more houses (see diagram below)? What if we were to deport all the PRC migrants who have settled in Singapore, confiscate any property they own in Singapore. But wait - did it occur to you that it was the PAP that caused this problem in the first place and you're asking the people who caused the problem to solve it for you? How illogical is that? It is like asking Hitler to improve the condition of Jews in Nazi Germany. At times like this, I just want to laugh and say, "you voted for this when you voted for the PAP, I don't want to hear you complain any more."
Singapore's property prices are comparable to other major cities.
Some people have said, "oh property in Singapore was more affordable some years ago" - that is hardly a fair comparison - in case you have forgotten, Singapore's population has grown a lot in the meantime, thanks to the PAP's policies. A far more sensible comparison would be to see what S760,000 or £359,000 can get you elsewhere. I can tell you that £359,000 would get you nothing in central London, you probably could get a small studio apartment somewhere in zone 2 if you are lucky (I did come across a studio in Camden for £340,000. but it was in a poorly lit basement.) When you compare London to Singapore, Singapore actually looks quite affordable. But then again, Punggol is right on the edge of Singapore - if you wanted to buy something say in Novena or Newton with $760,000, forget it, you can't get anything at all. A condo in Novena would cost you about S$1.4 million (and that's still a bit cheaper than London). The fact is property prices in big cities tend to be very expensive - there is no precise formula to calculate the most expensive cities in the world but Singapore is easily in the world's top ten in any list. Kuala Lumpur is pretty low on that list - but you would have to consider if you would like to live in a city like Kuala Lumpur?
A sense of entitlement by the strawberry generation?
This is why I felt so strongly about the comments I read: I basically see a younger generation who believe that they are somehow entitled to the nice things in life - such as a very beautiful property to live in. What were you expecting? What's with this sense of entitlement? Why are rising property prices somehow "not fair"? Why do you think you are entitled to by a nice property at a low price? Who do you think is going to provide that low cost housing for you - the government (and in turn the taxpayers, as that's who fills the government's coffers)? Why do you think you have the right to play the victim's card in this case? In a big city like Singapore, sure there will be beautiful properties for sale, but you have got to be realistic about the price tag they come with. If you want to live in somewhere like that, then you need to be earning a lot of money. Really, what I am saying should be nothing more than just common sense: nobody is entitled to anything in life. It is good to aspire, to want to live in a nice home, to have ambitions of buying your dream house but be prepared to work for the things that you dream of. Don't look at the price tag and deem it unreasonable just because you can't afford it - well guess what? Maybe you can't afford it for a good reason: you don't have a good enough job and whose fault is that? It's your fault. Yes it is your fault, tough - take responsibility for the situation lah.
When I first started house hunting for my latest property, I spoke to several estate agents and when they realized that I had quite a lot of money on top of my already sizable property portfolio, they started to tempt with me properties beyond my budget. "Oh it's rather expensive sure but you get so much more space, it is a new development and you will absolutely love it." And sure enough, I did actually go and view a few properties that were clearly out of my intended budget - what were the estate agents expecting, for me to sell my entire property portfolio to raise a few million pounds for my dream house? (No, that was not going to happen.) Sure there was a part of me that thought, "wow, wouldn't it be nice to live in a place like this? Oh I would totally love to live here!" Oh some of the places I viewed were just totally amazing, we're talking about luxury penthouses with roof gardens - but they came with a price tags so high so I had to be realistic and say to myself, "no I can't afford that, I just don't have that much money right now."
In real life, we all have to compromise when it comes to making the best of an imperfect situation: if money wasn't an object, then I could buy a dream home worth 10 million pounds. But my imperfect situation is that I do have some money to go shopping for a new home with, but I have to find something that I like within my budget. So in my case, it was all about getting the best deal I could find, getting good value for my money. I found my perfect compromise when I snagged me a bargain at a property auction, when I bought a property for about 15% less than the estimated price and it did tick most of the boxes for what I was looking for in a dream home. Is it perfect? No it isn't (hey but at least it is pretty darn big and I am getting a roof garden with it), but am I happy enough with it? Yes I am. I can make some effort in terms of renovating and redecorating the place to make it even nicer, but otherwise I am very happy with what I have found given the budget I had. Such is life - rather than complaining about the things in life we can't have (or can't afford), we should be grateful for the things that we have successfully managed to acquire within our means.
In general, I reckon people here are unhappy due to sheer ignorance. Many Singaporeans are simply unaware of what housing prices are like out of town. Yes, properties here can be expensive but as you have mentioned, that is the case in any major city.
