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Buying Singapore properties: Then and Now

Posted by temasektimes on September 16, 2018

For those millennials who are aspiring to buy their first property, I am sure you heard of stories from your parents, relatives, friends and agents about the “good old days” when one can buy a property easily and make a healthy profit by selling a few months later.

If you have bought a property any time between 2001 to 2008, chances are, it would at least doubled in price by now.

There were no restrictions such as TDSR, LTVR, ABSD, SSD etc imposed on property transactions then and HDB flat owners can still buy private properties in Singapore and overseas.

I remembered entering my first showflat at a new launch at Novena in 2005 by chance. The agents were standing outside distributing brochures and invited me inside for free tea and cakes. The project was developed jointly by two prominent developers in Singapore. The response was lukewarm and only half the units were taken up. The agent was desperately trying to sell me a three room 1205 square feet unit at $900,000 by offering a $50,000 renovation package. Just fresh out of university, I was earning only $4,000 monthly then, but no worries, a banker was on site to offer me a bank loan. I could take up a 90% loan and paid only 10% as down-payment. I regretted not buying the unit. The same unit now fetches $2.5 million dollars in today’s market.

A few months later, I did buy my first property – a three room condominium in Yishun at only $470,000, cheaper than a 3 room resale flat in some popular districts today. Less than a year later, I bought another property for investment and so on and on. It was possible in those days to buy multiple properties so long you hold a decent job and have a good credit rating. Banks are more than eager to do your business with scant consideration of whether you can finance your mortgages in the long term.

Read rest of article here.


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What are the differences between 99 year leasehold properties and HDB flats?

Posted by temasektimes on September 11, 2018

In land scarce Singapore, the majority of properties come with a limited lease of a 99 year tenure which includes both public and private housing.

Though both HDB flats and 99 year leasehold private properties come with a 99 year lease, there are many differences between the two which emanate from different types of ownership leading to different property rights and entitlements with regards to their sale, rental and refurbishment as encapsulated in different terms and conditions as stipulated in the contracts.


Ownership structure:

Buyers of 99 year old leasehold properties are buying a 99 year old strata properties which include the property and part of the land on which the property is built.

Leasehold private properties are strata title properties while HDB flats are not. Strata title allows individual ownership of part of a property (called a lot’ and generally an apartment or townhouse), combined with shared ownership in the remainder (called ‘Common Property’ e.g. foyers, driveways, gardens) through a legal entity known as the MCST or Management Corporation Strata Title which is responsible for managing the property and the surrounding land.

In contrast, HDB flat buyers are only buying the 99 year old lease from HDB. They own the lease, but not the flat or land on which it is built. HDB retains the ultimate ownership of the land and flat.

Read rest of article here.

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HDB contract is signed between a LESSOR and a LESSEE

Posted by temasektimes on September 11, 2018

A reader has emailed us a copy of a HDB contract he signed lately when purchasing a BTO flat:




It is stated very clear in the contract above that HDB is the LESSOR and the buyer is the LESSEE

According to the Oxford dictionary of English:

LESSOR is a person who leases or lets a property to another; a landlord.

LESSEE is a person who holds the lease of a property; a tenant.

It is pretty obvious even to the layman that HDB flat dwellers DO NOT own their flats. They are merely LEASING their flats from HDB which remains the “superior landlord”.

What HDB flat dwellers own is the LEASE of the HDB flat which the landlord allows to be sold to another party. When one sells his HDB flat, he is selling the remaining lease, not the flat or the land on which it is built on.

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Mahathir interfering in Singapore politics: Singapore should sent formal protest note to Malaysian government

Posted by temasektimes on September 10, 2018

In an interview with the Financial Times shortly after the May 9 General Election, Malaysian Prime Minister Dr Mahathir said rather caustically that his shocking electoral win may have a ripple effect in Singapore:

“I think the people of Singapore, like the people in Malaysia, must be tired of having the same government, the same party since independence.”

A few days later, when Prime Minister Lee Hsien Loong took the effort to visit Dr Mahathir to congratulate him, he received a lukewarm reception lasting only 30 minutes.


Source: Malay Mail

In contrast, Dr Mahathir spent 80 minutes meeting a Singapore fugitive Tan Wah Piow and four Singapore activists who are known to harbor anti-establishment views.

