I had an old blog post titled “Is property the reason why Singapore is not among the happiest countries in the world?”. I thought the topic was a bit dry. Unexpectedly, it turned out to be one of the most read posts in my blog.
That is not a good sign. It shows that many Singaporeans are not really happy with life. Because normally, people don’t read an article when they don’t agree with the headline.
Besides, people are not interested to find out more about what they have already accomplished: When you are financially-free, you don’t think about financial freedom anymore. If you are a millionaire, you don’t read articles teaching others how to be one. When you have a stable and loving relationship, you don’t spend time googling how you can be loved. If you and people around you are happy, who cares whether Singapore is or isn’t among the happiest countries?
We thought Singaporeans are clever, but …
In 2019, Forbes published an article with the title “Ranked: The 25 Smartest Countries In The World” (Did the headline prompt you to click on the link right away?)
To our relief, Singapore ranks first in the world in both school achievement and national IQ (Hooray!). However, when it comes to Nobel Prize ranking, we are lagging way behind the other countries, occupying a disappointing position of 73rd. As a result, Singapore ranks only 25th among the world’s cleverest countries.
I can recall our local media reporting Singapore’s top ranking in school performance and in major subjects, but not our ranking in Nobel Prize nor the ranking among smartest countries.
Now and then, we see news headlines that read “Singapore ranks first in …” “Singapore among top ten in …” “… ranks Singapore second in …” etc.
Our media loves to publish research findings with country rankings. Singaporeans are eager to discover how we fare compared with other nations, regardless of whether we are being categorized or benchmarked accurately. The hunger for rankings is not about competitiveness. It is about self-confidence and the desperation to seek acceptance and recognition from others.
The University of Pennsylvania studies how much citizens in each country care about international rankings. Claiming the bottom spot for the 35th year in a row is Americans who are “firmly not giving a shit about what anyone thinks to a detrimental extreme.”
Why are our IQ scores falling by the day?
If our students are number one in school test results, and we have the top national IQ in the world, why can’t we produce any Nobel Prize winner?
The study shows that Asian countries occupy the tops spots in school achievement and IQ scores. But Nobel Prize winners are concentrated in the western world, with US, UK, Germany, France and Sweden in the 1st, 2nd, 3rd and 4th position respectively.
What did the results of “The 25 Smartest Countries In The World” tell us?
1) People with high IQ scores may do well in study and work, but may not necessarily have exceptional achievement in life.
2) Education systems focusing on academic scores may not be able to produce extraordinary achievers with great benefits to humankind.
We know that the average national IQ score is linked to a country’s economic growth. However, a CNN article revealed studies that prove the IQ scores in developed countries declining steadily in the past few decades. This is the result of environmental factors, namely our education system and media environment.
The fact is: We are reading less but being online more. This makes us dumber. When we don’t know anything, we google. Most people know how to google. But less people know how to think. We are contented with outsourcing our problems and questions to technology. Some people end up being IT experts but real-life idiots.
Why the property facts show that we are not that clever
(WARNING: The following content is not meant for readers who are proud of themselves, their homes, their properties, the Singapore (upgrade) dream and the Singapore home ownership scheme. Continue reading is likely to hurt their pride and dignity. They are strongly recommended to skip the rest of the post now.)
Reason #1: We are contented with a little luck and small successes.
Kenichi Ohmae (大前研一) is a world-renowned economist, author and management consultant. In his book The Era of Low IQ (低IQ時代), he mentioned many Japanese have lost hope that the country’s economy will recover to the level of early-1990s before the deflation of the asset bubble. After three lost decades, people are used to things not moving at all.
The young Japanese don’t like to use their brain. Their powers to communicate, think and solve problems are deteriorating. Unlike the older generations, they have low expectations of life. They only care about trivial things around them. They are looking for a little luck in everyday life (小确幸) – a term invented by Japanese writer Haruki Murakami (村上春树). For instance, I hope to see a pretty girl walking down the street today and it really happened. How lucky!
In Singapore, half a decade ago our pioneer generation worked hard with the young government to build a new country. It was also common to see baby boomers and Generation X who wanted to live a better life than their parents. But our new generation tends to be contented with just a little luck in life – Find the right person to apply for a new BTO flat. Then sell it after five years for a good profit. Maybe it can be the next million-dollar deal. How lucky!
Do you personally know any young Singaporean whose life goal is to advance mankind in the fields of peace, literature, economics, medicine, physics or chemistry like those Nobel Prize winners?
Reason #2: We want others to lead. We just follow.
Singapore adopts a meritocracy model – with the few elites lead while the rest follow. This proves to be a successful growth strategy to drive a small new country to prosperity.
The elites are using their brain so we don’t have to. You and I are only the man in the street. If there is a problem, look for the right department to help. If something can be done better, lodge a complaint. Ask, and you shall receive.
Gradually, we have developed a culture to rely on somebody else to give us instructions, to show us the direction, and to solve our problems.
1) Follow the herd to buy old or new HDB flats
HDB resale flat buyers used to pay high cash-over-valuation for aging flats. The purpose was to anticipate SERS (Selective En bloc Redevelopment Scheme). After that, the value of the flat would jump. Then the herd was dispersed after Minister Lawrence Wong reminded us that only selected aging HDB blocks with high redevelopment potential will go for SERS. The rest will see their flat value drop with an expiring lease.
Homebuyers wake up with a 360-degree change in their buying pattern. They ditch older resale flats for newer ones, especially those that just past their 5-year MOP. Some don’t mind paying a million dollar for flats in strategic locations. With more higher value flats sold in the market, prices of HDB resale flats finally climb out of their trough.
