Housing glut or not, worries remain

COMMENTARY

Colin Tan

property@mediacorp.com.sg 

The expected surge in the supply of new Housing and Development Board (HDB) flats and private homes over the next few years will not lead to a housing glut in 2013/ 2014, according to a recent Citigroup property report that made news for its contrarian view.

Colin Tan is head, research and consultancy, at Chesterton Suntec International.

Citigroup’s analysis looks at Singapore’s housing stock in totality, taking into account both private and public housing, saying they are closely linked. It says a prolonged period of under-building in the 2000s has resulted in the current severe housing shortage. This is likely to provide continued support for mass market prices and demand.

The team behind the report estimates that the deficit in housing units is in excess of 50,000 currently and this undersupply will likely take several years to clear, just like the oversupply situation in the early 2000s.

I do not totally disagree with their view.

If you examine the facts, there was definitely serious under-building, especially in the public housing sector, the repercussions of which we are feeling now. What you may dispute is the extent of the under-building.

I am not sure if the team realises it but it was describing all the ingredients coming together for the perfect bull run [wIth  ShOOtIng Inflation and  IncreasIng  Cost Of LivIng  ? ? ? ?] that we are experiencing now, as opposed to the perfect storm that some are predicting that the market will face in two to three years’ time.

The decade of under-building has led to a strong build-up of pent-up demand.

Throw in a loose immigration policy, the strong stimulus provided by the integrated resorts and other infrastructure projects leading to a spectacular 14.5-per-cent gross domestic product growth rate last year, abnormally low interest rates and a liberal foreign ownership policy with respect to property and you have the perfect bull run.  [EMPOVERISH  the  SAVERS  ? ? ? ?]

The run-up has been sufficiently strong to fully negate the effects of four rounds of property market cooling measures. It has yet to be tamed as the market is still running on many legs — one of which is the low-interest-rate environment, which will likely persist in the near future.

However, even if one holds the view that there will be no property glut in 2013/2014, it does not mean that our worries are over.

We cannot preclude that one can quickly build up later.

It is already evident that there are imbalances in the different housing segments even if there is an overall equilibrium — oversupply in the upper tiers and a shortage in the lower tiers.  [fOrces  the  pOOr to bUy  hIgh end hOmes  ? ? ? ?]

In a rapidly rising market where prices rise faster than household incomes, the imbalances will worsen.

If prices do not correct soon to re-align the mismatch, more supply may need to be announced to correct the severe shortage in the lower tiers. This can quickly build up into a glut even if one does not exist now.

If you subscribe to the view that there will be equilibrium by 2013/ 2014, what it means is that there is a limit to the price downside when the market corrects. Prices will fall until they reach the support level that matches all units with occupiers. In other words, we will have a sharp correction but no crash. But if you feel that there will be a glut between now and 2013, a price correction can be severe as there will simply be more housing units than occupiers.

Finally, the profile of buyers in the HDB resale market for May showed that private property owners (8 per cent) and permanent residents (20 per cent) still make up a sizeable chunk.

Last year, then National Development Minister Mah Bow Tan revealed — before the implementation of the new rules — that 10 per cent of buyers in the resale HDB market were private property owners, while PRs made up 20 per cent.

The latest numbers seem to suggest that the new rules have been ineffective.

On the contrary, I feel the measures have worked. What we are seeing are probably single-property private owners who are downgrading, owing to en-bloc sales or otherwise.

The indications from agents are that resale volumes have fallen drastically in May.

So 8 per cent and 20 per cent on a sharply reduced volume is much smaller in absolute numbers.

In fact, most private property owners and PRs who bought in May probably had little choice, unlike citizens who have the option to buy new Build-To-Order flats.

The rise of gerontophobia

Attempts to stay young only make growing old all the more frightening

Sydney-siders get A$7,000 to leave city

SYDNEY

A sparkling harbour, enticing beaches and a climate to die for.— From a distance, Sydney may seem like one of the world’s most desirable places to call home:

is not active ageing

Letter from Jolly Wee

I share the views of Dr Alexandre Kalache, a former head of ageing programmes at the World Health Organization, that older people working long hours in menial jobs is not active ageing and that Government handouts for the elderly poor can also address the ageing issues.

We often see our seniors as cleaners, bending over to clean public toilets, standing for long periods of time as pump attendants at petrol kiosks and as food court helpers walking about so many times to clear and carry away food trays from the tables.

Such scenes should not be allowed to become a way of life for our elderly poor in their sunset years, particularly in a country that can afford to do more to make life a little easier for them.

We will be able to appreciate these jobs better only when we try them out. A young person should multiply the physical demands of the job by two or three times to feel the toll it takes on an old body.

Meanwhile, it is not uncommon to hear those old folk say that they want to work past 60 years or so.

They may not be speaking from their hearts, so as not to embarrass their children, who may be in financial difficulty themselves, and are not financially able to give their old parents an easier life.

On handouts, I believe more can be given by our Government and private establishments so that our elderly poor need not have to work on a regular basis or at all, if they are in poor health or physically less able.

