Recently developers have been sounding out to the government that the recent cooling measures are going to hurt an already frail economy and could spark a downward spiral for property prices. There has also been speculation that the government would remove these measures if property prices were to correct too much or if the economy were to contract drastically. To me, I feel that these measures should and would stay.
This is not about economics anymore. From day one, property prices were determined by political factors more than economic ones. Then minister for national development, Mah Bow Tan, embarked on his "asset appreciation" policy and wanted public housing to be seen as an asset which would appreciate over time. It did not matter that prices escalated out of control and beyond the reach of people. If economics played a part, the cooling measures should have been implemented from the onset of the bubble in 2009. Nothing was done and minister Mah allowed property prices to appreciate in a dramatic fashion after the financial crisis in 2008.
Next up was the use of social media. Politics in social media was liberalised. Singaporeans could discuss about politics and political groups could use sites such as Facebook and Twitter to spread their propaganda. Out came the opposition and they highlighted the problem of housing to all Singaporeans, young and old. It caused a great awakening and people realised that this spike in prices could not go on forever. Housing was one of the core topics in the general election of 2010.
Finally, the last straw to the PAP was the loss of a great comrade Mr George Yeo. Not only was he an able foreign minister, he was, to me, a possible candidate to take over as Prime Minister when Mr Lee Hsien Loong were to step down. This shocked the PAP and they had to do something. They realised that the past years were filled with mistakes in policies and that the unhappiness on the ground was spreading. Old guards like Lee Kuan Yew, Goh Chok Tong, Wong Kan Seng and Mah Bow Tan stepped down from the cabinet and finally our PM Lee Hsien Loong could assemble a cabinet which he could truly call his own. The PAP is now more consultative than authoritative.
Thus I would politely remind an association like REDAS that property prices have their ups and downs. Just because the government is trying to cool it down does not mean that you can throw economic rationale to the measures implemented. If REDAS truly cared about economics, why didn't developers feel that something was weird with our property market when they were making obscene amounts of money the past few years?
Typical upper elite class behavior. Only make noise when things don't go their way. They seem to forget that they had it very good for the last few years.
Yours Sincerely,
Daryl Lum
(+65) 9009 8731
visit my website @ www.DarylLum.com
read my blog @ www.DarylLum.blogspot.com
Friday, December 30, 2011
Monday, December 12, 2011
What drives the market?
The latest set of cooling measures seem to be rather harsh but personally I feel it's the right step to take to make Singapore a home for Singaporeans.
The past few days I have been bombarded by my clients as to where the market would be heading. There are a thousand and one reasons as to whether the market will go up or down. However I think all reasons boil down to one main reason.
SENTIMENT
Not too long ago, majority of analysts, developers, home buyers and owners, real estate agents all thought that Singapore market was going to become more and more expensive. We live in a land scarce country and thus prices must increase. Thus buying a property is a sure bet to securing a healthy profit a couple of years later.
What a difference a few months make. Today analysts are singing to the tune that market is going to correct. One analyst from Standard Chartered even forecasted a 30% drop in home prices in the next few years.
Let's then look at what happened. In mid 2010, analysts predicted that markets had already peaked and will rise slowly in 2011. The market did not peak in 2010 and instead peaked in mid 2011 at a level 16% higher than the last property peak in 2007. We underestimated the magnitude of the property boom. This time round analysts are generally betting on a 10-15% correction. I believe that we will again underestimate the market.
Sentiment drives the market. Regulations set by the government help fuel the sentiment, be it positive or negative. The last minister in charge of national development set out policies which caused the shortage in supply and thus it fueled the euphoric sentiment that came along with a recovering economy and record low borrowing rates. Thus the ridiculous spike in real estate prices. This new minister is more people-centric and listens to public feedback about Singaporeans wanting to own affordable properties. Sentiment was that market had peaked and will come down in the near future due to the global market turmoil. His policies, which will serve Singaporeans well in the long run, will fuel the negative sentiment, causing prices to correct deeper than what we expect.
Oh well, prices are too expensive in the first place. A correction will be good and healthy and will NOT destabilize the economy. Property prices are not going to halve. This is just a wake up call for everyone not to over commit themselves. In the long run, lower prices will mean more affordable housing for the people in Singapore.
Yours Sincerely,
Daryl Lum
(+65) 9009 8731
visit my website @ www.DarylLum.com
read my blog @ www.DarylLum.blogspot.com
The past few days I have been bombarded by my clients as to where the market would be heading. There are a thousand and one reasons as to whether the market will go up or down. However I think all reasons boil down to one main reason.
SENTIMENT
Not too long ago, majority of analysts, developers, home buyers and owners, real estate agents all thought that Singapore market was going to become more and more expensive. We live in a land scarce country and thus prices must increase. Thus buying a property is a sure bet to securing a healthy profit a couple of years later.
What a difference a few months make. Today analysts are singing to the tune that market is going to correct. One analyst from Standard Chartered even forecasted a 30% drop in home prices in the next few years.
Let's then look at what happened. In mid 2010, analysts predicted that markets had already peaked and will rise slowly in 2011. The market did not peak in 2010 and instead peaked in mid 2011 at a level 16% higher than the last property peak in 2007. We underestimated the magnitude of the property boom. This time round analysts are generally betting on a 10-15% correction. I believe that we will again underestimate the market.
