THE TEMASEK TIMES

News and views from an unique perspective

Archive for the ‘Opinion’ Category

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

Posted by temasektimes on October 22, 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.

Read rest of article here.

Advertisements

Posted in Commentary, Opinion | Leave a Comment »

Two-faced WP making use of opposition to advance its own selfish interests

Posted by temasektimes on October 6, 2018

In July 2018, former PAP MP Dr Tan Cheng Bock met up with leaders from various opposition parties in Singapore to discuss the prospects of forming an united opposition coalition to challenge the PAP in the next General Election.

The Workers Party, with 6 MPs and 3 NCMPs in Parliament, was conspicuous by its absence though an invitation was sent to them.

How can the opposition in Singapore be united without the Workers Party? It can only be possible once the opposition face the brutal hard truth that WP is NOT part of the opposition, but part of the PAP whose sole purpose is to keep and entrench the PAP in power forever.

WP is shamelessly making use of the opposition to further its own selfish interests and political agenda. It refuses to work with other opposition parties and yet it demands other parties keep away from its “stronghold” in the eastern part of Singapore to avoid third party contests in the name of opposition “unity”.

 

Photo: WP Chief Pritam Singh

 

Based on results of previous elections, the eastern constituencies of Singapore generally enjoy higher opposition support compared to the east. Because WP has “booked” all the good winnable seats, the other opposition parties have no choice but to contest in seats which are more difficult to win. This explains why WP appears to garner more votes compared to SDP and other parties.

Why not WP contest in Jurong GRC led by popular DPM Tharman and see how many votes it can win? If SDP fields an “A” team in East Coast GRC, it will stand a much higher chance of winning it compared to Bukit Timah GRC.

By giving way to WP to allow it contest as and where it wanted to while staying out of a united opposition front, the real opposition parties are restricting their own development and indirectly furthering the narrow political interests of WP instead.

Since Low Thia Khiang took over WP in 2001, WP has never expressed any interest to work with other opposition parties. Low himself admitted as much by saying that WP will “forge its own path.” The present WP Chief Pritam Singh has scoffed at the idea of “opposition unity” too. In fact, he appears more interested to work with the PAP.

During a forum held at the Institute of Policy Studies in the aftermath of the 2011 General Election, Pritam Singh shocked the audience by proclaiming that WP will form a coalition government with the PAP if the latter fails to win a majority in future elections.

The opposition should not regard WP as part of the opposition any more and “give face” to it. The real opposition parties led by SDP should considering contesting in ALL the WP seats in the eastern part of Singapore and gives voters more choice.

Do Singaporeans want a weak, feeble and useless opposition which dare not voice their concerns in Parliament or do they want brave, selfless and principled opposition MPs who dare to speak up and hold the PAP to its words and actions?

WP is now the single biggest stumbling block to real political progress and reform in Singapore. Do we want to continue with the status quo with 10, 20 or even 30 useless WP MPs “wayanging” in Parliament or do we want ONE SINGLE real opposition leader like SDP’s Dr Chee Soon Juan to challenge the PAP?

It is time we wipe the slate clean and start afresh in the next General Election. With 12 NCMPs guaranteed to enter Parliament, Singaporeans should not be afraid to vote out the fake opposition WP and replaced them with real opposition leaders in Parliament. Let us give them five years to see how they perform in Parliament and we can decide whether to continue lending support to them in the next General Election.

After witnessing so many cringe-worthy performance by WP MPs who are worse off even than the PAP backbenchers themselves, we can safely conclude that they are largely ineffectual and make no difference at all in Parliament.

Time is running short. A vote for WP is a vote for PAP! As the late opposition scion Joshua Benjamin Jeyaretnam said at the inauguration of the Reform Party: Singaporeans should vote for WP and Low Thia Khiang if they want to maintain the status quo. The question for you is: Do you still want the status quo for the next decade?

Posted in Commentary, Opinion | Leave a Comment »

Why HIP2 and VERS will not transform your depreciating HDB flat into an asset

Posted by temasektimes on September 25, 2018

In a report published by Swiss bank Credit Suisse on 20 September, analysts Louis Chua and Nicholas Teh noted that the much touted Voluntary En Bloc Redevelopment Scheme (VERS) is not a panacea to the real and pertinent issue of “lease decay”.

Noting that one of the stated aims of the scheme is to spread out redevelopment, the report pointed out that flats with 10 years of lease remaining would theoretically be worth only half of flats with 30 years left.

All HDB flats are owned by the HDB and comes with a 99 year lease. When a buyer buys a flat from HDB or another lessee, he/she signs on a lease agreement to lease the flat from HDB.

From a legal perspective, once the lease runs to zero, the flat automatically reverts back to HDB, the lessor with no compensation offered to the lessee as what happened to the 191 leasehold terrace houses in Geylang which were acquired by the government recently.

When Singaporeans buy a HDB flat, they expect three things:

  1. The value of their flat will appreciate over time and never depreciate.
  2. They are able to sell their flats for a profit years later and use the money either to upgrade or to retire.
  3. They are able to pass their flats as a bequest to their children after they pass on.

This means that if I buy a four room BTO flat in Punggol for $400,000 now, I will expect to sell it for $500,000 or $600,000 in 10 to 20 years time. If I buy a resale five room HDB flat in Toa Payoh for $500,000 now, I must be able to sell it at $700,000 to $1 million many years later. If I do not sell the flat and pass it on to my children after I pass on, they are able to inherit something of substantial value.

Such a future scenario is neither realistic or feasible because by nature of the fact of the limited tenure of HDB flats, their value will start to depreciate from 40 or even 30 years onward.

Read rest of article here.

Posted in Commentary, Opinion | Leave a Comment »

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.

Posted in Commentary, Opinion | Leave a Comment »

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.

Posted in Commentary, Opinion | Leave a Comment »

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.

Posted in Commentary, Opinion | 1 Comment »

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.

Posted in Commentary, Opinion | Leave a Comment »

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.

 

TAN KIN LIAN 

 

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.

Posted in Commentary, Opinion | 1 Comment »

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.

Posted in Commentary, Opinion | Leave a Comment »

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.

Posted in Commentary, Opinion | Leave a Comment »