Saturday September 15, 2012
Half a century of evolution
INSIGHT DOWN SOUTH BY SEAH CHIANG NEE
The Housing Development Board’s achievements in the 1960s that put the ruling PAP into power can become its political undoing if property price woes are not resolved.
FIFTY years after launching its mass public housing at a few thousand dollars per flat, Singapore last week made the kind of history few people wanted to see.
A resale maisonette from the Housing Development Board (HDB), which still designs homes to help the broad masses, changed hands for a record one million dollars.
In principle, the rising values should have excited Singaporeans since 85% of them are property owners, but instead the news created widespread concern.
In recent years, Singaporeans had grown unhappy with skyrocketing home costs that were aggravated by an inflow of new migrants.
That the pricey apartment was bought by a newly converted citizen from China added to the fear.
Home values have more than doubled over the past decade, putting them out of many Singaporeans’ reach.
Singaporeans expect the apartment sale will set new benchmarks for public housing. Until the million-dollar crossing, several units had been transacted for S$900,000-plus (RM2.3mil-plus), the last being S$980,000 (RM2.5mil) for a Bishan unit.
Buyers, both locals and foreigners, are readier to pay more and more for both private and public properties in anticipation of the government’s continued open-door policy.
A local reporter said: “You can’t inject two million foreigners into this small island without creating a huge demand for homes.”
“(This deal means that) Singaporean-born Singaporeans will soon find themselves pushed out of their homeland by foreigners,” said Patrick.
Others feel HDB prices should not be determined by market forces.
“When the market dictates, this crucial commodity will increasingly move from the hands of the poor to benefit the rich,” said a polytechnic student.
In land-squeezed Singapore, the demand for property will always grow as long as there is growth and stability. Adding to it is the stress caused by the arrival of migrants.
Land, on the other hand, is a finite commodity that rarely increases.
This explains the rising concerns of fresh graduates about being eased out of the market.
The million-dollar furore has prompted National Development Minister Khaw Boon Wan to issue a statement urging Singaporeans not to be “traumatised” by it.
The Penang-born Khaw added: “There will always be units with fantastic views that fetch fantastic prices....”
Since independence 47 years ago, Singapore’s history has been closely linked to the state of the city’s real estate as well as the achievements of the HDB.
Since its establishment in 1960, the HDB has won world acclaim for building more than one million homes and helping to turn a squatter colony into a developed city.
Its work is not just bricks and mortar; it has changed and moulded the lifestyles of millions of people.
Its first apartment was a relatively crude three-room structure sold for S$6,000 (RM6,000 then), a princely sum in an age when per capita GDP was only S$1,310 (RM1,310 then).
Today’s new three-room flat costs about S$340,000 (RM851,644), but the country’s per capita GDP has increased to S$70,450 (RM176,483).
By simple comparison, the hike in public housing prices (at 56.6 times) appears almost comparable with the increase in per capita GDP growth (53.8 times) between 1960 and 2010.
This, however, may be too sweeping since it fails to take into account the rising cost of living and the widening economic gap.
The modern generation of HDB housing is, however, no longer the crude version of the 1960s. Most are ultra-modern in design, albeit slightly smaller in size.
Recently, the biggest impact has been the large influx of middle-class professionals and small businessmen from Malaysia, China and India. And HDB costs have not been spared.
Tan Kin Lian, a failed candidate for the presidential election last year, said in the past when HDB flats were designed to house the poor, a single breadwinner could buy it on a 20-year loan.
Now it has to be financed by a double-income family stretching over 30 years, reflecting its unaffordability, he said.
A naturalised citizen is entitled to buy a cheaper new flat from the HDB, but it would have meant queuing up for several years and ending up with a different unit or location.
Singaporeans are generally not opposed to new citizens buying public flats and enjoying the same rights as locals.
Their anger is directed at the larger body of permanent residents admitted every year and allowed to buy resale flats, adding pressure on prices.
With an independence history of only 47 years, Singapore is like an infant. Occasionally, officials still talk of wanting an enlarged population of six to seven million in 30 years.
“This continuing anticipation of future demand is actually fuelling a reason to invest in property here,” said a real estate agent. “It’s hard for prices to come down short of a recession.”
Currently, Singapore is witnessing the modern version of a new immigration wave hitting the island, proportionately as big if not bigger than earlier ones in the last century.
But this time the arrivals have not come on refugee ships wearing only the shirts on their backs.
Instead they fly in on modern aeroplanes, many of them carrying university degrees and accumulated personal wealth that can pay for Singapore’s expensive properties.
“Many of them know that putting money into property here has little risk,” said the agent.
The million-dollar HDB unit is almost certain to hasten the trend for further hikes. Ironically, it was the HDB’s brilliant achievements in the 1960s that put the ruling People’s Action Party (PAP) into power.
Today the new pressures of demand and cost could become its political undoing, if the problem is not resolved.