Shanmugam: Singaporeans likely “culprits” for driving up HDB flat prices
January 18th, 2010 | 
Author: Written by Our Correspondent
Singaporeans are again blamed for the misguided policies of the ruling party which continues to turn a blind eye towards the problems it has created.
Despite the obvious fact that the relentless influx of foreigners over the years has led to a sky-rocketing of HDB flat prices, PAP leaders are adamant that foreigners are not to be blamed.
So who is responsible for supporting the HDB flat prices even in the midst of a recession? As expected, the fault lies with Singaporeans.
According to Law Minister Mr Shanmugam’s “hunch”, Singaporeans are the likely culprits. He did not provide any evidence to substantiate his allegations.
(and we are paying him SGD$2 million dollars a year for his “hunches”, not much better than his mentor – the “forecaster extraordinarie”)
“The first misconception is that somehow there are five million people and that is putting pressure on all of us. It doesn’t. Of the five million, 3.2million are citizens, and roughly 500,000 are permanent residents (PRs). The remaining 1.3million are here on temporary work permits, and they ‘impose no burden’ on the public housing system,” said Mr Shanmugam.
He was speaking during a dialogue session with Yew Tee residents in Hong Kah GRC.
Asked by another Yew Tee resident about the high prices, he shot back:
“‘You say maybe foreigners are paying these high valuations. I think if you check, you’ll find that the majority are Singaporeans. The foreigners who come here and look at HDB flats generally buy the lower value flats.”
Mr Shanmugam’s stance on the matter is similar to his colleague National Development Minister Mah Bow Tan who told parliament lately that “PR households owning HDB flats is a small proportion of all HDB households”.
However, Mr Mohamad Ismail, the CEO of Propnex quoted a figure of 20 per cent when asked by The Straits Times a few weeks ago.
Another real estate agency ERA claimed in a report in July last year that 40 per cent of the buyers of resale flats are PRs while C&H put the figure at 50 per cent.
Below is a graph illustrating how the rise in the prices of resale flats coincides with the rise in the number of foreigners in Singapore between the years 2000 and 2008, courtesy of Kojakbt, the moderator of 3in1kopitiam:
Due to the ruling party’s liberal immigration policy, foreigners now made up 36 per cent of Singapore’s population, up from 14 per cent in 1990. According to Home Affairs Minister Wong Kan Seng, there are over 20,000 new citizens and 90,000 PRs last year.
Besides competing with Singaporeans for HDB flats, PRs sometimes also “spoil” the market by over-paying for them.
An Indonesian PR forked out $653,000 for a four room resale flat in Queenstown in October 2009 when he could well afford a private condominium.
As the prices of new BTO flats are pegged to that of resale flats in the vicinity, this may contribute indirectly to the astronomical prices of the Dawson project launched a few months later where 5-room flats fetches as high as $660,000.
A Financial Consultant interviewed by Lianhe Wanbao advised Singaporeans not to buy these flats unless they earn more than $7,500 monthly.
Mr Shanmugam also repeated Mr Mah’s earlier assertion that HDB flats remain “affordable” to Singaporeans as “eight in 10 Singaporeans pay their HDB monthly mortgages completely with funds from their CPF savings and do not cough up any additional cash.”
Quoting the affordability benchmark of 30 per cent used frequently by HDB to show that HDB flats remain affordable to ordinary Singaporeans, Mr Mah said recently that a family with a monthly income of $3,000 can buy a flat worth up to $250,000 and spend only 30 per cent of their income every month on the mortgage.
“Similarly, a family with a monthly income of $4,000 can afford to buy a new flat worth up to $333,000 without spending more than 30 per cent a month on the mortgage. This means they can comfortably buy any of the flats offered in the latest BTO projects this month,” he added.
Both Mr Shanmugam and Mr Mah’s public statements are quite “divorced of reality”.
Instead of acknowledging the problem and tackling it, they chose to blame Singaporeans for their mistakes in order to defend the foreigners whom they are so infatuated with.
