Wednesday, March 19, 2008
About this Blog
Don't go on propaganding this rosy picture about IR and remaking Singapore, and so property price must go up. This rosy picture is good enough to keep Singaporeans with a fairly comfortable life but million dollars property is still out of the affordability for most. If such propaganda succeeds, then we will see more Singaporeans over paying for their property and living a miserable life working like dogs to pay off what should just be a roof over the head.
As long as the government is committed to meeting housing demand and keeping it affordable, there is no reason to believe that property price should go beyond the affordability of the average household.
Singapore Property is over-priced
Why's everybody blaming the US subprime problem for the poor take-up in the Singapore property market? The way I see it, the real problem is over-pricing. A typical unit in the suburb costs about $1M and can be rented for $3K which gives only a yield of 3%. That's a very high risk for such a low return. CPF gives 2.5% with no risk. Of course some people will argue that the rental yield is only to pay for the interest, "I can sell it at much higher price for profit" but if the present owner gets 3% and let's say he sells it at a higher price, then the next buyer will be looking at an even lower return ... eventually a property is only a home for someone and it boils down to people's affordability. With an average household income of $6K, a mass market priced above $1000 psf is simply beyond the reach of most people. It's simple mathematics.Don't go on propaganding this rosy picture about IR and remaking Singapore, and so property price must go up. This rosy picture is good enough to keep Singaporeans with a fairly comfortable life but million dollars property is still out of the affordability for most. If such propaganda succeeds, then we will see more Singaporeans over paying for their property and living a miserable life working like dogs to pay off what should just be a roof over the head.
As long as the government is committed to meeting housing demand and keeping it affordable, there is no reason to believe that property price should go beyond the affordability of the average household.
Tuesday, March 18, 2008
About this Blog
"In the long run, the major problem that Singapore will face is with talent renewal i.e. getting talented people to be involved professionally at the various levels of government and support industries. If this problem cannot be resolved, it will eat into the growth prospects of the country. This issue will be seen after the next five years and will ripen (given the current state of things) within ten to twelve years."
By: Anonymous
Posted: 18-03-2008
Here is what I feel we can see in the next five years:
Singapore, on a whole, is competitive and is still working hard to bring in investments. The economic fundamentals are sound and economic growth should not be a major issue. Making money should not be a problem in Singapore for the next five years. The only concern I have are the social problems which come with the changes that have been implemented and will be implemented over the next few years. There will be more social decay and while this will not have much impact in the short-term, it may grow to become one of the biggest problems we have as a nation.
The situation is dire in the US. I get my information not just from the media; it comes from my contacts in the States. On the ground, those in the financial industry are aware that there will be massive changes in the next few months due to the financial revelations that are gradually being made. Bear Stearns is just the tip of the iceberg and the Federal Reserve is aware of that. If they did not act over the weekend to contain the fallout from the Bear Stearns melt-down, we will see more financial institutions declaring similar problems early this week. Nevertheless, many folks believe that the actions by the Feds have come too late to be of significant effect on the inevitable outcome in the next few months; investor confidence has been shaken sufficiently that pull-out of funds could occur on the fall of a pin.
Ironically, this fallout may be necessary for recovery to even start. The later it happens, the longer it takes for the US economy to recover. As long as there are financial institutions that do not come clean (either of their own volition or compelled by circumstances e.g. Bear Stearns), there will always be uncertainty in the economy and that prevents the recovery at the various levels.
Now, in spite of the numerous claims that Asian economies are more or less decoupled from the US economy, I believe that it is a very optimistic view. Many countries, China included, have the US as a major customer where exports are concerned. The US$ is linked to much of the global economy e.g. oil and currencies. Thus, it is unavoidable that US-centric recession or inflation problems will cascade to other countries in the world.
Economic slowdown/recession is one set of problems. The other is inflation. If the US manages to resolve recessionary concerns, it will face another big hurdle in the growing inflation that its people are plagued with. Inflation is also something that many governments will have to put high up on their agenda this year and next.
The greater irony of all these is that it might be good for Singapore that we are not growing that quickly. The danger of uncontrolled exuberant growth is that a bubble can form unknowingly. When a bubble forms, it is a matter of time before it bursts. The problems that the world is facing right now serve to temper the growth that our country is having and helps to break bubbles that may form along the way. Though the bursting of these smaller bubbles may have some detrimental effect on our economy in general, they ensure that our growth is based on strong fundementals and not on just make-believe.
