“Singapore Govt ‘not averse’ to more property cooling measures if necessary: Desmond Lee” – that was the title of a Straits Times article published last Friday (Jan 17).
A few questions pop up in my mind:
– Were HDB property cooling measures effective?
– Did private property cooling measures work?
– Is new property curb a self-fulfilling prophecy?
– Do we want property prices to go up or down?
Were HDB property cooling measures effective?
National Development Minister Desmond Lee was replying to the media’s question whether the government’s efforts have addressed concerns over housing affordability over the past years.
Lee said the last round of property cooling measures was effective. After the implementation of the 15-month wait-out period, the number of private property downgraders paying high prices for HDB flats has dropped from 34 percent in the first nine months of 2022 to 12 percent in the first eleven months of 2024.
However, the new restriction of 15-month wait-out was only effective since October 2022. Taking into account a home’s average selling time of six months and another 15 months’ of waiting, it is understandable that private property downgraders couldn’t buy an HDB flat at least in the first half of 2024.
In August 2024, HDB housing loan LTV lowered from 80 percent to 75 percent. Despite all these public housing cooling measures, HDB resale prices still climbed 9.7 percent in 2024, up from 4.9 percent increase in 2023. Furthermore, the number of HDB million-dollar deals has jumped from 469 in 2023 to 1,035 in 2024.
Did private property cooling measures work?
What about cooling measures for private homes?
“In the last 10 years, despite the government’s repeated warnings to buy properties prudently, property-obsessed Singaporeans still rushed to snap up private homes amid spiralling prices. It is precisely because the homebuyers were not worried that the government was very worried.
To slow down an overheated private residential market To slow down an overheated private residential market, eight rounds of cooling measures were introduced between September 2009 and June 2013. From the 3rd quarter of 2013 to the 2nd quarter of 2017, private home prices dropped 11.6 percent.”
– Vina Ip, Behind The Scenes of The Property Market
Eight rounds of private property cooling measures were insufficient. There were another four rounds on 5 July 2018, 15 December 2021, 29 September 2022 and 26 April 2023.
Any country in the world can beat Singapore in the frequency of introducing new property curbs?
If private property cooling measures worked, why did the government need to roll out twelve rounds in fourteen years?
I can’t help thinking that Singapore property cooling measures to control prices are like our MRT trains. We need to accept the fact that sometimes they work, sometimes they don’t.
Is new property curb a self-fulfilling prophecy?
1) HDB resale flats
Minister Lee emphasized that the curbs are meant to keep property prices under control. It’s not time to roll them back yet. He also attributed rising HDB resale prices to “sentiment-driven psychology”:
“Million-dollar resale flats, despite being concentrated in locations with good attributes and forming a small proportion of overall resale transactions, have caused sellers to believe they can raise their asking prices.
Those who pay very high prices, especially high prices above valuation, will be at greatest risk when the market – when, not if – eventually does correct.”
Our government is worried that greedy sellers are raising prices too high and FOMO homebuyers are buying at prices well above valuations. To prevent high risk when market direction changes, the government must do something now. This is a common practice of a nanny state for people who have difficulties making their own decision.
“Singapore is arguably a nanny state where our government is regarded as overprotective. Whenever we have any doubt, concern, complaint or problem, we look up to the government for clarifications, reassurances, rules and solutions.”
– Vina Ip, Behind The Scenes of The Property Market
2) Private homes
In the 4th quarter of 2024, developers all rushed to launch new projeccts, with 3,425 new units pushed to the market at the same time. This is the highest number of new private residential units released since the first quarter of 2021.
Unsurprisingly, we read property headlines like “New private home sales surge 84% in October”, or “Singapore’s new home sales more than treble in November”, “
Of course, the media couldn’t wait to congratulate their developer advertisers with headlines “696 out of Chuan Park’s 916 units sold on launch weekend”, “Emerald of Katong 99% sold”, and “The Orie condo at Toa Payoh sells 86% of units at launch”.
I wonder whether these headlines are actually meant to set the stage for imposing new private property cooling measures. With GE2025 on its way, cost of living and housing affordability will definitely come into focus.
As Nicholas Mak at Mogul.sg said in the Orie condo article,
“The authorities are closely watching the housing market, particularly the buying demand and price movement. Every burst of euphoric sales that led to new record prices would only strengthen the argument for tougher government intervention to moderate prices and demand in the property market.”
Do we want property prices to go up or down?