Posted in Editorial
Well who are the culprits for losing billions in risky overseas investments?Oh, I forget, one of their leaders said they have “no regrets”. Its bad and lets move on.
The master pays shanmugan millions so that he carries out such dirty job for his master. The Lees are clever to get people like him and MBT to be their errant boys. Isn’t it? Shame on them…
Interesting… I mean all those figures reported by TR here.
S’poreans are to blame for voting in this govt !!!
Shanmugam is frying yester-year’s fried rice. This crap abotu foreigners/PRs taking jobs that S’poreans “shun” is so stale and obviously a lie.
Well, male S’poreans also shun NS, so can the govt get foreigners/PRs to protect S’pore????
Was he able to prove beyond reasonable doubts what he claimed?
I remember seeing a report from somewhere that PRs are buying flats at super high prices and could this not drive up the market?
If he can prove beyond reasonable doubt, another question for this person :
Q1. How much is the construction cost of HDB flat eg a 3 room at hougang st 11 ? This question is specific enough right? If not give me the cost for ANY 3 room flat you know. Or Any Flat of Any size from Any location you know.
Q2. Can you Quantify what is meant by generous subsidy citizens receive from hdb flat purchased?
If you know answer to q1, you know answer to q2 am i right?
Which MP knows? It would not be respecting to assume none of them knows right? So , which is it? Who knows? Give us a name. We could choose then to elect an MP to ask him on national tv if no MP has already done so.
Which GRC will he be contesting under huh?
In all this saga…i havent heard a peep about the singaporean flat owners who have made profits of maybe more than 40% in areas like sengkang/punggol (which if u see the hdb index have the highest prices in the last 3 yrs for resale flats) from their government flats.
1.3 million people here albeit on temporary permits do not impose any burden on the housing system??! No wonder he prefers being on PAP instead of being a lawyer – highly paid and can spew nonsense without having to substantiate his claims (and no one to question him).
I wonder how these people can shamelessly draw their multi-million dollar salaries. The motivation in any Confucian society is ’shame’ or avoidance of such. These people are as shameless as the Wall Street bankers in awarding themselves their salaries even when they fail to perform in their jobs.
//Mr Shanmugam’s stance on the matter is similar to his colleague National Development Minister Mah Bow Tan who told parliament lately that “PR households owning HDB flats is a small proportion of all HDB households”.
In order to proof that both, Shanmugam and MBT are correct..they should vulunteer to stand for GE 2011 in a “SINGLE CONTITUENCY WARD” individually without GRC to show that voters agreed and accepted their reasoning for HDB prices.
Please come forward and let the voters be the judge.
no burden on the public housing?
Then where does these new entrants stay?
They will have to rent somewhere.
Increase demand implies increase yield leading to higher prices to lower yield to match the level of risk of the asset.
This guy doesn’t know about valuation.
either that or he is trying to fool us.
The foreigners know that and that’s why when the window allows, they snatch up pr/singapore citizenship quickly to buy flats.
To tell us otherwise is to fool us.
//leo
You have not heard of the news because these same buyers will have to cough out more to buy a smaller place in the city or approximately the same amount in less desirable estate like Yishun.
They didn’t managed to keep any gains after selling so there is no cause for celebration.
Unless they are packing and leaving S’pore for good. They will celebrate outside S’pore and you won’t hear from them.
All those PAP MPs who disagreed with the general public’s opinions and doubts in certain issue, they can come forward to stand alone as individual in a single election ward to proof that they are correct and that the people are wrong.
Aiyoh! This nerd utters rubbish again! First and foremost, are elevated property prices under the ministry of law’s purview? Is the relentless influx of foreigners under law ministry’s jurisdiction? I opine that he should clean-up his own backyard such as the under-function cum under-perform legal-aid-bureau prior to his interference with other ministry’s portfolios!
Mind you, is this nerd aiming to be the dpm pertaining to the next G-erection? If not, why he continuous to take-on issues that is not under the law ministry’s portfolios? An “Annual-Two-Million-Dollar” nerd whom knows nothing but only to interrupt and make unnecessary comments on other’s scope of works!
