January 18, 2010
By Jeremy Au Yong from Straits Times
MIDWAY through a 11/2-hour dialogue with Law Minister K.
Shanmugam yesterday, 58-year-old Wee Kai Fatt stood up and gave
voice to the claims of many coffee shop pundits here.
The senior engineer complained about the foreigner-fuelled
population boom, saying he was shocked when he heard there were
five million people living in Singapore.
This influx of foreigners, he added, had caused HDB home prices
to rocket.
Taking it all in, Mr Shanmugam took pains to clarify what he
said were several misconceptions in Mr Wee’s statement.
The Law Minister’s key message: Do not cast foreigners as the
villains driving up the prices of HDB flats.
Speaking at the end of his three-hour visit to Yew Tee
constituency in Hong Kah GRC, he said: ‘The first misconception is
that somehow there are five million people and that is putting
pressure on all of us. It doesn’t.’
Of the five million, 3.2million are citizens, and roughly
500,000 are permanent residents (PRs).
The remaining 1.3million are here on temporary work permits, and
they ‘impose no burden’ on the public housing system, said Mr
Shanmugam, who is also the Second Home Affairs Minister.
The reason: These foreigners are not allowed to buy any public
housing flats, whether directly from the HDB or in the resale
market.
As for the PRs, who can buy resale flats, he said they form too
small a number at the moment to have any significant impact on
prices.
So, who is supporting the high HDB prices?
Just last week, there were media reports of a two-room HDB flat
in Chinatown selling for $245,000, or $45,000 more than the flat’s
valuation.
Mr Shanmugam’s hunch is that Singaporeans are the likely
culprits.
Asked by another Yew Tee resident about the high prices, he
responded: ‘You say maybe foreigners are paying these high
valuations. I think if you check, you’ll find that the majority are
Singaporeans. The foreigners who come here and look at HDB flats
generally buy the lower value flats.
‘You’ll see that they are spread out in the suburban areas, and
their salaries tend not to be that high. They don’t get the kind of
grants we give Singaporeans. And it’s not so easy for them. I
haven’t done an analysis of the statistics, but I’d be prepared to
say that it is primarily Singaporeans who are paying these
prices.’
He added that it would be difficult for the Government to step
in and impose some sort of limit on resale flat prices.
‘It requires the Government to intervene and for every one
person you want to make happy, you will make another person
unhappy,’ he said.
The Government’s approach instead was to give Singaporeans a leg
up with concessionary loans and housing grants which can amount to
as much as $40,000 just for young couples seeking to live near
their parents.
Mr Shanmugam also noted that eight in 10 Singaporeans pay their
HDB monthly mortgages completely with funds from their CPF savings
and do not cough up any additional cash. All in, he said, flats
remain affordable.
This year, the Government is ready to launch up to 12,000
build-to-order units to keep up with demand. In fact, HDB launched
a new project in Yew Tee two weeks ago.
Yesterday’s dialogue highlighted again the simmering tension
between foreigners and locals here, as the issue dominated the
meeting with around 150 residents.
In the past year, the surge in foreigners has been blamed for
various ills – from the rise in home prices to a lack of jobs for
Singaporeans.
Mr Shanmugam’s remarks mark the latest attempt by a political
leader to clarify the issue. He noted the Government need to work
harder on getting across the message on the role of foreigners.
He said: ‘Politics is, in fact, the art of communication, and
this question shows how much misconception there is on the ground,
and that is one of the problems a Government has and must
overcome.’ – Straits Times
http://www.temasekreview.com/2010/01/18/wrong-to-accuse-them-of-driving-up-costs-shanmugam/
January 18, 2010
Singaporeans are again blamed for the misguided policies of the
ruling party which continues to turn a blind eye towards the
problems it has created.
Despite the obvious fact that the relentless influx of
foreigners over the years has led to a sky-rocketing of HDB flat
prices, PAP leaders are adamant that foreigners are not to be
blamed.
So who is responsible for supporting the HDB flat prices even in
the midst of a recession? As expected, the fault lies with
Singaporeans.
According to Law Minister Mr Shanmugam’s “hunch”, Singaporeans
are the likely culprits. He did not provide any evidence to
substantiate his allegations.
(and we are paying him SGD$2 million dollars a year for his
“hunches”, not much better than his mentor – the “forecaster
extraordinarie”)
“The first misconception is that somehow there are five
million people and that is putting pressure on all of us. It
doesn’t. Of the five million, 3.2million are citizens, and roughly
500,000 are permanent residents (PRs). The remaining 1.3million are
here on temporary work permits, and they ‘impose no burden’ on the
public housing system,” said Mr Shanmugam.
He was speaking during a dialogue session with Yew Tee residents
in Hong Kah GRC.
Asked by another Yew Tee resident about the high prices, he shot
back:
“‘You say maybe foreigners are paying these high valuations.
I think if you check, you’ll find that the majority are
Singaporeans. The foreigners who come here and look at HDB flats
generally buy the lower value flats.”
Mr Shanmugam’s stance on the matter is similar to his colleague
National Development Minister Mah Bow Tan who told parliament
lately that “PR households owning HDB flats is a small proportion
of all HDB households”.
However, Mr Mohamad Ismail, the CEO of Propnex quoted a figure
of 20 per cent when asked by The Straits Times a few weeks ago.
Another real estate agency ERA claimed in a report in July last
year that 40 per cent of the buyers of resale flats are PRs while
C&H put the figure at 50 per cent.
Below is a graph illustrating how the rise in the prices of
resale flats coincides with the rise in the number of foreigners in
Singapore between the years 2000 and 2008, courtesy of Kojakbt, the
moderator of 3in1kopitiam:
Due to the ruling party’s liberal immigration policy, foreigners
now made up 36 per cent of Singapore’s population, up from 14 per
cent in 1990. According to Home Affairs Minister Wong Kan Seng,
there are over 20,000 new citizens and 90,000 PRs last year.
Besides competing with Singaporeans for HDB flats, PRs sometimes
also “spoil” the market by over-paying for them.
An Indonesian PR forked out $653,000 for a four room resale flat
in Queenstown in October 2009 when he could well afford a private
condominium.
As the prices of new BTO flats are pegged to that of resale
flats in the vicinity, this may contribute indirectly to the
astronomical prices of the Dawson project launched a few months
later where 5-room flats fetches as high as $660,000.
A Financial Consultant interviewed by Lianhe Wanbao advised
Singaporeans not to buy these flats unless they earn more than
$7,500 monthly.
Mr Shanmugam also repeated Mr Mah’s earlier assertion that HDB
flats remain “affordable” to Singaporeans as “eight in 10
Singaporeans pay their HDB monthly mortgages completely with funds
from their CPF savings and do not cough up any additional
cash.”
Quoting the affordability benchmark of 30 per cent used
frequently by HDB to show that HDB flats remain affordable to
ordinary Singaporeans, Mr Mah said recently that a family with
a monthly income of $3,000 can buy a flat worth up to $250,000 and
spend only 30 per cent of their income every month on the
mortgage.
“Similarly, a family with a monthly income of $4,000 can
afford to buy a new flat worth up to $333,000 without spending more
than 30 per cent a month on the mortgage. This means they can
comfortably buy any of the flats offered in the latest BTO projects
this month,” he added.
Both Mr Shanmugam and Mr Mah’s public statements are quite
“divorced of reality”.
Instead of acknowledging the problem and tackling it, they chose
to blame Singaporeans for their mistakes in order to defend the
foreigners whom they are so infatuated with.
http://www.temasekreview.com/2010/01/18/shanmugam-singaporeans-the-culprits-for-driving-up-hdb-flat-prices/