According to Singapore Department of Statistics, we have a high home ownership rate of 89.7 percent. By right, the majority should be happy seeing our home value goes up. Discontent should only come from the minority who don’t own a home but are looking to buy one.
“The rapid hike in property prices over the last few decades is proof of our country’s success. A healthy property market is the pride of the nation and the self-esteem of its citizens. With real estate occupying a significant portion of our wealth, we pin our hopes on the sustainable growth of property prices.”
– Vina Ip, Behind The Scenes of The Property Market
What about upgrading our home?
In 2023, 77.8 percent of Singapore residents stay in public housing. Since upgrading to a private home can be a Singapore dream, people are happy to see the growth of private home prices under control. However, we can’t deny the fact that many of us cannot afford private homes, regardless of high or low prices.
The fact is: We are unhappy whether we see rising or falling property prices.
When the economy is good, we complain about ever rising property prices becoming out of reach. But when the economy is bad, we lament the falling value of our home and dare not upgrade.
If home prices are stagnant or under control, we complain that they cannot beat inflation. Our most valuable asset does nothing for wealth accumulation to prepare for our retirement or for the next generation.
The conclusion: It doesn’t matter whether property prices are going up, down or horizontal – whichever direction people will be upset.
What if home prices fell 30 percent?
For a long while, the media have been reporting Hong Kong’s falling home prices. Housing prices have tumbled 30 percent from its last peak in 2021. But this was after home prices skyrocketed 250 percent in 12 years from their bottom in 2009.
(In comparison, Singapore’s private residential prices climbed just 60 percent in the same period from 2009 to 2021. Should we thank or blame our government for the nine rounds of property cooling measures during that period?)
Hong Kong property agencies forecast 2025 home prices to go up 5 to 10 percent. However, like Singapore, Hong Kong developers didn’t cooperate and voted with their feet during land sales with poor participation. If property prices are going up soon, why are developers offering discounts for new projects to clear stock? Are they making too much money and giving back to homebuyers?
For the longest time, Hong Kong people put all their hard-earned money into home buying. Whenever they had money, they put it into properties. Now home prices fell 30 percent and still counting. Market voices are negative. Homeowners feel themselves getting poorer. They are unwilling to spend money. Many businesses and the local economy suffer.
Remember Singapore home prices plunged 45 percent before?
“The Asian Financial Crisis which happened in 1997 involved a currency crisis. The rapid increase in interest rates sent property prices plummeting. The inability of owners to repay or restructure their housing loans caused widespread mortgage default and bank foreclosures. By the end of 1998, Singapore property prices had dropped 45 percent from their peak in mid-1996. It was not until twelve years later in 2008 that prices finally recovered to the previous level.”
– Vina Ip, No B.S. Guide to Property Investment
Why can’t we accept the ups and downs of real estate?
On the other hand, if home prices continue to fall, genuine homebuyers such as young couples and growing families can finally afford a roof over their head.
As China President Xi Jinping said, homes are for own stay, not for speculation. We make the purchase when we have housing need and when prices are reasonable.
This is more positive and practical than lamenting home prices keep going up. Or feel upset whenever we see others jump on the bandwagon when we can’t afford to buy. Or chasing escalating property prices for fear of missing out.
Why can’t we accept the fact that real estate, like any asset or money market, has its ups and downs in cycle?
Why are we so obsessed with properties? If the property market offers no value-for-money, we can always invest in other assets which offer better return.
Every now and then there is an asset bubble growing somewhere and will eventually collapse. We can sit back, relax, and wait for the right time to enter the market.
My book Behind The Scenes of The Property Market is available for preview and order online.
If you need advice on property matters or residential properties in Singapore, you can check out my one-to-one consultation service.
Check out my new online courses How To Buy Good Quality Properties and Buy The Right Condos.
Maybe no need cooling measures. Government just needs to clamp down on agents giving “cash back” from their lucrative commission in any ways like referral fees, etc.
Understand some agencies are giving out 100% commission without taking percentage cut to the company.
How does this industry claim to be Professional if agencies and agents go about undercutting business.
Happening. Go to show flat and after or even before presentation, ask for “discount price”, see how the agents react. Don’t need to take “NO” as answer, go to the next one.
Some project team pay their agents a flat amount, the rest “cash back” to customers.
Eg. Hutton pays $500 to agent for Eco Sancturary launch and most Chinese buyers are very happy.
Sigh, CEA (The Council of Estate Agents) was founded in 2010. After 15 years, this is still very much a cowboy industry.