Strong demand for housing likely to continue: Khaw (zt)

Question

SINGAPORE: National Development Minister Khaw Boon Wan said strong demand for residential property in Singapore is likely to persist, as interest rates stay low.

In a question to the minister in Parliament on Monday, MP Foo Mee Har cited the case of a flat in Queenstown which was sold for S$1 million.

Mr Khaw said from time to time, some buyers are prepared to pay way above market valuation but these are exceptional cases.

He said residential property prices are stabilising, but Singapore is not yet "out of the woods".

Both private property and HDB resale markets showed signs of stabilising this year.

For private property, growth in prices slowed from 18 per cent in 2010, to 6 per cent in 2011, and to 0.9 per cent in the first three quarters of 2012.

Growth in the Yearly Resale Price Index (RPI) also dropped from 14.1 per cent in 2010, to 10.7 per cent last year, and to 3.9 per cent in the first three quarters of this year.

Nonetheless, flash estimates for the third quarter of 2012 show a 2 per cent uptick in the resale price index, from the second quarter.

He said the latest curbs on loan tenures are to prevent excessive speculation in both the public and private housing markets.

And this is in response to abnormal global monetary conditions that are keeping interest rates low.

The Monetary Authority of Singapore had recently announced a 35-year cap on residential property loans, and also tighter loan-to-value limits for loans that exceed 30 years.

To meet demand, Mr Khaw said the Housing and Development Board is keeping up the current pace of building new flats into 2013.

In 2011, HDB launched 25,000 new flats, and this year, the total will be some 27,000 units.

Mr Khaw said: "Every year, marriages that are involving citizens, we're talking about 15,000 family formations a year. So 25,000 units (new flats a year) provide some buffer. But we also have additional demand from upgraders, downgraders, second timers.

"In fact, if not for other policy changes I'd be beginning to wind it (the supply) down a little bit. Other than, because now we have this new subject of catering for singles. So I have to deliberately ramp it up a little bit higher in order to cater for singles. We're still mulling over it. Very hard to put a figure on how much should we cater for singles."

- CNA/ck

http://www.channelnewsasia.com/stories/singaporelocalnews/view/1231432/1/.html

陆翠荔 · Answer

HDB supply: Forgot about new citizens?（ZT)

I refer to the article “Strong demand for housing likely to continue: Khaw” (Channel NewsAsia, Oct 15).

Enough new flats?

It states that “Mr Khaw said: “Every year, marriages that are involving citizens, we’re talking about 15,000 family formations a year. So 25,000 units (new flats a year) provide some buffer. But we also have additional demand from upgraders, downgraders, second timers.

“In fact, if not for other policy changes I’d be beginning to wind it (the supply) down a little bit. Other than, because now we have this new subject of catering for singles. So I have to deliberately ramp it up a little bit higher in order to cater for singles. We’re still mulling over it. Very hard to put a figure on how much should we cater for singles.””

Forgot about new citizens?

I think the Minister may have forgotten about the average of about 18,500 new citizens a year, over the last five years or so. The actual figure for last year was 19,777 (“NCMP Lina Chiam’s question discovers more new citizens last year”).

Forgot about PRs in resale market too?

We should also not forget about the 340,000 new Permanent Residents (PRs) for the five years from 2006 to 2010(“Rapid Growth in Singapore’s Immigrant Population Brings Policy Challenges By Brenda S.A. Yeoh and Weiqiang Lin, National University of Singapore”), who may add demand and pricing pressure in the HDB resale and rental markets.

The above means that we had an average of about 68,000 new PRs a year, from 2006 to 2010.

For the period from 2007 to last year, there were 259,040 new PRs, reducing the average per year to 51,808. (“Many new PRs, citizens young, well-qualified”, Today, Jul 27).

Forgot about foreigners renting HDB too?

If we add to the above, the annual growth rate of foreigners to the population of 6.9 (89,400) and 7.2 per cent (99,800) in 2011 and 2012, respectively, the pressure on HDB rentals may continue as some foreigners may have to rent HDB flats or rooms.

So, looking at the above statistics, when will the HDB supply ever play catch-up with the continuing relentless rise of new citizens, PRs and foreigners? Oh, I forgot to mention that we are “ mulling over this new subject of catering for singles” too!

Forgot about 2013 too?

I also find it rather strange that the answer in Parliament (“Significantly more housing units to be completed in 2014”, Channel NewsAsia, Oct 15) gave estimates of the number of HDB flats projected to be completed in 2014 (26,800 flats) and 2012 (11,300), but was silent on the figure for 2013?

Why is this so?

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Leong Sze Hian

Leong Sze Hian is the Past President of the Society of Financial Service Professionals, an alumnus of Harvard University, Wharton Fellow, SEACeM Fellow and an author of 4 books. He is frequently quoted in the media. He has also been invited to speak more than 100 times in 25 countries on 5 continents. He has served as Honorary Consul of Jamaica, Chairman of the Institute of Administrative Management, and founding advisor to the Financial Planning Associations of Brunei and Indonesia. He has 3 Masters, 2 Bachelors degrees and 13 professional qualifications. He blogs at http://www.leongszehian.com.

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http://www.tremeritus.com/2012/10/21/hdb-supply-forgot-about-new-citizens/

Strong demand for housing likely to continue: Khaw (zt)

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