A clutch mentality would not be created if the handouts are for the elderly poor who cannot be economically active any more.

The handouts need not be all cash.

Free public transport, medical examination and supplies, and probably more generous senior citizen discounts for the poor, for food items.

Presidential Election: Tell them more

Letter from Tiong Choon Hin

THERE has been much hype in the media and elsewhere about the coming Presidential Election, which must be held by the end of August.

However, I doubt that the layman understands what the whole exercise is all about, other than that it is to choose a man to be the next President.

The President’s job of guarding Singapore’s reserves and so forth is not easily understood by many people, especially the old folk or by people who do not have much of an education.

Perhaps, as the Presidential Election draws near, an independent authority could be appointed to draw up an educational programme so that the voters I have mentioned will be able to understand what they are doing when they draw that cross on the voting slip?

have a long way to go

SHENZHEN

The pilot project, which could be replicated in other cities, underpins China’s ambitious plans to put at least half a million electric vehicles (EV) and plug-in hybrids on the road by 2015.

The country is already the world’s biggest emitter of greenhouse gases from burning fossil fuels and other human activities that scientists say are causing global warming. As the world’s largest and fastest-growing auto market, China’s carbon footprint can only grow.

To bolster China’s energy security, Beijing has pronounced the electric vehicle industry a top priority, earmarking US$1.5 billion (S$1.9 billion) annually for the next 10 years in the hope it can transform the country into one of the leading producers of clean vehicles.

But even with government support and the popular support of e-taxi customers, challenges remain for electric vehicles such as the e-taxis to gain broader acceptance and widespread use.

Charging stations are few and far between, repair shops are hard to find and the cars are costly. Even after generous government support, the Shenzhen e-taxi costs 80 per cent more than the Volkswagen Santana that ordinarily cruises the streets of Shenzhen.

“The electric car is still too expensive and we ended up paying a lot more than for a (VW) Santana, even with government subsidies,” said Mr Du Jun, general manager of Pengcheng E-taxi, the taxi operator participating in the pilot project.

Local manufacturers, from SAIC Motor to Dongfeng Motor Group, have pledged massive investments in greener vehicles. Global automakers, including BMW and Nissan Motor, are also working with local governments to roll out their E-Mini and Leaf respectively.

For China to hit its EV targets however, will mean quickly winning market acceptance for an untested technology.

“I think it’s going to be a very, very long time because the Chinese consumer, at the end of the day, is very pragmatic and wants a reliable car with a gasoline engine. They don’t want to be the ones experimenting,” said Mr Michael Dunne, president of industry consultancy Dunne & Co in Hong Kong.

— A pioneering electric taxi (picture) project in China’s southern economic powerhouse of Shenzhen seems a success by most accounts. Riders are enthusiastic, there have been no accidents and drivers are termed “gracious”, not a term usually applied to mainland drivers.Reuters

M’sia to launch affordable home scheme for middle class this year

PETALING JAYA

The housing scheme, an extension of the My First Home Scheme for units priced between RM100,000 (S$40,684) and RM220,000, will see stratified units priced between RM220,000 and RM300,000.

The initiative is aimed at first-time homebuyers with a monthly household income of less than RM6,000,

“The government will do whatever it can to ensure the lower income group will have a house and the medium-income group will have a chance to buy a property of their own,” Housing and Local Government Minister Chor Chee Heung said in an exclusive interview.

Units built in Kuala Lumpur, Penang and Johor Baru will cost up to RM300,000, while those in other parts of Malaysia will be cheaper.

The apartments, which will range between 850 sq ft and 1,000 sq ft, will have at least three rooms, Mr Chor said.

The report comes as the Chief Minister of Sabah, Mr Musa Aman, called on developers to build houses for a broader market.

“While profit is important, it is the responsibility of developers, especially those which have carried out projects in Sabah, to give back to the people by offering them quality yet affordable housing, and preferably in areas accessible to public transport,” he said at the groundbreaking ceremony of Jesselton Residences.

Mr Musa added that middle-income families also find it difficult to buy houses that are large and comfortable due to rising prices, the — Malaysia will launch affordable government-built homes later this year to cater to its middle-income citizens.The Star newspaper reported yesterday.Daily Express newspaper reported.

Suu Kyi warned that tour may trigger riots

YANGON — Myanmar’s state media warned pro-democracy leader Aung San Suu Kyi (picture) yesterday to stop political activities, saying her plans to travel outside Yangon to meet supporters could trigger riots.

tragedy

for Europe

• Any claim of property market trend or movement or economic forecast must be substantiated by statistics from reliable sources, such as from a government agency’s reports.

real estate agents: CEA

QIUYI TAN

tanqiuyi@mediacorp.com.sg

SINGAPORE

Under one of the new guidelines, such misleading headlines, will not be allowed in advertisements and publicity collaterals and flouting it could result in disciplinary action.— Come August, real estate advertisements proclaiming “advance loans available”, “real estate specialist” and “king of XX (name of estate)”, could become a thing of the past, as the Council for Estate Agencies (CEA) yesterday issued two new practice guidelines, in its continued efforts to raise the professionalism of the industry.