Many buyers lack the ability to think for themselves and differentiate whether the information presented to them is true or false. Instead of evaluating risk and return, they go along with others, thinking that it is safe to follow the majority. And the herd goes around like parrots repeating what everyone else is saying.
Buying a home is something very personal. Instead of looking at what others are doing, shouldn’t we ask ourselves what we really want? Do we buy in a particular area because it has sentimental value to us? Do we prefer new or older flats because we like the layout or amenities?
2) Follow the herd to buy new private homes
We don’t ask why. We don’t like to think. It’s best someone can tell us what, when and how to buy.
Everybody is eager to upgrade. Those who have no clue want others to show them when to take action. Many look up to industry experts to give them some hints. Homebuyers immediately see it as a sign and flock to the sales galleries.
Seeing the big crowd at the preview weekend proves them right. What the media say is true. The market has picked up again. There is a big demand for new projects. Everyone is buying now. We cannot miss the boat this time. We had better be quick and buy now.
Do people who tell us to buy have vested interest? Do they have our best interest in mind? Do they take all the upside while leaving us with the downside? These questions never cross our mind.
Reason #3: We believe property is the only way to build wealth.
If we continue to believe in something that is not true or no longer valid, it is either we are stubborn or we are not that clever.
1) A home can be a depreciating liability rather than an asset
A property will depreciate over time because of the need for more repairs as it ages. If a home is mortgaged, it is a liability. In other words, a mortgaged home is a depreciating liability, not an asset.
Many people are not aware of the fact that our home is not calculated as part of our total net worth. If we stay in our property, there is no income but only expenses. Because we need to stay in this home and can’t sell it now, whether its value goes up or down has nothing to do with us.
Anything can happen in the future. No one can predict the size of profit or loss the moment we sell our home in the future. Without economic growth, property prices can be stagnant or falling.
2) Property is no longer a good investment
With Singapore transformed from an emerging country to a developed nation, housing prices also multiplied many times. Although it is impossible for us to go through the same path again, the conventional wisdom “buy property will make money” has implanted deep inside our mind.
A recent Business Times article highlighted the fact that the attractive long-term capital appreciation in the past from owning Singapore private homes is unlikely to be repeated (“Pot of gold at end of Singapore property rainbow? Not a sure thing anymore”, The Business Times, 22 April 2021)
The most common question from readers of this blog is always “Is it a good time to invest in properties now?”
Isn’t the answer too obvious? There are only two main calculations to evaluate the feasibility of a property investment: cash-on-cash return and net income.
• With high prices and Additional Buyer’s Stamp Duty, the cash-on-cash return of investing in private homes is miserable.
• With low rent but high maintenance fee, after paying mortgage and property tax, there is low or no net income every month.
And buying at high prices near the peak of the market with high transaction and running costs is a formula that guarantees a loss for investors. If we know investing in properties now can’t make money and still go for it, are we dumb or what?
If you need advice on property matters or residential properties in Singapore, you can check out my personal consultation service.
My new book Behind The Scenes of The Property Market is now available for preview and order online. You can also check out my online courses.
For a society to accomplish extraordinary things, large numbers of people need to “move fast & break rules”. If carried out in positive manner, it means not accepting conventional wisdom, willing to try new things, irritate the establishment, & fail. It’s an attitude thing.
However if the top-down culture is “move fast & break heads” or “move slow & break heads”, then people will follow the herd & safety first. It’s not a coincidence that all the top countries for Nobel prizes have much higher levels of social safety nets, freedom of speech, & welfare than S’pore.
As for those million-dollar HDB, almost all are newer high density precincts whose gross plot ratio have been maxed out. Doubtful if they will ever see SERS. So buyers are engaging in greater fool game, or simply have too much money burning a hole in their pockets.
Maybe they’re thinking there will be high inflation & SGD will become devalued to the point where 1 chicken rice will cost $50 in 20 yrs time.
You have spoken the truth in the points you made. There’s no best way to run a country. There are things to sacrifice in any way.
Agree with you that what the majority of people are thinking or doing often don’t make good sense. And there are less people who have independent thinking and dare to think or act differently.
Rankings during school days to make MOE look good. They have basically force fed our kids materials meant for higher levels and hence our kids perform better than peers.
Sometimes I don’t understand why primary school kids need to learn topics in such depth. It only kills their interest in the subject which defeats the purpose of learning. We adults all know that making us learn many things at a young age won’t make us smarter when we grow up.
Great article. I think you covered the key points: cultural (“study hard, get a job”), comfort zone (“don’t break things”, to Sinkie’s point) and political climate (“don’t break or question things, or else…”).
(Private) property debt can be a big overhang and I think partly this results in people following the path of least resistance. Breakthroughs (Nobel prize ranking) do not come from following the herd. We need outliers (you are an example, its a compliment!) and creativity – but just like policymakers encouraging people to make more babies, unless you have the right ingredients you can’t do it by command / tweaking incentives.
Lastly, we teach advance math, science in schools, but yet we do not teach students basic financial literacy. I have met scores of people making 5 digit monthly salary and yet cannot manage their cash flow, which then stifles options as mentioned above.
Well said. I completely agree with you the 3 factors: cultural, comfort zone and political climate.
You are right that IQ, income level and social status have nothing to do with financial literacy.
The objective of our country is to produce followers who are loyal MNC employees or civil servants. If too many people follow their dream, commit their life to entrepreneurial, creative work or a grand cause, there won’t be enough manpower for companies, and a population big enough to buy homes and pay their monthly mortgage obligingly.
Following the herd gives people peace of mind until they face a big change or a crisis.