It is unfriendly and undiplomatic to say the least for the Prime Minister of Malaysia to so blatantly interfere in Singapore politics by making wild baseless insinuations that Singaporeans are not happy with the PAP and meeting with the Singapore opposition.

Imagine if PM Lee were to make similar comments about the Malaysian ruling coalition and to meet up with opposition activists from across the Causeway, would Dr Mahathir not recall the Singapore ambassador and slammed our government publicly demanding an apology?

Home Affairs and Law Minister Shanmugam had publicly attacking the four Singaporeans for meeting Dr Mahathir, lambasting them as “unpatriotic”, but stopped short of criticizing Dr Mahathir:

“And you know, we are not saying anything about Dr Mahathir but I think one needs to be careful about these things. And now to try and explain away what is so obvious, that doesn’t do them much credit either.”

Isn’t it pretty obvious that the four Singaporeans have been unwittingly made use of by Dr Mahathir to take a jibe at the Singapore government?

It is time the Singapore government sent a formal protest note to the Malaysian government to protest against Dr Mahathir’s blatant interfering in Singapore’s internal affairs. Continued silence over the matter may send the wrong signal to Dr Mahathir that we are afraid of him and encourage him to indulge in more sabre-rattling against Singapore.

Instead of bullying and intimidating its own citizens, the Singapore government should stand up to the real bully up north who has been making insensitive, irresponsible and incomprehensible comments about Singapore and jeopardizing cross-straits relationship.

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Why HDB flats cannot be considered an asset which can generate wealth

Posted by temasektimes on September 9, 2018

Most Singaporeans have the ingrained mindset of properties being a worthwhile investment asset whose value will appreciate over time. As such, many are willing to work long hours and scrimp and save to purchase a property.

For the eighty per cent of Singaporeans living in HDB flats, the flats are not only a roof over their heads, but their single largest investment in life. The prices of HDB flats have nearly doubled in the past decade, but does their rising prices really generate wealth for Singaporeans?

For real estate to generate real wealth which can be unlocked by the owners, three conditions must be present:

  1. The property should preferably be of a freehold or 999 year status whose value is almost guaranteed to appreciate over time. (Leasehold private properties and HDB flats in certain locations can also appreciate in price, but only up to a certain point which I will elaborate later in another article)
  2. The bank accepts the property as a collateral and owners can refinance a bank loan to get a home equity loan as its value rises and cash out the available equity.
  3. You own more than one property so that besides the one you reside in, you have other properties to generate a steady stream of rental income and capital gain.

Singapore was still a developing economy in the 1970s and 1980s. As our economy grew by double digits, the prices of HDB flats soared as well. That is why many Singaporeans who bought their flats thirty to forty years ago will definitely make a healthy profit if they sell them today. The problem is: after selling their flats, in today’s market, they probably have to spend most of the profits from the sale to buy another place to stay.

A study done by two NUS economists, Tilak Abeysinghe and Gu Jiaying, shows that “past episodes of house price escalations have led to a substantial erosion of housing affordability” especially in the private sector. (source: NUS SCAPE) Higher property prices does not necessarily translates into higher wealth for Singaporeans.

Abeysinghe and Choy in their book – “The Singapore Economy: An econometric perspective (2007)” have examined the wealth effect of property prices on consumption in Singapore and found that the wealth effect is very much absent.

In the absence of cheaper suburbs which offer quality living, the only way for Singaporeans to unlock property values is, apart from emigrating, to downgrade to smaller units. This does not seem to be occurring on a large scale which explains why the ‘housing wealth effect’ on consumption is insignificantly small.

Higher property prices, instead of creating a wealth effect, exert a significant and negative “price effect” on consumption expenditures leading to a fall in the average propensity to consume.


Photo by chuttersnap


As house prices go up, the increase in the value of housing assets is accompanied by a concurrent rise in the financial liabilities of households, in the form of higher downpayments for purchase of residential properties and burgeoning housing loans.

Due to the limited avenues for liquidating property assets, households have to build up sufficient financial assets to smooth the profiles of their lifetime consumption of non-housing goods and services leading to a diminishing in domestic purchasing power.