He is a “Chinese” under the guise of an “Indian-body”, a “Sissy” under the camouflage of a “Man’s body”, a “Mercenary-nerd” under the disguise of a “Righteous-man”, an “Idiotic-peasant” under the cover of an “Intelligent-scholar”!
Heehaheeha……… What a hilarious joy created by the million-dollar miw! He is more likening-to a clown than a scholastic-gentleman! Senior counsel, my “foot”, if he can cease his farting more often than not, the world will be a better place to live in without adulterate air-pollutants and the people can breath more freely and easily without being “strangled” to die by this country-bumpkin’s relentless farts!
So far, since he takes on the job as law minister, he has put-up and directed so many “farces” that lighten-up and exposes the idiotic-nature of the ruling party! A true clown with “annual-million-dollar remunerations” and nothing else!
What a waste of TAXPAYERS’ money!
I think he is death right , S’poreans are to blame !
They are to blame for voting in this govt !!!
Er, excuse me…
I thought he is the Law Minister or am i mistaken?
Why is he giving unsubstantiated opinions for Manpower and National Development?
He wants to takeover these two portfolios, is it?
Hey We deserve better!
They want FT, we give them FT.
$2m is way too much to pay for such service & standard.
Get some ex-USA president instead.
since its no difference given the way they run the country like runnig a company.
Oops, I have forgotten that he is the 2nd Home Affairs minister…
I wonder what is his salary?
I totally agree with Shanmugan that Singaporeans are the “culprits” for sky high HDB prices.
If not for Singaporeans blinding voting for PAP in the 2006 elections, PAP wouldn’t have had the chance to bring in HUNDREDS OF THOUSANDS of foreigners between 2006 and now.
Yes, Singaporeans are definitely responsible for it.
My question for this greenie minister whose ego is skyrocketing (very soon he will think and act like LKY because he thinks he IS LKY) :
ARE SINGAPOREANS ALSO RESPONSIBLE FOR DRIVING UP THE SALARY OF PAP MINISTERS TOO?
Please give me an answer, you sleezy compassionless ex-lawyer.
actually, the real culprit is the government’s monopoly over the flat supply and its bizzare(kiasu) way of managing demand.
do you hear private developers accuse singaporeans of driving up condo prices? i have yet to heard one, maybe shanmugam will care to enlighten me
show me the data on this one. its easy to say anything. the last 5 years HDB transactions, citizens vs non-citizens, age group, median income, occupation and nationality.
thank you.
plus asking price and transacted price.
Let singaporeans be the culprit to VOTE PAP OUT !!!
Most of us are ready to vote !
Is PAP ready to call for election now ?!
Vote PAP OUT !
Out they go or we be in deep troubles.
VOTE PAP OUT !!!
’singaporeans’ pushing up prices,how true!
these ’singaporeans” in question are none other than MBT and his runners.Even if the prices of secondary market flats rise,must first-time buyers who want to start families,for example,pay secondary market prices?
When it comes to froeigners,our govt. seems so magnanimous but when it comes to citzens,they suddenly change colour?
How come the govt is so adept and good at controlling every aspects of our lives except HDB prices?
OH YES, PEOPLE, YOU FORGOT that PRs and new citizens are also considered citizens
http://www.hdb.gov.sg/fi10/fi10206p.nsf/WPDis/Subletting%20Your%20Flat%20/%20RoomStatistics%20-%20Number%20of%20Subletting%20Approvals%20by%20Flat%20Type?OpenDocument
hdb sublet statistics
typical tenancy agreements are 2+1 year, 2 years is the minimum occupancy for these ppl who rent. from the stats you can project that at any one time in the past 2 years, there are about 30k flats being rented out (either room or whole flat) at any one time. approving these rental is also a culprit for the rising prices because it reduces the supply.
