Are property prices real?

[Rani's]

I'm looking to settle in Singapore in the near future, as I'm engaged to be married to a Singaporean, but I can't help asking myself if the prices are real - both for rented and purchased properties alike.

I don't expect anyone's able to put any light on this question, so I apologise for writing it, but I'm wondering how the prices have been allowed to become the way that they are. Is it a case of profiteering? The construction costs of the building must surely be far less than the prices currently being asked.

Given that it seems to cost at least GBP 2m to buy a nice home with garden and a bit of space around it, I just can't understand how normal people are able to afford a home in Sg.

It also seems that the typical salary of normal Singaporeans just isn't enough to own their own home. How do they manage? Sorry, but I don't mean to ask irrelevant questions, but I'm struggling to reconcile the prices being asked.

[JayCee]

I'm looking to settle in Singapore in the near future, as I'm engaged to be married to a Singaporean, but I can't help asking myself if the prices are real - both for rented and purchased properties alike.

I don't expect anyone's able to put any light on this question, so I apologise for writing it, but I'm wondering how the prices have been allowed to become the way that they are. Is it a case of profiteering? The construction costs of the building must surely be far less than the prices currently being asked.

Given that it seems to cost at least GBP 2m to buy a nice home with garden and a bit of space around it, I just can't understand how normal people are able to afford a home in Sg.

It also seems that the typical salary of normal Singaporeans just isn't enough to own their own home. How do they manage? Sorry, but I don't mean to ask irrelevant questions, but I'm struggling to reconcile the prices being asked.

Most Singaporeans don't live in a nice home with a garden and a bit of space around it, they live on government estates (otherwise known as HDB) and receive lots of subsidies to keep them happy so they'll continue to vote for the ruling PAP party (although it doesn't work, they still complain about everything despite being probably one of the most pampered nations of people on the planet)

[Rani's]

Most Singaporeans don't live in a nice home with a garden and a bit of space around it, they live on government estates (otherwise known as HDB) and receive lots of subsidies...

Thanks JayCee, I can see that I have a lot to learn about Sg. Phew.

[the lynx]

Most Singaporeans don't live in a nice home with a garden and a bit of space around it, they live on government estates (otherwise known as HDB) and receive lots of subsidies...

Thanks JayCee, I can see that I have a lot to learn about Sg. Phew.

Just to note, even with all that, there have been grouses that the HDBs are still too expensive for them.

[Strong Eagle]

Property prices are a very serious problem in Singapore. While it has generally not been possible for non Singaporeans to buy landed properties, shop houses, and the like, the purchase of condos has been wide open.

My view is that the Singapore gahmen thought that by preventing sales of certain types of properties to foreigners, the overall balance of property costs would remain in line for the average Singaporean.

Unfortunately, that has not been the case at all. Price rises in the "private sector" have meant that HDB flats and shop houses are worth more as well... and the citizenry is right to gripe... Singapore is turning into another Hong Kong... where a minority of citizens and foreigners reap large profits while the rest face reduced standards of living due to housing costs.

And it is not only housing. Rents for restaurants are going up... you pay more to eat. Rents for retail establishments are going up... you pay more for what you buy to pay for that additional rent, and the logistics of reduced inventories.

It's bad all around. People need to make more money to keep a standard of living because of rent rises. Attracting new talent costs more, and makes it harder to bid on contracts because of those increased costs.

But, the Singapore gahmen is essentially screwed. Who owns the mortgages on all that expensive property? Singapore banks, the lifeblood of Singapore. Even if the gahmen wants to create more affordable housing, it can't really afford to see a drop in property values... and underwater mortgages... because then the banks are in trouble.

A bloody mess.

[macaroonie]

I don't understand how property prices (for purchase or rental) can go up so much! especially in the last 3-4 years. It really doesn't make sense. Salaries certainly have't gone up so much. It is beginning not to make sense working and living here.

Sure locals can buy HDB and get subsidies, but there is also a cap for those with a certain income level, and i dont think they can really afford condos even if they have hit the income ceiling and are no longer eligible for HDB flats. The prices are just too high. I mean a million dollars for a 1 bedroom condo is really crazy!

Do you think foreign talent, not earning exorbitant salaries, would survive here for long?

[sundaymorningstaple]

In reality the costs have just reached the 1996 prices.

[revhappy]

The problem is the low interest regime. Singapore controls its inflation using exchange rates instead of interest rates. As long as monthly installments is same as rents people will continue to buy and that causes prices to go up.