Read rest of article here.

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Tan Kin Lian: There is a climate of fear in Singapore

Posted by temasektimes on September 8, 2018

I wish to talk about the climate of fear in Singapore. What is this climate of fear? It is the fear of criticizing the policies of the government.

Many people are worried that they might lose their jobs or their business might be badly affected, if they speak against these policies. They even worry that it might affect other members of their family. Their family members also ask them to tone down their views.

It is bad if we do not have a healthy discussion how the policies affect the ordinary people. We can have bad policies and practices that are not corrected for a long time, causing a lot of damage.

What are some of the bad policies and practices? Some of them could be:

a) Policies that lead to high cost of living, such as GST
b) Policies that lead to uncertainty of jobs or depressed wages.
c) Abuse of power and corrupt practices.

Why are people afraid to speak out?

They saw what happened to some of the people that spoke out and how many of them were sued and made bankrupt or have to run away from Singapore. The statements were not extremely bad but they were sued anyway.

It was rather sad that the judges found the statements to be defamatory, and awarded huge and financially crippling damages.

These legal cases create a climate of fear. Many people are not sure if their statements could lead them to be sued for defamatory or charged for scandalizing the judiciary. It is better to keep quiet.

I have personally been threatened with defamation by a land banking company. Their demands were excessive and bullying. I agreed to the reasonable demands but did not comply with the excessive demands. The matter was dropped after a few months. The company was later found to be cheating the public and the directors were jailed.

The government can remove this climate of fear and encourage people to think rationally and express their views freely. This will be good for our future.

The government should refrain from taking harsh action against people who might have gone overboard in expressing their views. They can point out the mistake and make it easy for people to retract them. People will understand and learn from the experience.

If people made unfounded allegations about the actions of the government, it is better for the government to be transparent and give the facts. There is no need to use harsh measures against these allegations.

By being transparent and accountable, they will gain the trust of the people.




Note: The above article is published on Mr Tan Kin Lian’s Facebook page on 4 September 2018 and is available for public viewing. Mr Tan is a former presidential candidate and CEO of NTUC INCOME.

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Can I use my CPF or secure a bank loan to buy a 70 year old HDB flat

Posted by temasektimes on September 7, 2018

Minister for Transport Khaw Boon Wan said recently at a dialogue session with young people that Singaporeans who buy a 50-year-old Housing Board (HDB) flat today can expect prices to continue to appreciate over the next 10 years.

“If you buy a 70-year-old flat, there is still appreciation potential especially because this Government is prepared to continue to invest in it through Home Improvement Programme (HIP) II and the Voluntary Early Redevelopment Scheme (Vers),” Mr Khaw said.

While it is difficult to ascertain if his statement is true as no HDB flats have reached the 70 year mark yet, we can examine if it is possible to secure a bank loan and to use CPF to purchase the flat.

For the purpose of illustration, let’s use a recent transaction at Ang Mo Kio:

Source: HDB


A Singaporean couple paid $470,000 for a 3 room flat with a balance lease of 93 years. The prices of resale HDB flats have declined by 1.5% in 2017. Assuming Singapore’s economy continue to grow at the present rate of 2.0 to 3.0% annually and the prices of resale HDB flats grow at a conservative rate of between 0.5 to 1.0% annually, the market value of the flat should reach $680,000 based on a growth rate of 0.51% after 73 years.

The couple may probably pass on by then and sell the flat to another owner or pass down to their children. Now the new owner want to sell the flat with a lease of 20 years left at $680,000, will any prospective buyer be able to buy?

Read rest of article here.

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HSR postponement: win for Malaysia, but loss for Singapore

Posted by temasektimes on September 7, 2018

While Azmin Ali, the economic affairs minister from Malaysia may have characterized the postponement of the planned High Spped Rail (HSR) between Kuala Lumpur and Singapore as a “win-win,” it cannot be denied that Singapore has already sustained some short-term losses because of the delay in the project.

On the plus side, the agreement from both Malaysia and Singapore to defer the HSR is definitely a win for relations between the two countries. A transport analyst from the Singapore Management University, Dr. Terence Fan, said that Singapore would have been “cold-hearted” not to have helped Malaysia, which then may have tried “to walk away and try to give Singapore the (full compensation) which could amount to RM500 million (S$168 million).”

