Property Expectations

RE: No good reason to shrink new HDB flats

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Image from propertyguru.com.sg

Property, property and more property news.  The sudden steep appreciation of public housing prices in recent years and private housing seeing an average 2 bedrooms shooting through the 1 mil mark, has taken a toil on Singaporeans.  Not only has it hogged the headlines for months, it has also took center stage in the recent May general elections.

With the change in leadership in Ministry of National Development (MND) after the elections, numerous measures ranging from increased public housing (HDB flats) released in a single tranche to measured pricing of new flats have been implemented.  All these measures are aimed to cool the property market and provide affordable housing for our people, especially young couples.  Patience is perhaps, a distant language for most of our people.  While the ministry with new leadership is trying their best, people do not understand that these measures will take a while before we can see the impact on the property market.  Afterall, we do not build new flats overnight.

Expectations of our people and expectations is a function of measurable reality.  Our government has done a tremendous job trying to keep the nation strong despite its size and almost absolute zero natural resources to depend on.  But did the government try her best to make housing affordable for all? I did some research to give myself some reality checks.

1.  Home Ownership rate.  Singapore has come a long way to ensure that most of our people own a property, an asset. We have been achieving high home ownership rate with a steady increase from 58.8% in the 1980s to 87.2% in 2010 (extracted from Singstats).  Let us compare a city on our side of the globe. Hong Kong, with current population of about 7.1 mil, has raised the home ownership rate from 35% in the 1980s to 69.5% in middle of 2011(public and private).  These statistics can easily mean that we have more people in our country owning an asset compared to our comparable neighbour.  Take it to the economic powerhouse, US has about 66.3% (3rd quarter, 2011) of its people owning a home.  This is some statistics to show where we are.

2.  Shrinking size of HDB flats.  I do not think anyone can contest the fact that big countries has bigger apartment on average.  Though it has been repeated on numerous occasion, let me say again, Singapore is a small island and land is scare.  Having smaller flat would also means more affordable housing for our people, but will it sacrifice the quality of life as mentioned by Paul Chan (RE: No good reason to shrink new HDB flats)?  My opinion is, quality of life is a function of how people make it out to be.  Allow me to draw comparison Hong Kong, though it is larger, their populous area are comparable to us.  Even so, Hong Kong has only 8.9% of its public housing with floor area of 60 sqm or more (Hong Kong Housing Authorities) and we have 56.6% of 4 rooms or bigger HDB flats (HDB). Even some of our 3 rooms flats are bigger than 60 sqm.  Have they lost the quality of life?

3.  Prices index.  Are we a victim of our own success?  The natural result of strong economic growth is increased population for commercial interactions.  The increased population increases the demand for housing has inevitably shot the prices up.  In a similar economic standing and geography, Hong Kong domestic index has grew about 100% since 2005 (Private Domestic - Price Indices by Class (Territory-wide) (from 1979)) while HDB has gains about 80% in the same period (HDB Resale Prices).  It is a global challenge and China may be next to see the bubble bursting.

These are reality checks for property and I appreciate that MND is working something for everyone, notably for the young families. While we are going through a period a tension over the accelerated property price increment, we must remember that Singapore does not live off property industry alone but a complicated combination of various factors in global economy.