Everyone aspires to own their own home and most people will want to get married and bring up their children within a sufficiently-sized livable space in a private home or flat (not shoebox condominiums created due to high land costs purchased by developers). Most children, i.e. the next generation of citizens/residents, will likely stay with their parents till their late teens or early twenties, or a period of approximately two decades. A shoebox unit will not be healthy or suitable for children or young adults.
Economic progress is important, especially for Singapore which has practically no natural resources. I have been very lucky to live in Singapore for the last twenty plus years and brought up my family staying in a reasonably priced 5-room HDB resale flat from 1995 (S$275,000), and had the chance to progress to private property from the year 2000.
However, I noticed that our property prices have doubled or tripled in some cases resulting in demand from speculators/investors locally and abroad who are focussing on making a quick profit from a property flip here. In the last five years, a large number of property purchasers have been foreigners, PRs and locals alike. Many purchases were not just for own stay but are also for quick profit or asset appreciation. Everyone wants a piece of the "action".
I am quite concerned that a small country with limited space for liveable housing is able to have property prices appreciate beyond what I call its "true value" and bordering on a "bubble", or in some cases may have already reached that situation. One example is a two-storey shophouse in Jalan Besar which was priced at around S$1.9 million to S$2.2 million five years ago, but is now selling for around S$6 million to S$6.5 million. I wonder what is the fair value when the rental yield after deduction of expenses, e.g. property taxes is only about two percent because its price does not reflect the high selling price in terms of location and return on investment.
Sometimes I wonder how our next two generations or the majority of the less well-off or middle-income families are going to own their own homes when very often they end up having to service high property loan instalments over a lifetime, or possibly up to their children's generation if property prices are very high. I really hope we won't wait for history to repeat itself in the form of a propery boom and bust cycle. It is better to eat "bitter" medicine now to prevent a property bubble than to face its full force later when many will not be able to survive the crisis.
Mr Lee T.O.
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