Others echoed his sentiments that Singapore’s concession to Malaysia’s fiscal concerns was important for strengthening bilateral ties.

The deferment would furthermore give both countries more time to make needed adjustments in order for the project to proceed. Experts have said that the two year deferment is “manageable.”

Read rest of article here.

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We cannot remain silent

Posted by temasektimes on September 6, 2018

By Constance Singam

“If credibility, trust, and character become critical issues in deciding the political outcome, the destruction of credibility and character assassination become the most potent political weapons.” (Manuel Castells)

Here we go again.

Character assassination is a very effective method used against dissenters and opposition political parties to discredit them and eliminate them from public life. This is a very successful strategy used by our government and which have been honed in by over 50 years’ of execution. It is now being deployed against PJ Thum, Kirsten Han and others. They are targets especially since they are activists, intelligent and articulate.  It is so predictable and rather tiresome.

As I watch this strategy unfold I am reminded of all those people, J B Jeyaratnam, Francis Seow, Chee Soon Juan, and others all of whom paid a heavy price for standing up to the PAP. All those years we remained silent. Our silence has resulted in the emasculation of our public life and has discouraged able and good people from participating in opposition party politics. For our country these are heavy prices to pay.

Read rest of article here.

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Debunking the official myths about HDB flats (Part 2): HDB flats are affordable to the most Singaporeans

Posted by temasektimes on September 5, 2018

MYTH #2: HDB flats are affordable.

TRUTH: HDB flats are affordable only to a minority of Singaporeans and is increasingly priced out of the reach of the average worker.

In spite of the relentless rise in HDB prices lately, the government insists that HDB flats remain affordable to the masses.

Recent pronouncements by the Minister of National Development Mah Bow Tan and HDB officers in replies to concerned citizens in the Straits Times Forum have largely sticked to the official stance: that the government will not intervene in the market to bring the prices down.

Minister in the Prime Minister’s Office Lim Hwee Hua maintained that HDB flats are affordable to ordinary Singaporeans as they cost no more than 30% of their monthly pay.

HDB’s deputy director Mr Ignatius Lourdesamy wrote to the Straits Times Forum lately that HDB flats remain affordable to eligible first-time households as they use between 21 to 25 per cent of their monthly income to service their loans on new and resale HDB flats which are well below the international affordability benchmark of 30 per cent. (read letter here)

Though he did not state it explicitly, he is likely to be referring to the average shelter-cost-to-income ratio (STIR) or the proportion of total before-tax household income spent on shelter. The shelter-cost-to-income ratio is calculated for each household individually by dividing its total annual shelter cost by its total annual income. A STIR higher than 30 per cent is conventionally taken as indicating a serious housing affordability.

As I was unable to obtain any international studies published online using the STIR to assess housing affordability in different countries including Singapore, I have to use the Median Multiple which is used widely by international organizations such as World Bank and United Nation to assess housing affordability.

[Please read the addenum to this “HDB flats will be unaffordable using the Median Multiple as benchmark for housing affordability” here]

According to the International Housing Affordability Survey which studies the affordability of housing in Australia, Canada, Ireland, New Zealand, U.K. and U.S.A, the “median house price to median household income multiple” or median index is used to judge housing affordability. (read article here)

Under its rating categories, a median multiple of 5.1 and over is considered as “severely unaffordable” while affordable housing is kept by a median multiple of 3 and below. The annual median income of a Singapore household is $65,760 in 2008 (source: singstat) which means that the upper limit is only $197,280 which is far exceeded by current prices of new and resale flats.

[The above figure is calculated based on the Median Multiple and not STIR which is used by HDB. I was unable to find out how HDB arrived at its figures of 21 and 25 per cent]

Source: Singapore Property Update Facebook Page


The prevailing sentiment on the ground is that HDB flats are becoming increasingly out of reach to the lower income group. Even the middle class will be stretched to their limits to finance the flats at today’s prices.

The crux of the issue is not whether HDB flats are “affordable”, but if they are “easily affordable” to the average Singaporean.

