A recent letter to the press has again brought to the surface the concerns of a group of house-hunting citizens whose needs have not gained much attention since the General Election. The writer lamented that the changes announced by Prime Minister Lee Hsien Loong at the National Day Rally speech on Sunday did not address the housing aspirations of HDB upgraders such as himself.
He wrote that in 2008, the price difference between a resale five-room HDB flat and a low-end condominium was about 20 per cent and that the gap has widened past 70 per cent now. And just when potential HDB upgraders like himself are starting to see the value of their homes catch up with runaway private property prices, the Government steps in. He is probably referring to the huge increase in new supply of Build-To-Order flats that may eventually stymie or correct the growth in HDB resale flat prices – and in the process upset his upgrading plans.
He feels this is unfair as the Government has allowed private property prices to balloon beyond an upgrader’s reach. His concerns probably do not just reflect the feelings of the pool of potential HDB upgraders but a larger mass of households – including some owners of older or smaller private apartments – who share similar upgrading aspirations. This has always been the Singaporean dream – to upgrade from an HDB flat to a small private apartment and eventually to a more comfortable larger private home.
Of course, their upgrading aspirations are less urgent that those who do not yet own a flat, but as the housing shortage problem for new households looks to be coming to an end, I expect more of these potential upgraders to step up their demands on the Government to address their concerns as well.
Talking to these people, I sense the frustrations building up. I can understand them. If you take away their dream, what can they look forward to?
Rightly or wrongly, upgrading has come to represent a symbol of progress for most Singaporeans. And if you think about it, they are a much larger group than the new households whose needs are being addressed at the moment.
The present uncertain global economic environment has bought some time for the Government, taking the heat out of the private housing market so that the authorities need not have to introduce more cooling measures. This has allowed the Government to fully focus its efforts on the more urgent housing needs as a matter of priority.
If the world goes into a downturn and Singapore slips into recession or shows little growth, property prices are unlikely to shoot up too soon, even with the ample liquidity flooding into Asia and into the few economies still holding a triple-A rating – such as Singapore. I expect private housing sales to remain robust due to ample liquidity but for prices to stay flat or show only moderate rises due to the present weak economic conditions.
The problem arises when the economic situation starts to perk up. Investors are usually forward looking and an expectation of an upturn can quickly start cranking up prices once again – way ahead of any recovery. At this rate, I cannot see price levels – even if a correction does happen – coming down to the level of these Singaporeans with housing aspirations.
Once the correction is significant enough in the eyes of investors – but not to these potential upgraders – the former may just pour in and limit the downside.
Frustrations may then build up to a level where they may eventually force the Government to act to curb or control some of these money flows, especially into residential property. We may eventually adopt rules similar to Australia’s. Under Australian housing rules, foreign investors can only buy homes under construction. Once completed, these can only be sold to Australian citizens.
Having said this, I must qualify that I do not expect any foreign ownership restrictions to be introduced in the near future. Singapore takes great pride in being one of the freest economies in the world and we wear this like a badge of honour. As such, the authorities will try to exhaust all other means before they even contemplate introducing any major buying restrictions on foreign investors.
By Colin Tan – head of research and consultancy at Chesterton Suntec International.
Chinese nationals have again emerged as the top non-Singaporean buyers of private homes in the second quarter, acquiring 640 homes in Q2, up 26 percent from 527 units in Q1 2011.
According to a new report from DTZ, the proportion of acquisitions made by non-Singaporeans in the second quarter was similar to the 16 percent recorded in the previous quarter.
“In absolute terms, foreign purchases were 1,327 in Q2 2011, below the record high of 1,741 foreign purchases in Q2 2007. With the exception of one landed home in Sentosa Cove, the rest of the transactions by foreigners were for non-landed homes,” it said.
The report also noted that buyers from other Asian countries bought more units than in the previous quarter.
Malaysians – the second-biggest group of non-Singaporean buyers – bought 496 homes, 66 more units in the second quarter as compared with the 430 homes recorded earlier this year.
Private residential purchases by Indonesians also moved up from 320 to 408 units in the second quarter.
Despite making up a mere 1.6 per cent of non-Singaporean buyers, Vietnamese more than doubled their property deals this quarter, from 17 to 40 units.
Another small but growing market segment is landed properties bought by PRs, which came in at 33 homes, up from 28 last quarter.
But while foreigners and PRs have been more active, the report found that Singaporeans still easily dominate buying, making up 68 per cent of sales.
The other 2 per cent of private home sales were made by companies.
Mainland Chinese buyers have emerged as the biggest group of foreigners buying residential property in Singapore this year, according to the latest research from global real estate services firm DTZ.
Over April to June, residential
property sales grew a strong 20 percent from the previous quarter, with
the Chinese buying 640 properties during that period - 100 units more
than in the first quarter of the year, according to the report.
Buyers from the Mainland accounted for 26 percent of all purchases made by foreigners.
An agent from Singapore-based HSR International Realtors, Huang Xiao Qiong, told CNBC that she gets on average 10 clients a month from mainland China and so far this year, she has already sold local properties to 20 Chinese buyers.
"They don't get one house, most of them actually get a few," Qiong said. "One will be to stay in, and the rest will be for investment - whether it is to rent or just to keep until the price goes up."
Thirty-two-year-old David Wei, from China's northwestern Heilongjiang province, who has been working in Singapore for the past couple of years, said that he has been looking to buy an apartment in Singapore for some time now.
He feels property prices here are less volatile than in China and has sold his property in China in order to invest in a two-bedroom apartment in Singapore, which he sees as a long-term investment.
According to Qiong, Chinese businessmen like investing in Singapore, attracted by the island nation's good governance and legal system.
"When they have a bit of cash they think it's safer to put it Singapore," Qiong said.
She added that many people from mainland China also like to send their children to Singapore to study. "Many wives and children stay back in Singapore, while husbands spend most of their time doing business in China," Qiong said.
Connie Chai, Assistant Vice President at DTZ Resale, who's sold more than 10 units this year to mainland Chinese clients, said buyers usually look for a three or four bedroom apartment to live in or as a holiday home, but for an investment they prefer to buy smaller one or two bedroom units.
Barter Mu, 39, who has been living in Singapore since 2007 said he decided to buy a two-bedroom apartment in December last year after his family joined him from Shanghai.
"I think the price was reasonable, because otherwise I had to rent," Mu said. "Also for the long term, I think [prices] still can increase, and I can get a profit from the investment."
While growing in popularity with Chinese buyers, Singapore still has some catching up to do compared with Hong Kong, where mainland Chinese accounted for nearly 10 percent of all property sales in the first half of this year, according to one of Hong Kong's largest real estate firms, Centaline Property. Mainland Chinese made up 7.6 percent of total sales in Singapore during the second quarter of this year, according to DTZ.
But foreigners are continuing to drive up demand for high-end residential properties in Singapore. In the second quarter, foreign buyers made up 43 percent of all properties that were sold for S$1.5 million (US$1.2 million) or more. Whereas 75 percent of all properties that cost S$500,000 or less were bought by Singaporeans in the April to June quarter.