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SINGAPORE PROPERTY WEEKLY Issue 359
Question #1: Can Singapore reverse an Exactly five years later at the announcement
aging population to reach 6.5 million by of Singapore Budget 2018, Josephine Teo,
2030? Minister in the Prime Minister‟s Office in
charge of population matters, admitted that
I have covered this topic in my earlier blog
“Singapore is not expected to change its
post “Singapore‟s latest demographics: what
immigration policy, and its population is likely
it means for housing”.
to be significantly below 6.9 million by 2030”.
Remember the controversial Population
To encourage couples to have babies before
White Paper Back released in January 2013?
they get their flats, Mrs Teo told us that we
The Singapore government set an ambitious
“need a very small space to have sex”,
target to reach a total population of 6 million
without demonstrating how. Maybe the two
by 2020 and 6.9 million by 2030.
DBS analysts can share with her their
But the reality is: Our latest population of 5.61 personal tips (to hit 6.5 million by 2030), even
million shows a humble growth of merely 0.1 when the government has already given up
percent in a year. If we inch at this rate, we their target?
can only hit 5.69 million by 2030. Do you think
China‟s one-child policy that stretched over
our government will ignore public outcry to
36 years has created an unhealthy
import the balance of 1.21 million foreigners
demographic with serious imbalance in age
and make up the magic number of 6.9
and gender.
million?
The rapidly aging population results in an the reasons why eligible couples are hesitant
elder-care crisis. China‟s age group of 60 or to have a second child.
above as a percentage of the population
China will be having a negative population
stands at 17.3 percent (Singapore total
growth in the future. If the country with the
residents stands at a higher 19.7 percent in
world‟s largest population cannot solve their
that age group).
low birth rate and aging population problem,
The one-child policy was finally ended in how confident is Singapore to get the same
2016. Couples living in the cities with one problem under control? Are we sure we can
parent as the only child are allowed to have beat China with higher fertility rate and a
two children. An estimated 15 to 20 million younger population? What optimism drives
couples are eligible and expected to have a DBS to conclude that Singapore‟s population
second baby in 2017. can hit 6.5 million by 2030?
But to everyone‟s surprise, instead of seeing Question #2: Can Singapore’s income
an increasing birth rate, the number of growth keep pace with S$2,900 psf?
newborns in 2017 dropped 630,000 or 3.5
The DBS property report said the current
percent compared with the previous year
average private home prices is S$1,500 psf
(while Singapore‟s fall is 4 percent in the
and will go up to between S$2,300 psf and
same year). High costs of living, housing
S$2,900 psf in 2030.
prices and education expenses are cited as
Well, it depends on which region or district we What about OCR (Out of Central Region)
are talking about, and whether they are new districts like 22, 23 and 25? With average psf
projects or resale properties. prices still hovering between S$700 and
$1,000, do you think they will also go up to
A check on all the non-landed private homes
S$2,300 or S$2,900 psf by 2030? Will our
transacted last month shows big gaps in
government sit there doing nothing to cool the
average price psf in different districts.
market, while happily collecting revenue from
land sales and stamp duties?
Mind you, this happens when Singapore‟s private residential properties in 2009 1Q is
economy is performing well these few years 100. Last quarter in 2018 1Q, the number
with unemployment rate at ±2 percent and goes up to 141.6. The compound annual
retrenchments near 7-year low. growth rate is 3.94 percent, which has gone
up twice as fast as our income growth (1.5 to
The Singstat report also points out that, as a
2 percent).
developed country, Singapore is experiencing
slower pace of income growth, especially for DBS said private home prices will increase
the bottom 50 percent of households. from S$1,500 psf now to S$2,900 psf in 2030.
That is an annual compound growth rate of
And could I check with any economics or
5.65 percent. Wage earners will be overjoyed
finance teachers whether it is possible for
if this “steady rise in property rises” can be
Singapore wage earners to enjoy salary
supported by “steady income growth”.
growth at that rate for 12 years, even while
going through potential economic downturns But wait, do we want our labor force to enjoy
and a global crisis? high wages that are commensurate with a
rise in property prices, or a labor force with
Can our income growth keep pace with the
competitive wages comparable with other
rise in private home prices?
countries‟ to survive in the global labor
URA‟s Property Price Index for non-landed market?