Sentiment drives the market. Regulations set by the government help fuel the sentiment, be it positive or negative. The last minister in charge of national development set out policies which caused the shortage in supply and thus it fueled the euphoric sentiment that came along with a recovering economy and record low borrowing rates. Thus the ridiculous spike in real estate prices. This new minister is more people-centric and listens to public feedback about Singaporeans wanting to own affordable properties. Sentiment was that market had peaked and will come down in the near future due to the global market turmoil. His policies, which will serve Singaporeans well in the long run, will fuel the negative sentiment, causing prices to correct deeper than what we expect.
Oh well, prices are too expensive in the first place. A correction will be good and healthy and will NOT destabilize the economy. Property prices are not going to halve. This is just a wake up call for everyone not to over commit themselves. In the long run, lower prices will mean more affordable housing for the people in Singapore.
Yours Sincerely,
Daryl Lum
(+65) 9009 8731
visit my website @ www.DarylLum.com
read my blog @ www.DarylLum.blogspot.com
Thursday, December 01, 2011
The erosion of our social core
A client of mine recently could not complete the purchase of her new flat because she did not have sufficient funds in cash to fork out for the cash over valuation and down payment. Usually these monies are to be handed to the solicitor acting for the purchaser so that the solicitor can make the payment to the sellers. It was of no fault of mine that she did not have the money. She required about $10,000 worth of cash to complete the sale of her property. A few weeks ago she had collected a hefty cheque of more than $60,000 as profits from the sale of her flat. I told her to keep the monies and remember to set aside sufficient monies for the completion of the flat she purchased. She agreed to do so as well.
How then did this amount disappear in a matter of two weeks? Very simple, she had squandered it on the casino. She knew she needed this money and yet she was tempted to place all of it at the gambling tables of our very own casinos.
When the government built these "integrated resorts" they promised us that there was going to be barriers for Singaporeans to enter their premises. A few years on, the "integrated resorts" are experiencing extraordinary profits. The foreigners which we were supposed to attract are coming in but then who are the ones actually playing at the tables? Singaporeans. Let's all wake up to the fact that these are casinos and stop trying to dress them up merely by renaming them "integrated resorts". Other than the $100 levy, the government has not tried anything significant to educate Singaporeans about the ills of gambling. Buses were allowed to pick Singaporeans from heartland malls and were only halted after a public outcry. I also wonder how many Singaporeans are aware that we have a National Council on Problem Gambling (NCPG)? If our casinos are truly designed for foreigners then why is it that there are more entry points for Singaporeans and Permanent Residences than for foreigners? Why not have an opt in option rather than an opt out option? What we should have is that every Singaporean and Permanent Resident should be excluded by default from entering the casinos. If anyone wants to play, he has to apply and obtain a permit. This hassle will deter a quite substantial group of people and it will also sound alarm bells to the families of people who have a gambling addiction. The reason why the government opted for the current system? Profits.
I have a friend who has lost his whole hairdressing business due to the massive debts that he chalked up at the tables of the casinos. Let's face it. $100 is not a significant amount. I have clients who have had to sell multiple properties just to fund their gambling addiction.
It is a multi billion dollar industry. However, to me, the economic benefits that come along with it do not outweigh the social ills that is affecting our nation.
I'm very sorry but the government has taken the very very low road this time round.
Singapore is a land where there are no shortcuts. Everyone works hard for a living. The casinos are eroding the very social core of our society.
Yours Sincerely,
Daryl Lum
(+65) 9009 8731
visit my website @ www.DarylLum.com
read my blog @ www.DarylLum.blogspot.com
How then did this amount disappear in a matter of two weeks? Very simple, she had squandered it on the casino. She knew she needed this money and yet she was tempted to place all of it at the gambling tables of our very own casinos.
When the government built these "integrated resorts" they promised us that there was going to be barriers for Singaporeans to enter their premises. A few years on, the "integrated resorts" are experiencing extraordinary profits. The foreigners which we were supposed to attract are coming in but then who are the ones actually playing at the tables? Singaporeans. Let's all wake up to the fact that these are casinos and stop trying to dress them up merely by renaming them "integrated resorts". Other than the $100 levy, the government has not tried anything significant to educate Singaporeans about the ills of gambling. Buses were allowed to pick Singaporeans from heartland malls and were only halted after a public outcry. I also wonder how many Singaporeans are aware that we have a National Council on Problem Gambling (NCPG)? If our casinos are truly designed for foreigners then why is it that there are more entry points for Singaporeans and Permanent Residences than for foreigners? Why not have an opt in option rather than an opt out option? What we should have is that every Singaporean and Permanent Resident should be excluded by default from entering the casinos. If anyone wants to play, he has to apply and obtain a permit. This hassle will deter a quite substantial group of people and it will also sound alarm bells to the families of people who have a gambling addiction. The reason why the government opted for the current system? Profits.
I have a friend who has lost his whole hairdressing business due to the massive debts that he chalked up at the tables of the casinos. Let's face it. $100 is not a significant amount. I have clients who have had to sell multiple properties just to fund their gambling addiction.
It is a multi billion dollar industry. However, to me, the economic benefits that come along with it do not outweigh the social ills that is affecting our nation.
I'm very sorry but the government has taken the very very low road this time round.
Singapore is a land where there are no shortcuts. Everyone works hard for a living. The casinos are eroding the very social core of our society.
Yours Sincerely,
Daryl Lum
(+65) 9009 8731
visit my website @ www.DarylLum.com
read my blog @ www.DarylLum.blogspot.com
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