“the remaining 1.3million are here on temporary work permits, and they ‘impose no burden’ on the public housing system” is only persuasive is these 1.3 million are not renting any of those 30k flats.
typo earlier: “if”
corrected version:
“the remaining 1.3million are here on temporary work permits, and they ‘impose no burden’ on the public housing system” is only persuasive if these 1.3 million are not renting any of those 30k flats.
The pricing of the public housing should be based on alternative measure of pricing system, rather that its current valuation based on comparable pricing. This is basically a viscious cycle driving up the public housing beyond the affordability of the singaporeans.
Shanmugam at Yew Tee, hmmm….. is he thinking of taking over the GRC from YCT who has said that he will not be standing at the next elections.
I stay there leh, hope I get a chance to vote.
Even if local are responsible for the ridiculous prices…SO WHAT? I don’t get this logic. It’s HDB’s job to provide enough houses at affordable prices to citizens, so if the prices are out of control due to local demand, HDB has failed. It’s like a service provider blaming customers for swamping the store and raising product prices. I don’t get the logic.
But the truth remains that it’s the PRs who are driving up prices.
looks like the small group of PRs pawned the whole lot of Singaporeans here. I’m shocked that whole of you can’t even compete with a handful of PRs. how come you’re first world when you’re getting your asses whopped by people from third world?
I am not sure if he is just stupid for not knowing the situation on the ground level or he is lying with wide open eyes
I am also not sure which (of the above) is worse
@Singaporean Parent
oh why don’t you provide the figures from “ground level”?
Some statistical figures can be tursted while some can’t be trusted. So must be careful. The statistical figures from Propnex and Era can be trusted as the figures are real.
HE is talking RUBBISH. If the demand from foreigners and PRs for renting is so strong, it is inevitable that Singaporeans who can afford will hold on to their HDB flats even when they have bought private houses so as to lease the HDB flat to foreigners. Hence the supply of resale HDB flats shrinks and prices rise. Thanks to foreigners.
The authorities should disclose the number of Singaporeans who live in private houses but own HDB flats for lease. They have not done this but the figure could be huge.
I blame greedy people (citizen/pr both who) who sell/rent their houses is ridiculously high prices. every body want to take advantage of situation. Problem will be there till the GREED exist. Human nature !!! very simple.
Looks at the people who are asking 100k COV..they dont want to sell even when offered 50-60-80k COV. so whom are you blaming ? you want to blame a tenant who is paying $1800 for rental or owner ? you think tenant enjoy paying that amount, even when owner asking $1000 ? come on !!! he is forced to pay it !!
you are right keithyip.
HDB SHOULD HAVE MORE BRAIN-FULL MEASURE TO VALUE PROPERTY.
The pricing of the public housing should be based on alternative measure of pricing system, rather that its current valuation based on comparable pricing. This is basically a viscious cycle driving up the public housing beyond the affordability of the singaporeans.
sorry to disappoint all of you. if you check again the background of the person who posed the question, you will realized this is a planted question.
.
Singaporeans may be the culprits, but indirectly driven by demand from foreigners. Easy subletting rules and good rentals are driving Singaporeans to buy resale HDB flats whether or not they have a real need.
TR is also BSing, u only have posted a sample size of 11. how do u think such a small sample size can give u reliable correlation result, which u concluded to be significant. if so plz explain year 2000, to 2004, prices of HDB and size of FT was not related at all during that period. and furthermore plz explain why HDB price JUMP from 2007 to 2008, and why it did not just at 2007.
Dear MR SHANMUGAM
Honestly,I have long heard of your exploits long before you were called to serve our peoples and nation.
I somewhat have this feeling that inside of you is a man of integrity,of Wanting to make things better for the common singaporeans.For what else would you choose to sacrifice your glorious days in courts and glamorous pay and bonuses?
So,SIR,in view of the intricacies of the current evolvement of the badly thought out FT policy that leaves countless
of singaporean families financially strapped and lost-some with no roof over their heads – I hope that you could help rethink the future direction of such a self-destructive policy.
I would like to share a simple but meaningful song by PHIL COLLINS which I sincerely think would help future leaders add a wee bit of true compassion to our own well deserved citizens in their policy formation.The title of this song is ‘ANOTHER DAY IN PARADISE’.