My feel for the property market is that there will be some reversal of the exuberance that we saw last year. A significant percentage (about 60% to 70%) of the price growths last year came from unfounded exuberance. This means that the bubbles that have formed will burst because the exuberance will have been negated by the global economic slowdown. Thereafter, the cycle starts again as exuberance starts to build together with the actual economic benefits of the implementations (IR, etc) coming in.
In the long run, the major problem that Singapore will face is with talent renewal i.e. getting talented people to be involved professionally at the various levels of government and support industries. If this problem cannot be resolved, it will eat into the growth prospects of the country. This issue will be seen after the next five years and will ripen (given the current state of things) within ten to twelve years.
Thus my humble view is that:
2008 - year of reduction perhaps to slightly better than late 90s levels.
2009 - increasingly better than 2008
2010 - significant exuberance from materialising benefits
2011 - year of changes - deflating complacency
2012 - reinventing singapore for the next mile
Major problem Singapore faces is talent renewal
Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers."In the long run, the major problem that Singapore will face is with talent renewal i.e. getting talented people to be involved professionally at the various levels of government and support industries. If this problem cannot be resolved, it will eat into the growth prospects of the country. This issue will be seen after the next five years and will ripen (given the current state of things) within ten to twelve years."
By: Anonymous
Posted: 18-03-2008
Here is what I feel we can see in the next five years:
Singapore, on a whole, is competitive and is still working hard to bring in investments. The economic fundamentals are sound and economic growth should not be a major issue. Making money should not be a problem in Singapore for the next five years. The only concern I have are the social problems which come with the changes that have been implemented and will be implemented over the next few years. There will be more social decay and while this will not have much impact in the short-term, it may grow to become one of the biggest problems we have as a nation.
The situation is dire in the US. I get my information not just from the media; it comes from my contacts in the States. On the ground, those in the financial industry are aware that there will be massive changes in the next few months due to the financial revelations that are gradually being made. Bear Stearns is just the tip of the iceberg and the Federal Reserve is aware of that. If they did not act over the weekend to contain the fallout from the Bear Stearns melt-down, we will see more financial institutions declaring similar problems early this week. Nevertheless, many folks believe that the actions by the Feds have come too late to be of significant effect on the inevitable outcome in the next few months; investor confidence has been shaken sufficiently that pull-out of funds could occur on the fall of a pin.
Ironically, this fallout may be necessary for recovery to even start. The later it happens, the longer it takes for the US economy to recover. As long as there are financial institutions that do not come clean (either of their own volition or compelled by circumstances e.g. Bear Stearns), there will always be uncertainty in the economy and that prevents the recovery at the various levels.
Now, in spite of the numerous claims that Asian economies are more or less decoupled from the US economy, I believe that it is a very optimistic view. Many countries, China included, have the US as a major customer where exports are concerned. The US$ is linked to much of the global economy e.g. oil and currencies. Thus, it is unavoidable that US-centric recession or inflation problems will cascade to other countries in the world.
Economic slowdown/recession is one set of problems. The other is inflation. If the US manages to resolve recessionary concerns, it will face another big hurdle in the growing inflation that its people are plagued with. Inflation is also something that many governments will have to put high up on their agenda this year and next.
The greater irony of all these is that it might be good for Singapore that we are not growing that quickly. The danger of uncontrolled exuberant growth is that a bubble can form unknowingly. When a bubble forms, it is a matter of time before it bursts. The problems that the world is facing right now serve to temper the growth that our country is having and helps to break bubbles that may form along the way. Though the bursting of these smaller bubbles may have some detrimental effect on our economy in general, they ensure that our growth is based on strong fundementals and not on just make-believe.
My feel for the property market is that there will be some reversal of the exuberance that we saw last year. A significant percentage (about 60% to 70%) of the price growths last year came from unfounded exuberance. This means that the bubbles that have formed will burst because the exuberance will have been negated by the global economic slowdown. Thereafter, the cycle starts again as exuberance starts to build together with the actual economic benefits of the implementations (IR, etc) coming in.
In the long run, the major problem that Singapore will face is with talent renewal i.e. getting talented people to be involved professionally at the various levels of government and support industries. If this problem cannot be resolved, it will eat into the growth prospects of the country. This issue will be seen after the next five years and will ripen (given the current state of things) within ten to twelve years.
Thus my humble view is that:
2008 - year of reduction perhaps to slightly better than late 90s levels.
2009 - increasingly better than 2008
2010 - significant exuberance from materialising benefits
2011 - year of changes - deflating complacency
2012 - reinventing singapore for the next mile
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