The nature of HDB may need to change

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#11
(24-06-2011, 08:31 PM)redcorolla95 Wrote:
(23-06-2011, 09:05 PM)tanjm Wrote: Also, another point I have not mentioned. With this method, Singapore can give every single citizen the subsidy (amount dependent only on your income level). Then they just go and choose their choice of housing.

Then it becomes the government transferring wealth indirectly to private developers.

The land cost is the major component of a property price. Guess who owns most of the land.

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#12
(25-06-2011, 01:04 AM)tanjm Wrote:
(24-06-2011, 08:31 PM)redcorolla95 Wrote:
(23-06-2011, 09:05 PM)tanjm Wrote: Also, another point I have not mentioned. With this method, Singapore can give every single citizen the subsidy (amount dependent only on your income level). Then they just go and choose their choice of housing.

Then it becomes the government transferring wealth indirectly to private developers.

The land cost is the major component of a property price. Guess who owns most of the land.

What would then happen in your scenario would be that
1. property prices would rise to something like Hong Kong
2. but after the subsidy, the net price people pay would be close to what they're paying now
3. and so the subsidy goes to the private developers, not the citizens, which worsens rather than helps the problem
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#13
I find it curious that the people of this forum (particularly this forum) discount the influence of competition in setting prices. They assume that with more private sector involvement, prices *must* rise.

Prices may still rise, but that may be a function of factors like location, greater demand, higher expectations for quality of housing, but all these things being equal (and assuming proper policy decisions), having greater private sector involvement (provided there is sufficient competition) may at least ensure a more transparent pricing mechanism than the HDB system which has the government trying to explain itself everytime, as well as more variety/quality/choice.
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#14
(25-06-2011, 12:09 PM)tanjm Wrote: I find it curious that the people of this forum (particularly this forum) discount the influence of competition in setting prices. They assume that with more private sector involvement, prices *must* rise.

I'm with you on this.

Fact is that 80+% of S'poreans stay in HDB. Demand is segmented (and further sub-segmented due to the various schemes) in that public housing is only available for Citizens and PR. People on foreign employment pass (of which a substantial proportion of our resident population comprise of) and foreign investors are confined to the private market.

The above are all government policies so if prices now are said to be 'too high', how can one be saying that it is a result of increased private sector involvement? It's more likely the case that public sector involvement was too high in the first place.

I'm not saying public sector involvement in the property market didn't/doesn't have its use- it certainly does. But to say that the freer markets cause higher property prices and therefore is bad is a little too simple.
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#15
(25-06-2011, 12:09 PM)tanjm Wrote: I find it curious that the people of this forum (particularly this forum) discount the influence of competition in setting prices. They assume that with more private sector involvement, prices *must* rise.

Prices may still rise, but that may be a function of factors like location, greater demand, higher expectations for quality of housing, but all these things being equal (and assuming proper policy decisions), having greater private sector involvement (provided there is sufficient competition) may at least ensure a more transparent pricing mechanism than the HDB system which has the government trying to explain itself everytime, as well as more variety/quality/choice.

I am not sure about others, but I am not against competition, and it is good, but when it is a totally free market and there is no policies to govern those profit making companies, often in many cases the people who suffer are the consumers. There are so many examples of consumers suffering due to free market.

A classic case is of the recent financial crisis in US, where the consumers were taken a ride and large no. of consumers lost their wealth. Retirees had to come back from retirement to work to put food in the table at age of 70+ when they thought their retirement was safe, families lost their homes and ended on the street, banks refusing to work on the terms of the loans to reduce so that they can afford it etc...etc...etc...

As I said before , in theory a totally free market due to competition would benefit the consumers in the end, but in reality that;s not what happens. Organization try to find all kind of loopholes to make as much profit as possible and often at the detriment of the consumer.

Even now in US, the new consumer protection agency led by Elizabeth Warren ( Harvard professor who is pro consumers) has been fighting a battle with lobbyist ( hired by the free companies who don't want any policies or regulations against the free market reign they have now) to get some teeth to fight against the companies.

The lobbyist have been fighting hard to prevent the agency from coming up 1st then now that it is exists they are trying to remove any teeth it has and the battle goes on.

Why is there a fight? because if new regulations and policies come , it would impact the companies profitability and they cannot play with the loopholes and hoodwink the consumer.

So all these leads me to think that a free market system without any proper regulation and policies and laws to protect the consumer is basically leaving the door open for all to come and plunder.

Its like running a country without any police, army etc... expecting everyone to behave ...... that is a recipe for disaster.
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#16
Free Markets do lead to bubbles at times (and this is not exclusive to any particular "product"). Which is why governments everywhere regulate "essential" goods and services. I'm not for totally free markets (is there really one?), but when HDB builds 80% of our homes, this leads to market distortions and people clamouring for their free ride.
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#17
Of course there is competition: there will not be a whole lot more competition from the supply / developer side - since the public tenders already draw plenty of bidders, but do remember that there will also be competition from the demand side too as more people can buy (foreigners, people can buy more than 1 etc).

There are a few data points which suggest that more private sector involvement will result in higher property prices:
1. After 5 years of living in a flat, once it's out in the open market it goes up by a lot
2. Rental yields are a whole lot higher for HDB than equivalent private. Now if the ownership of HDB was to convert to private, the rents would remain the same, and the yields would equalize, and for this to happen, it means the HDB prices would suddenly jump up.
3. In Hong Kong, which is most similar to Singapore, average housing price was HK$4.03 million (US$520,000), a whole lot more than Singapore.
http://www.chinadaily.com.cn/business/20...791438.htm
4. Sim Lian's latest DBSS launch.

While HDB by definition is a market distortion, and no govt agency can be perfect, expecting that these distortions would disappear if the system is privatized is wishful thinking. Let me know if there is a single data point that supports the case for totally free property markets in Singapore.
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#18
From my non-scientific obervation and personal experience, I think its more than a question of more competition or government monopoly...

The biggest reason for property price increase is economy good and property buyers feel optimistic and invincible (I will never lose my job, interest rates will not rise, I afraid to miss the boat, I so very de smart, etc).

The biggest reason for low property price drop is economy bad and not enough of "confident" property buyers above...

I remember the 1985 recession was caused by Govt raising the average wage of Singaporeans to "encourage" businesses to upgrade and not rely on "cheap" wage costs to compete globally. How about Govt increasing the employer CPF back to 25%?

Short-term property prices will increase since more can afford (employees cheers, while employers start to explore outsourcing). But once we over-price ourselves and new investments start to flow overseas, unemployment will go up and we will have what we want: low property prices!?

Of course I say this half-in-jest. But I do want to show how contradictory and difficult to implement policies that work for all vested parties. Salary is revenue to employees; but cost to employers. Same goes for HDB prices. Even subsidies have to come from somewhere - unless we want to follow the mediterranean route - borrow and let our grandchildren worry about repaying...

http://www.marketwatch.com/story/beijing...2011-06-26
Just google singapore man of leisure
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