Many impoverished families whose sole bread-winners have lost their jobs more due to the increasing greed of the rich and powerful than the supposed global labour competition are really
crying their hearts out with silent tears which they shed in solitude too shy to let any ‘OUTSIDERS’ know because they are still true ‘SINGAs’ at heart.
Minister,do kindly spare a thought for these people who are singapore’s very own sons and daughters…
‘MARI-LAH KITA BERSATU…’
best wishes and regards to all fellow countrymen,
talknonsense.
PAP MPs are starting to show their compatibility with UMNO MPs in their reasoning capacity. And we pay them so much more money …we should just import the UMNO MPs.
Facts:
• There are 5 million people in Singapore
• 3.2 million are citizens (64%)
• 500,000 are PRs. (10%)
• 1.3 million (26%) are on temporary work permit and they “impose no burden” on the public housing system
1. There are 1.3 million foreigners (or 26%the population). As the Minister suggested, they “impose no burden” on the public housing system, then these foreigners must necessarily be living in the private housing or condominium apartments. Is this what the Minister is suggesting? If no, then is insidious for the Minster to suggest that none of the 1.3 million live in HDB flats.
2. The Minister is also incorrect to suggest that the 500,000 PRs or 10% of the population do not assert upward pressure on the prices of HDB flats.
Firstly, this is an absolute supply and demand situation. At the moment there is an insatiable demand for HDB flats not fulfilled.
Secondly, there may be the situation of high elastic demand for these flats i.e. a small increase in prices may trigger a rush to buy – fear factor or hear mentality.
Therefore, for the Minister to say that PRs form “too small a number at the moment to have any significant impact on prices” is reprehensible.
3. Supply and demand is the sole arbitrator in any economic model. In a competitive market, holding the output steady against a backdrop of rising demand will see a rocketing of the price. This is economics at its utter basics.
Mr. Shanmugam, it is said the greatest obstacle to discovery is not ignorance – it is the illusion of knowledge.
Sorry. Correction:
“Secondly, there may be the situation of high elastic demand for these flats i.e. a small increase in prices may trigger a rush to buy – fear factor or herd mentality.”
Who are the Singaporean that he is referring to?
If they are Singapore residents, then it also include PR.
If he is referring to citizen …
Until today, we still have not heard from any of the millions-dollar PAP Ministers what is the actual cost for building a HDB flat ?
Why is this question so difficult to answer in the first place ? Is the truth so difficult to reveal because it will show that there is actually no subsidy but a huge profit built into the HDB flat prices ?
IMHO, it just doesn’t make sense for HDB to sell any public housing flat above S$400,000 as it would have strayed from its primary objective to provide affordable housing for Singaporeans. It doesn’t make sense either that they are roping in private developers/architects to re-design the public housing flat to look like private condominiums and then raises their prices to sell them at even higher profit levels.
So isn’t HDB the culprit to be blamed instead ? Why can’t our supposedly super efficient Ministers provide the actual data to prove that HDB is not profitting and that there is a real subsidy in cost ?
Remember in the past PAP was adamant in calling CSJ a liar if he could not provide real proof in some of his research findings.
Likewise can we demand that our PAP Ministers reveal the truth, nothing but the truth about our HDB flat subsidy ? Otherwise, how to convince us that they are not a bunch of liars ?
Shanmugam Tio ‘Blasted’ on Straits Times Forum
http://comment.straitstimes.com/showthread.php?t=29259
Yes sellers are asking for ridiculous prices, but they will never make a sale if there is enough supply of flats for the sellers to choose from… and the fact is, demand has outstripped supply due to the influx of PRs.
Speaking from first-hand experience, I viewed flats where lift upgrading wasn’t done VS flats where it’s done. As you know, PRs will shun blocks where lift upgrading is not done, because they pay a hug cash amount for the upgrade. And in those flats, no one was competing with me to buy the flats i viewed! And in other blocks, more than 1/2 my competitors were PRs!