Is sg property cheap now?

[CY09]

Your household monthly income has to be below $1,500 to qualify for $160,000 of grant subsidy. I am pretty sure no bank or CPF will grant you 50% of 340,000 to repay as loan if your entire family is earning $1,500 monthly

[Scg8866t]

So seems like sg property prices has been moving up since 2019. My thesis was correct? See how it pans out.

[Kaimin]

It depends on what your thesis was. If your thesis is that home prices would go up it was correct. The private home property index rose from 2019 Q2 to 2021 Q2 from 151 to 162. That is 3.5% in two years. Home prices are almost always on a very non-volatile upward trend.

If your thesis is that because home value ratios are so much lower in Singapore than in Hong Kong and that there will be a reversion to the mean of Hong Kong prices, I think it is wrong. Hong Kong prices are the highest in the world, so they are not the mean. 

Adam Smith said something very useful about land. Land is a fixed commodity, so unlike corn or cars in a free market there is no useful effect on society when land prices go up because no one can produce more land. The only useful effect of an increase in land prices is to cover increase in building costs. Hong Kong building prices are sky high and only the landlords benefit. 

It is not just an economic situation that created Hong Kong's prices but it is the result of failed public policy. Just ~8% of land in Hong Kong is residential, it is 14% in Singapore. Hong Kong has a few huge land conglomerates which gives them pricing power. The majority of Hong Kong lives in private housing, it is the opposite in Singapore. 

If this situation develops in Singapore then we will reach Hong Kong housing valuations. But I hope it will not.

[Wildreamz]

Work-from-home trend might change real estate price dynamic somewhat, price appreciation of prime real estate might not be as rapid (as it did in the past) in the near future if the trend persist beyond COVID.

[karlmarx]

The most powerful driver of SG real estate is probably SG's position as a wealth haven. Some barriers have been erected to prevent multiple property purchases by foreigners, but this will not stop an increasing foreign share of real estate if more foreigners continue to store their wealth in SG.

No swiss standard of living for the masses, but SG is closer to achieve swiss standard of banking.

I'm quite confident that SG real estate will continue its (slow?) upward trend over the long term.

[ongweehiang]

Other than demand and supply, the next important factor has to be the interest rate.

As long as interest rate continues to be low, the demand will continue to be high?

We need to divide the Singapore market into a few buckets

- Residential market for locals (HDB, Heartland condos)
- Landed properties for locals
- Trophy assets for "locals" (GCB)
- Trophy assets available to all (Sentosa and Shophouses)
- High end condos available to all

They should all move differently from due to different demand and supply dynamics and of course interest rate.

[dreamybear]

In 2020, the largest proportion of household now sits at the income bracket of at least $20k.   In 2010, the biggest proportion was $3k - $4.999k. 

Other than the low interest rate env, previous rounds of cooling measures to ensure affordability, rising household income, there are many residents getting very high income which may explain why the housing mkt is holding strong, and will probably continue to do so ? 

While I am not a property agent, I think nowadays it is quite difficult to get a 3 bedroom leasehold condo(> 1200 sqf) in a gd location(e.g. walking distance MRT, near amenities, no expressway way noise)for less than S$1.7m ? the freehold equivalent for $2.2m & above ? Need to uncover many multi-baggers if want to upgrade .....

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https://www.straitstimes.com/singapore/r...ade-census

"Significantly, the share of households earning at least $20,000 more than doubled from 6.6 per cent to 13.9 per cent. This group also formed the largest proportion of households in 2020.

In contrast, the largest proportion in 2010 - 16.2 per cent - was for those earning between $3,000 and $4,999. "

[dreamybear]

there are 4 room flats crossing over $1000 psf. Wonder what will be the price in say, 2030 ?

https://www.straitstimes.com/singapore/h...ts-sold-in

[dreamybear]

Housing is a complex issue and I may not fully understand the underlying issues but I thought the point made about the reinforcing cycle, is interesting. If new HDB flats prices are dependent on the transacted prices in the area, then allowing prices to appreciate and giving more grants may not be sustainable in the long term ? This is in the context that HDB are on 99 years lease and will depreciate to 0 at the end of the lease. It's like future generations will be paying higher and higher prices (net of grants) for something that will go to 0 ? Am I missing something here ?

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https://mothership.sg/2023/02/psp-altern...dget-2023/
"....However, he opined that the increase in CPF Housing Grant announced during Budget 2023 would not be the best solution as it would inflate the housing market and necessitate higher CPF grants in the next round, and the cycle will repeat itself...."

[CY09]

Yes, you are right. HDB prices its BTO at a discount to the surrounding resale transactions. They package it as "subsidy" given.

PSP's proposal is indeed good because it recommends for pricing to be pegged to the cost of production (excluding land cost). However, the political machinery is not taking it nicely to this proposal. I do feel that public housing should be priced to its cost of production inputs with a mark up of say 10-15% to cover for HDB operating cost. It never should have factored in land cost