Resale flat prices are alarmingly high. They are at an all time high in fact. Recently I brokered an executive maisonette flat in Bishan for $90,000 above valuation. The valuation was priced at $690,000 and thus the flat was transacted at $780,000. The offer came in during the very first viewing. This actually made me wonder, are flats really that short in supply? Do we really have that serious a supply and demand imbalance? The answer to these questions is an astounding YES!
I had 23 groups of buyers and buyers who were represented by their agents we came to the property. The house was not done up and extensive renovation was required. However, it was one of two executive maisonette flats on sale in Bishan and thus it was rather rare.
As the option was being filled in, I pondered as to what the buyers would have to go through. A 25 year loan for $552,000 (80% of valuation) at 3 % interest would mean a monthly installment of $2,617.61! This would have to run on for the next 25 years. For public housing, I find it ridiculous. Moreover, the buyer has to for out $90,000 cash over valuation, $34,500 in cash down payment and $103,500 in CPF down payment. On top of that the buyers will need an extensive renovation on the property and estimated that it would cost them about $80,000 to do up the place to their liking. Throw in another $10,000 for furnishing and the total cash that the buyer would have to spend on this property is a whopping $214,500!!!
I find having to spend $214,500 worth of cash on public housing is ridiculous...
Let's all please remember, when you buy a HDB, you are owning the lease on the property. When you buy a private property, be it landed or condominium or apartment, you are owning the title of the land either as land itself or in strata title. This is a very big difference and this discussion will be left to a later post.
Now then, our current Minister for National Development has come out to say this....
http://www.channelnewsasia.com/stories/singaporelocalnews/view/1142742/1/.html
and I quote
"National Development Minister Khaw Boon Wan said it will take 3 to 5 years to "substantively resolve" the problem of high resale flat prices and for prices to stabilise."
Why then was this problem not singled out by the previous cabinet? It was already glaring. The asset appreciation policy was never an actual plan. It was conceived as a cover up for a flawed policy. One of lax immigration and poor housing supply planning. The two created a very good mix for escalating flat prices.
I am sorry but I believe that our ministers are and were paid a handsome sum of money to conceive policies that would benefit Singaporeans. Therefore we must have ministers with FORESIGHT, not SHORTSIGHT. I am a flat owner and I would like to say that I do not care if the value of my flat goes up or goes down. This is because I cannot monetise it.
Let's just say that I believe it is mainly this flawed policy that made our Prime Minister Lee Hsien Loong give an apology during the last election.
Let me first state that I believe that PM Lee is perhaps the right person to lead Singapore forward. However, the same cannot be said for some of the policy makers who came up with weird policies in the last 5 years.
All I have to say to the policy makers who made our PM give this apology, shame on you! What have you done?
That was about 2 years ago. Today, flat prices are still higher than ever, suburban condominiums are commanding in excess of $1,000 per square foot for leasehold developments. Banks are offering easy financing with interest rates close to zero, people are spending huge portions of their salaries financing their houses with the belief that Singapore can remain prosperous forever and they can keep their jobs always.
Dearest Minister Khaw, please be someone with foresight. We do not need to see the problem before reacting. We can take evasive measures before it becomes too late. (a HDB flat valued at SGD$1 million soon?)
Do not be a doctor who prescribes medicine for a patient when he is sick. Instead give the patient an inoculation to prevent him from getting the flu in the first place.
Yours Sincerely,
Daryl Lum
(+65) 9009 8731
visit my website @ www.DarylLum.com
read my blog @ www.DarylLum.blogspot.com