ReplyDeleteRecently, I visited Sydney for the first time after my uni days - property prices in close proximity to the city centre have doubled since (by close proximity I mean distances from Jurong West to Changi). A 3 bed-room apartment in a suburb like Parramatta (20km away from city centre) can set you back upwards of AUD700k to AUD800k.
How about a place closer to home like Hong Kong? Average of SGD1800/square feet. Fancy living in Tokyo? Anywhere from SGD1000/square feet to SGD2300/square feet. Want a "Swiss-standard" of living? Roughly SGD1400/square feet. Heaps of other examples out there. Bear in mind we are talking about locations as far as 20-30km away from city centre.
Even cities with impoverished images such as Mumbai (thanks to films like Slumdog Millionaire) have surprising high property prices. While their apartments have truly run-down and dated appearances (circa 1960s designs), properties in the city centre can boast of prices SGD900/square feet. To put things in perspective, the median wage of professionals in Mumbai is around SGD950/month. And these are really, really hideous and grimy apartments that I daresay any HDB in Singapore can beat aesthetically hands-down any day.
So much for our SGD1200/square feet HDBs being "unaffordable" eh?
The only argument I can accept is that HDB owners are essentially leasing from the government rather than outright buying their own properties. That said, it remains a fact that the majority of Singaporeans did vote for the incumbent. The minority holds the prerogative to (as you often say) "vote with their feet". So there really is no cause for complaint here. Can't afford "X"? Too bad. The world doesn't owe you a living. Especially in a world that is of your own devise.
Well said. Thanks for your comment.
DeleteThe left wing side of me thinks that more should be done by government to help people in 'essential services' but do not earn that much money - like nurses for example. They provide such a vital service to society but they are not highly paid, so if the government wants to provide subsidized housing for nurses, then fair enough.
But I was reacting to a bunch of young Singaporeans who are complaining that they cannot afford a 147 sq m luxury apartment and I'm like, nobody is entitled to a huge apartment like that. You are entitled to what you can afford - so where do you get this sense of entitlement from?
Alex, even thought I am based in Australia, I agree with a lot of your views. A lot. I agree with nearly everything you've said in this post, with one exception.
ReplyDeleteI don't presume to speak for Singaporeans of my age bracket, but I do feel that the 'strawberry Generation' label is quite unwarranted. Here's a good riposte from a blogger you follow yourself: http://www.jeraldinephneah.me/2015/11/gen-y-strawberry-generation.html
You hit the nail on the head when you said that housing affordability is pretty much a worldwide problem. There was an article I read about Londoners moving to Berlin as it is more affordable there. I wonder if any Singaporeans would even consider housing affordability as a reason to leave Singapore.
Which gets at the heart of the conservative Singaporean mentality. Complain, whine to the PAP, rinse and repeat. At some point something's gotta give. The island is a pitiful dot and overcrowding/infrastructure strain has already set in. The situation is only going to get worse. These issues, coupled with real estate prices, make the future rather bleak. But hey, 'no complaints', am I right?
Having said that, I am contemplating a move to the UK next year! It would be to Sheffield / York though, not London.
Hi Dan,
DeletePerhaps it is somewhat unfair to make a general comment about the strawberry generation like that - but please understand that as much as I said I wasn't trying to make any kind of personal attack on the readers of the blogger who first raised the issue of rising property prices (I could have posted a link to that blogger to drive some traffic there... but I didn't), I was pretty much still responding to some of the sentiments expressed by her readers (notez bien: her readers, not her) about the situation and the general sentiment I gleamed was a sense of entitlement; like, "why are luxury apartments so expensive? How many years must I work before I can afford one of these - it is not fair!" And I'm like, duh: very nice apartments are expensive, not so nice apartments are a lot cheaper. Such is the way the free market works and you are only entitled to what you can afford. You want a nice apartment, simple: choose a career that will generate more income for you and work hard. It's so simple - yet they just don't get it.
Berlin is undoubtedly cheaper than London for housing - but people will continue to move to London for a simple reason: good jobs. There are plenty of good jobs here and if you can get a good job in London, then great - you can afford the expensive housing. But if you can't, then you're ... well, for want of a better word, fucked.
But hey, as discussed, no complaints - Singaporeans voted for this.