Also since interest rates are so bloody low here, it doesnt make sense to save money, rather people tend to invest and most of it goes to properties. If only interest rates were higher most of these problems wouldn't occur

[Rani's]

Property prices are a very serious problem in Singapore. While it has generally not been possible for non Singaporeans to buy landed properties, shop houses, and the like, the purchase of condos has been wide open...

I think from reading this, it is increasingly looking difficult to settle in Singapore, although I really want to do so, and ultimately wish to settle down with my fiancee and get married.

May I ask how the prices of HDB flats are set? Is the price when new dictated by the open market, or by the Government's price?

Also, are a mixed Singaporean/Western married couple (30 years old) allowed to purchase an HDB flat?

[JR8]

... But, the Singapore gahmen is essentially screwed. Who owns the mortgages on all that expensive property? Singapore banks, the lifeblood of Singapore. Even if the gahmen wants to create more affordable housing, it can't really afford to see a drop in property values... and underwater mortgages... because then the banks are in trouble.

A bloody mess.

An interesting post and I agree with much of what you said. But I have some trouble digesting the above. It would suggest that the country is a perpetual hostage to what banks will lend, but regulation is surely within their remit.

Or looking at it another way (and note I know little about he SG mortgage market) let's imagine that a typical mortgage is 75% loan-to-value (LTV). On a new mortgage that gives the lender a 25% cushion from todays prices before the borrower (and bank) is in negative equity. But let's say that the average outstanding mortgage was taken out maybe 7 years ago again at 75% LTV, the retracement point from today before banks feel any heat must surely be much larger (perhaps so large that it is is unlikely ever to happen?).

For me the question remains. Why are prices being allowed to get this out of control?

[zzm9980]

As long as monthly installments is same as rents people will continue to buy and that causes prices to go up.

Please point these out, I'll be the first to rent one! Everywhere i look rent is at *least* 50% more than what a typical mortgage payment would be with 20% down.

[the lynx]

As long as monthly installments is same as rents people will continue to buy and that causes prices to go up.

Please point these out, I'll be the first to rent one! Everywhere i look rent is at *least* 50% more than what a typical mortgage payment would be with 20% down.

Probably that's the reason why people want to buy; you earn more by renting it out at an amount way higher than your monthly instalments.

[skipper]

As long as monthly installments is same as rents people will continue to buy and that causes prices to go up.

Please point these out, I'll be the first to rent one! Everywhere i look rent is at *least* 50% more than what a typical mortgage payment would be with 20% down.

Probably that's the reason why people want to buy; you earn more by renting it out at an amount way higher than your monthly instalments.

Precisely, I just bought and took out a 20-year loan with my amortization around the same as my monthly rental. And it is a bigger unit (as I have a big family) so we're hoping that any wild swings in price (on a psf basis) will be manageable. But this is for my own use and not for investment..

[teck21]

For me the question remains. Why are prices being allowed to get this out of control?

The government can't quite control prices going up astronomically, and vice versa! They can try, and always have, but apart from a controlled economy, the problem is nobody ever knows when high has become too high, and low become too low. Until that point is actually reached.

Probably that's the reason why people want to buy; you earn more by renting it out at an amount way higher than your monthly instalments.

The thing is, I don't see how this state of affairs can persist based on current circumstances and trends. And this is exactly what is keeping a lot of owners afloat.

Whether we are anywhere close to the point of having to revert to the 'mean' is anyone's guess, but that's where I am placing my bet.

[teck21]

May I ask how the prices of HDB flats are set? Is the price when new dictated by the open market, or by the Government's price?quote]

Most interesting question! New HDB flats are sold to eligible citizens at a price that is benchmarked against resale prices (in the vicinity), and then discounted (that discount is called the market subsidy).

4-room flats in Sengkang were being hawked by HDB for under $200k in 2002, and the ones they were hawking now or, maybe a year or so back, c. $400k. Something to that effect. For an identical good, to all intents and purposes.

They built too many before that, and found that there were no takers until everything had been built. So they pretty much stopped building public homes for years, and when a high level government decision was taken to rapidly increase Singapore's resident population, HDB didn't get the memo obviously. Nor did anyone else for that matter!

So now apparently Singapore has a dire shortage of homes and everyone ranging from the HDB to my next door neighbour is building, building building!

Also, are a mixed Singaporean/Western married couple (30 years old) allowed to purchase an HDB flat?

One citizen and one permanent resident will do, subject to all other conditions of course found here: http://www.hdb.gov.sg/fi10/fi10321p.nsf ... itizenship

This if for a purchase direct from HDB, involves a wait of several years for construction to complete.