Is sg property cheap now?

[Scg8866t]

I feel hk is not an open market like u think. Gov there has put out numerous cooling measures like sg to cool the property prices there. Reason hk gov fail to control housing prices is predominantly because during the asian financial crisis they abandoned the public housing project. 2011 restarted it but too late, all the private developers gain hegemony in land ownership and price shot sky high.

Lky on the other hand persisted with the public housing project throughout.

There is no freehold title land in hk, all land there ultimately belongs to the Chinese gov and in 2047 land there has to be returned to China with a potential extension of lease afte(alot of uncertainity). 

You mentioned gov buying the land off from private owners to build infrastructure. They always pay a premium to make it hard to reject. Just see the recent JCC and RCC land and how they compensated  the club owners.

1) The HK government has never had genuine intentions, since the colonial administration and arguably even until present day, to provide affordable housing to the public. Real estate in HK has always been controlled by a few big players; first the British traders, then came the HK nouveau riche in the 1970s. For a good part of HK history until 1985, these private interests controlled the government through their own representative on the legislative council. Although the electorate now has some say in choosing who to represent them, they may only elect half of the legislative council, with the other half being elected by members of professional, industrial, and trade association (i.e. private interests). The Chief Executive is still elected by a body of private interests.

What happens when you have an over-representation of capitalists in the government? Policies will be pro-business, and hence taxes (on the business and private wealth) will be kept minimal. Since taxes are low, there will be little government funding for social programs. In other words, no money for public housing. Which for the public means that they have to turn to the private market -- whose supply is controlled by few players -- for their housing needs.

The large demand residential and investment demand (from mainlanders, HKers, and global HNWIs) for HK housing, together with the well-controlled supply, is what gave HK her very high property prices.


2) On the non-existence of freehold land in HK, I assume you are making the point that because HK leases are shorter than SG, so SG real estate -- being of longer (or freehold) tenure -- is, in addition to other factors such as SG's high GDP per capita and so on, cheaper compared to HK. I cannot disagree with this. There is no doubt that SG real estate is cheaper compared to HK, by any measure.

But your point on SG real estate being cheap is where I differ, for reasons I have mentioned. To illustrate, a P/E of 50 is cheap compared to a P/E of 100, but a P/E of 50 is still expensive.


3) On compulsory land acquisition by SG government, my impression is that while they do pay a premium, it is usually small. With regards to Jurong Country Club, JTC only offered $90m, while the asking was $168m. So I don't think a premium is offered here. I'm not sure if that is fair, but I think it should be noted that JCC's lease expires in 2035. As for Raffles Country Club, I'm not sure how much the government offered for the land. But since its lease expires in 2028, I think the reaction of most RCC members will be the same as JCC members; very upset.

2) Besides HK, there are many other well known cities that Sg is compared too. And according to demographia, basing on median hse price to median income ratio, Singapore property is more affordable than HK, New York, Vancouver, Toronto, Sydney, Perth, Dublin, Seattle, Briabane, San Fran, Melbourne, Hawaii, LA. The whole list is as attached in my previous post. Hk being the most extreme at 20.9x vs Sg 4.9x

3) My impression is all these club members made some money on top of their initial downpayment for the membership. Ie they got their membership for free, including those bondholders who manage to get compensated. Thats actually a pretty bad example because club owner land strata ownership percentage is pretty confusing and yes the land lease is very short too. But in general if gov wants to force acquire a freehold residential land from someone, they usually pay a hefty premium. And instances for that are still pretty rare. Home ownership being 90% in sg shows the confidence that sgreans have towards their gov on sticking perpetually to the rule of law, unlike our neighbouring third world countries that doesnt honour the black and white. Own view.

[dreamybear]

Talking Point 2019/2020 - EP4
Thu 2 May 2019 - Is My Flat Worth A Million?
https://video.toggle.sg/en/series/talkin...ep4/793503

A HDB home owner at Tiong Bahru is looking to sell his flat for more than $1 million which is the price some of the nearby flats transacted at. The shocking thing is he bought it at $350k only !!!

No need to read 500 pages a day, sigh(for more than a few minutes) ....

I think the older generation has more such chances(& also for SERS) than the younger ones ?

Do note that the 2nd half of the episode talks about the Open Electricity Market. It may be a worthwhile watch for buddies like me who is unsure whether to switch or which provider to switch to.

[LionFlyer]

Someone might pay 1 mil for his flat but where does that leave him to stay next time?

If it was a private property, he can use the asset as a collateral to get a loan and use the loan for further investments. Then he gets to stay at the same place while unlocking cash. Not sure if this can be done for HDB.

[soros]

If he sold his HDB flat for SG $ 1 Mil , he could get 5% return by investing in a portfolio of REITS which is about $50K annual income and enough for retirement.

He could move to Johor Bahru or Penang where the monthly rent for 900 sq ft flat is lower ( https://www.expatistan.com/cost-of-livin...own-penang ).

[brattzz]

1 milos? Take and sell, 👍 no questions asked! no need to die die stay at Tiong Baru!! 😅😅😅

[Bibi]

I dont know the hdb rules well. But i believe he can sell his S$1mil hdb and buy resale at extreme West or East HDB for S$300+k. Jurong West 4-rm selling around 300+k i think.

[specuvestor]

Talking Point 2019/2020 - EP4
Thu 2 May 2019 - Is My Flat Worth A Million?
https://video.toggle.sg/en/series/talkin...ep4/793503

A HDB home owner at Tiong Bahru is looking to sell his flat for more than $1 million which is the price some of the nearby flats transacted at. The shocking thing is he bought it at $350k only !!!

No need to read 500 pages a day, sigh(for more than a few minutes) ....

I think the older generation has more such chances(& also for SERS) than the younger ones ?

Do note that the 2nd half of the episode talks about the Open Electricity Market. It may be a worthwhile watch for buddies like me who is unsure whether to switch or which provider to switch to.

I think people generally forget to reference price with time: How long was it and the compounded CAGR return? Secondly generally housing has a positive experience bias due to inflationary environment and people tends to hold very long term rather than trying to be smart

But the L99 issue potentially could disrupt this experience depending on how the govt manages it

[corydorus]

Everyone has 2 chances to buy 1st timer flat. Even if is one time, I would think most people will benefits from it despite 99 years rules. It doesn't really affects them. The concern is more on how much to profit from it. More or even more ....

[donmihaihai]

Not just time. 350k should be without interest portion. Total cost will be higher and with yearly repayment and I think the owner cleared his loan. The annualised return is actually quite Low.

At that year, I would also bet that west and north area hdb around 100k. Logically.

The valuation for a lot of properties is only for 20 to 30 years. Unless cap rate go down to 2%.

[specuvestor]

Not just time. 350k should be without interest portion. Total cost will be higher and with yearly repayment and I think the owner cleared his loan. The annualised return is actually quite Low.

At that year, I would also bet that west and north area hdb around 100k. Logically.

The valuation for a lot of properties is only for 20 to 30 years. Unless cap rate go down to 2%.

Yes and I also wrote in another thread that if paying by CPF, they also help calculate the “opportunity cost”, which I think is a good policy to anchor people to earth, though there’s a lot of misconception over this. In inflationary environment with 4X leverage, the experience of stay-in home buyers are generally good even if the ROA is actually just ok over the years.