Let us examine the price of a 3-room HDB flat in the 1970s, 1980s and now based on anecdotal evidence (readers in their 40s and 50s will be able to attest to the veracity of these figures).

A new 3-room flat in Toa Payoh cost about $8,000 in the 1970s. The median pay of a graduate then was $1,000 a month. (8 times)

A similiar flat in Ang Mo Kio will fetch about $40,000 in the 1980s. The median pay of a graduate then was $1,600 a month.  (25 times)

Now, a new 3 room resale flat in Ang Mo Kio can cost as much as $270,000. The median pay of a graduate now is around $2,700 a month (100 times).

As we can see from the above figures, the prices of HDB flats have sky-rocketed to more than 30 times while the median salaries of a graduate has only risen by 2.7 times. Are HDB flats becoming more expensive or affordable to ordinary Singaporeans? Maybe they are still affordable by the government’s standards, but definitely not more affordable by the common man in the streets.

The median pay of a Singapore worker is $4,500. 30% of $4,500 is $1,350 which will enable him to afford a flat c0sting costing up to $450,000 assuming a bank interest not more than 2% and 30-year replayment period.

Of course using this figure as the limit is deceptive as a majority of the population will be able to finance the 30 year loan even if they are earning less than $3,000 monthly.

Still, most flats under HDB’s Design, Build and Order scheme have already breached this upper limit. City View at Boon Keng was launched at prices of between $390,000 and $700,000 last year.

Again, the crux of the matter does not lie solely in the affordability of the flats, but whether Singapore households are plunged into greater debts as a result of financing over-priced HDB flats thereby leaving very little savings for retirement needs.

Anything can happen during the thirty year tenure. Retrenchment, unemployment and unexpected death can lead to an abrupt stop in the mortage payments.

A study conducted by NUS shows that housing affordability has decreased over the years, more so for private properties (source: NUS SCAPE)

In 1975, lifetime income of middle-income households with heads aged 30 was nearly 4 times the amount they would have paid for an average-sized private property.

By mid 1980s, their lifetime income was only sufficient to purchase one private property. The trend continued and during the 1994 – 1996 property price escalation, median income households would be in debt if they purchased an average-priced private property during this period. Price escalation since the late 2007 has brought down affordability again.

Comparing median income and property prices for the past nine years, there were five years when property prices outgrew income.

The prices of HDB flats have now reached or exceeded that of the last property peak in 1996 after which the market crashed, plunging many households into debts. Are we seeing another bubble in the formation?

Current prices are unsustainable in the long run due to combination of a few factors: the economy is expected to be sluggish in the near future, rental income has dropped by more than 30%, salaries are not going up by much and companies may have to retrench more workers if the economy does not pick by the end of year. It is kept high by the influx of new citizens and PRs who may sell off their flats should they leave Singapore later thereby increasing the supply of flats.

There will always be demand for HDB flats in Singapore as housing is a basic necessity. As such, leaving their prices entirely to free market forces will only lead to continuous inflation till the market is unable to support the prices any further leading to a precipitous crash.

The government should undertake a comprehensive study to examine the impact on the rising HDB prices on the savings and standards of living of ordinary Singaporeans.

If one has to work 70 hours a week without rest to finance the HDB mortage loan, even if one is able to “afford” the flat, there will be no quality of life to speak of. What’s the purpose of “owning” a flat at the end of one’s working life when one’s savings and CPF have been depleted by the mortage loans leaving very little for retirement needs? Do Singaporeans really want to work beyond the age of 80 till they drop dead?

The predicament of these Singaporeans had led to HDB to introduce a buy-back lease scheme lately for those living in 2 to 3 room flats in which HDB will purchase the flat from the owner at market rate and pay the sum to them in monthly installments over thirty years while the household continue to live in the flat which they now “lease” from HDB.

Affordability is not just an empty figure and more consideration should be given to its wider social implications and impact on the populace such as maintaining sufficient savings in the bank abnd CPF for retirement, domestic spending power, adequate work-life balance and most importantly, the standard of living.

HDB flats are definitely becoming less and less affordable to the masses and it is imperative that the government takes action now to reduce the prices so as to fulfill the original mission of HDB to provide cheap and affordable public housing to the people of Singapore.

Note: This article was first published in the old Temasek Review in September 2009

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