Question #3: Can we depend on HDB employment is terminated, they must leave
upgraders and foreigners to buy units the country.
averaging 840 sq ft?
Besides, foreigners must pay 15 percent
The DBS report expects annual transaction Additional Buyers Stamp Duty for private
volume for private homes to reach between properties. No wonder only 6 percent of last
12,000 and 16,000 units, mainly due to year‟s total sales transactions are by foreign
demands by HDB upgraders and foreigners. buyers.
And the average size of private units will
2. HDB Upgraders
shrink to 840 sq ft by 2030.
According to SRX, HDB Resale Price Index is
Really?
131.8 in April, down by 13.5 percent
1. Foreigners compared to its last peak of 152.4 in April
2013. For transaction volume, only 1,850
The low population growth of 0.1 percent last
HDB resale flats were sold last month, down
year is mainly due to the negative growth of -
by 49.3 percent from the last peak of 3,649
1.6 percent for non-residents. The current
units in May 2010.
size of PRs hasn‟t changed much for the last
four years. Our government is not granting The SRX T-O-X for HDB is negative S$1,000,
many permanent resident approvals for meaning buyers are underpaying S$1,000 of
foreigners staying here. Once their the HDB flat‟s estimated market value.
The days when selling HDB flats can make a are strictly internal living space, excluding
generous sum from Cash-Over-Valuation as unusable spaces such as planter boxes and
down payment for condos are over. aircon ledges as counted into the floor area of
condo units.
How many HDB upgraders are preparing to
sell their flats at zero or negative COV, and Does that make sense for HDB owners to
pay S$1,500 psf now, or $$2,300 to S$2,900 give up their current HDB home, top up a few
psf in 2030to upgrade to a condo? hundred thousand dollars from their savings,
only to “downgrade” (I mean downsize) to an
3. Average size of private units
840 sq ft private home?
Unlike cities such as Hong Kong or Tokyo, 80
Question #4: Can we trust the DBS
percent of Singapore‟s population are
property report is unbiased?
benefiting from subsidized HDB flats with very
decent living space. I own private properties and I live in my
private home too. I don‟t have problem seeing
According to the Housing Development
a rise in private home prices. But I have a
Board, the size of an older 4-room flat is
problem seeing any party predicting the rise
between 914 and 1,129 sq ft, while a 5-room
of private home prices without full disclosure
flat is about 1,322 sq ft. The new 4 and 5-
of their vested position.
room flats built are 968 sq ft and 1,183 sq ft
respectively. Note that these measurements
When the researchers commented that Just because Morgan Stanley speculates
Singapore banks are “best-placed to cash in “Singapore‟s property prices to double by
on the property boom”, the opposite is also 2030” doesn‟t mean that DBS should follow
true. By lending heavily to a single industry suit, especially when DBS is positioning itself
sector, the banks are making themselves as the leader in Asia banking.
vulnerable to any possible property downturn
As I mentioned before, trust is a rare
in the future.
commodity in properties. The same applies to
In January, the Monetary Authority of banking. In this digital world, trust is more
Singapore (MAS) said it is monitoring closely valued than ever. Unfortunately, trust is
how the banks are financing property increasingly rare to be found with industry
projects. MAS is collecting data on the size of stakeholders and in the mass media.
banks‟ exposures and details of the loan
We have no choice but rely on our own
facilities granted for each project.
judgement to tell the truth.
To coincide with its 50th year anniversary,
By guest contributor Property Soul, a
DBS is spending S$30 million across Asia on
successful property investor, blogger, and
their new rebranding campaign. The
author of the No B.S. Guide to Property
advertising tagline is „Live more, Bank less‟.
Investment.
Maybe they can change it to „Say less, Trust
more‟?
Non-Landed Residential Resale Property Transactions for the Week of May 12 – May 18