PS. If you can get a good job in Sheffield/York, then good for you. Where you move to really should be guided by the ability to get a good job there. There's no point in saying, "I love New York City or (insert name of city)" - can you get a good job there? If you're gonna tell me, I'm such a highly skilled professional that my skills are in demand anywhere I go - then good for you.
DeleteIf you don't give a hoot about location and tell HDB that I simply want a HDB at the cheapest price, you can get one very quickly. A lot of Malay families do that because to that, as long they can live with their families and have a stable job, that's all it matters to them
ReplyDeleteIf you take the 99 year lease impose by HDB, theoretically it means HDB depreciates 1% every year. In that case London apartments (freehold) should be more worthwhile in the long run
ReplyDeleteHmmm. 99 year lease - well, nobody is going to buy a flat in their 20s and then live another 99 years, so the lease will expire after us; but nonetheless, if you intend to leave your property to your child and grandchildren, then yeah they will not have a lifetime in that property. A property with a short lease (say under 20 years) will depreciate in value very quickly as the lease gets shorter and shorter.
DeleteHence freehold is always better, of course.
It is true a twenty something will not live that long. What I find ironic is that resale flats often change hands for higher prices during the owners lifetime.
DeleteThe only reason I could justify this price increase is that surrounding vicinity has become increasingly vibrant, and demand has still out stripped supply.
No one seems to consider this yearly depreciation of 1%. So is this a pyramid scheme or am I missing out on something?
Well, you have to factor in the scarcity of properties in Singapore as the population keeps increasing. Land area and housing stock simply cannot increase along with the rate of population growth, that is why property prices increase despite the leases being just 99 years.
DeleteAnd you have the PAP to thank for that!
Fact : Property prices in Singapore have risen a lot
ReplyDeleteNot Fact but very likely : Owning a nice home may be out of reach for many of those in the younger generation. But of course we can argue about definition of a nice home.
In 1990s and early 2000s, a 5 room resale HDB of decent size near city centre could cost S$400,000. The same HDB unit that is 20 years older now cost double the amount, due to inflation, population increase and a host of other reasons. For a large majority, salary has not really kept pace with housing inflation. The older generation got a better deal with higher CPF contribution and cheaper housing for both brand new and resale.
On the flip side, there is no point lamenting. As Limpeh rightly pointed out, "Life is not fair. Get used to it". You just have to work harder and smarter to get similar housing. The world is a lot more competitive and connected. Singapore being a price taker has limited options for growing GDP. Somebody screw up, and was asked to leave. Cooling measures were also implemented to limit price growth, though I must say that it took a long while for them to take effect. What else would you have the government do?
Will complaining in blogs help younger generation get their dream home at a cheaper price? Actually I think it may help. If you put forth a good argument and can sway public opinion, civil servants may think twice before removing property cooling measures. After all, big brother is all ears. To make sure they listen, post your ideas to REACH forum.
Just my 2 cents
Nah, 70% of Singaporeans voted for this, they voted for higher property prices. I don't wanna hear you complain if you're part of the 70%... oh and if you're the 30%, then it's time to consider greener pastures elsewhere.
DeleteThanks for your post, LPFT. I am a millennial myself and I was very annoyed when I saw that post, albeit for other addtional reasons.
ReplyDeleteI saw that post and the ensuing cringeworthy comments that were devoid of any cogency. I know that you're friends with that blogger so this might come across as offensive. Frankly, as a millennial, I wish she would not "speak up" for us. To be honest, I don't find her writing particularly insightful. They are mostly "No shit, Sherlock" posts with generalisations written in 'A' Level-style GP prose lacking in flair. She has since deleted her post (she always deletes her posts whenever they don't perform well, garner enough likes, etc) which actually shows how insecure she is online.
In fact, she comes across as entitled and narcissistic in her writing and whenever someone disagrees with her she will post a flawed study about loser men cyberbullying attractive women online. No, I do not want someone who throws the victim card at the first sign of trouble to represent my ENTIRE generation. I do not want someone who posts selfies and fishes for superficial compliments to attain online social validation/approval to represent me. It is reaaaally annoying.
I assure you, the majority of millennials are NOT like that. It's very disheartening to know that a vocal minority are making a din, giving the impression that we are all part of the entitled strawberry generation. Most of us work hard, are humble, and earn our keep in this world. We know life's not fair and so we silently grind daily. This group of younger people, her wonderful social media audience, who complain and complain (and frankly, aren't really bright, as you can see in the comments), are really not representative of us.
There are more influential role models and more intelligent human beings that can represent us.