New Reporter
30-09-23, 14:14
Is it time to stop bingeing on real estate?
Instead of constantly acquiring property for the next generation, we could do better by leaving them with fairer societies and a healthier planet
Kalpana Rashiwala
Sep 29, 2023
MUCH of the narrative accompanying the surge in Singapore’s private home prices in the past three years has focused on a housing shortage driving buyers to jump on the bandwagon for fear of missing out.
The government has stepped up supply and given assurances that there will be enough homes. For private housing, priority has been accorded to owner-occupation demand from Singaporeans and permanent residents, with measures taken to further rein in purchases by foreign buyers and local investors.
But there will always be limitations – especially for a small island state such as Singapore – on how much new housing supply can be rolled out, despite the best and most creative efforts from all quarters.
How much property do we actually need?
When it comes to demand, there is only so much that cooling measures can do. Based on past experience, cooling measures have sometimes resulted in unintended consequences, which exacerbate volatility in property prices.
Or the market has adapted to the cooling measures, with clever property agents finding loopholes to help buyers get around the rules. For instance, the practice of decoupling and ”99-to-1” property deals were devised as ways to avoid payment of Additional Buyer’s Stamp Duty (ABSD) on a second residential property.
Fundamentally, the property market is driven by fear and greed. Fear of missing the boat if prices keep going up, and greed in the sense that property – besides being a roof over one’s head, a place to call home and build a family – is coveted by many Singaporeans as an investment in which to park one’s money for wealth preservation and growth.
The lack of alternative investment options is often cited as a key reason that people here want to own multiple properties.
In the 15 years to Jun 30, 2023, the Singapore stock market benchmark Straits Times Index rose just 8.8 per cent. The Urban Redevelopment Authority’s overall price index for private homes, in contrast, climbed 53.2 per cent between Q2 2008 and Q2 2023.
Over the same period, the Housing and Development Board (HDB) resale flat price index increased 84.7 per cent, though not everyone qualifies to buy a public housing flat.
Savvy investors with the wherewithal have always made a strong case for investing in property. Those with fewer resources are following suit.
“Sell one, buy two” strategy
During the Covid-19 outbreak, when working from home was mandatory, property agencies started using webinars to convert HDB dwellers into legions of property investors.
They were taught to sell their HDB flat if it had reached the five-year minimum occupation period, and use the sale proceeds plus a loan to buy not one, but two private residential properties: the first as a replacement home to live in and the second, probably a smaller unit for those with stretched budgets, as an investment property. This was dubbed the “sell one, buy two” strategy.
The more affluent, too, have not lost their appetite for properties, often acquiring residential properties in the names of their next generation or other family members for whom it would be their first property – and hence not subject to ABSD.
No amount of new homes may be enough, no matter how hard the authorities work to increase supply, if Singaporeans continue to display an insatiable appetite for property.
This raises the question: How much property do we actually need?
Based on past experience, buying properties in this former backwater-turned-global-business-hub has been a tried-and-tested path to enhance wealth, with rental income along the way to defray monthly mortgage repayments.
Past performance no guarantee of future results
There is no guarantee, however, that amassing properties will continue to be a sure strategy for wealth preservation and growth.
Global warming and climate change present uncharted scenarios. The predictions about sinking cities, rising sea levels and extreme weather conditions of floods and droughts, once studied in geography lessons, have started to become reality.
Who can be sure that property will continue to be a safe store of value?
It may be wise to diversify one’s wealth holdings to include more of other asset classes. More fundamentally, instead of endlessly bingeing on real estate, it may be more fulfilling and fruitful to take care of our larger home: the planet.
Taking urgent action to combat climate change and its impacts is one of the United Nations’ 17 Sustainable Development Goals. Of course, those looking to allocate a bigger portion of their resources to help make the world a better place will find a range of satisfying options among the other 16 goals.
These include ending hunger and poverty; achieving gender equality and empowering all women and girls; and making cities and human settlements inclusive, safe, resilient and sustainable. Another goal is to reduce inequality within and among countries.
These form the bigger picture – which we can easily lose sight of when we become engrossed in chasing our dream homes in safe Singapore.
Even if we manage to fare relatively better than other parts of the world in the face of extreme weather patterns, one could ask: Can we truly be happy living in beautiful properties in coveted locations – on a sick planet? One of the most important lessons the Covid-19 outbreak has taught us, is that we cannot be safe until everyone is safe.
Do we keep buying as many properties as we can get hold of, just because we have the means? Or do we take stock of the situation with the earth, and say: “No, this is enough.” To be able to realise and say “I have enough” is the end of greed.
Instead of acquiring properties for the next generation, how about working towards leaving them with a healthier planet?
https://www.businesstimes.com.sg/opinion-features/it-time-stop-bingeing-real-estate
Instead of constantly acquiring property for the next generation, we could do better by leaving them with fairer societies and a healthier planet
Kalpana Rashiwala
Sep 29, 2023
MUCH of the narrative accompanying the surge in Singapore’s private home prices in the past three years has focused on a housing shortage driving buyers to jump on the bandwagon for fear of missing out.
The government has stepped up supply and given assurances that there will be enough homes. For private housing, priority has been accorded to owner-occupation demand from Singaporeans and permanent residents, with measures taken to further rein in purchases by foreign buyers and local investors.
But there will always be limitations – especially for a small island state such as Singapore – on how much new housing supply can be rolled out, despite the best and most creative efforts from all quarters.
How much property do we actually need?
When it comes to demand, there is only so much that cooling measures can do. Based on past experience, cooling measures have sometimes resulted in unintended consequences, which exacerbate volatility in property prices.
Or the market has adapted to the cooling measures, with clever property agents finding loopholes to help buyers get around the rules. For instance, the practice of decoupling and ”99-to-1” property deals were devised as ways to avoid payment of Additional Buyer’s Stamp Duty (ABSD) on a second residential property.
Fundamentally, the property market is driven by fear and greed. Fear of missing the boat if prices keep going up, and greed in the sense that property – besides being a roof over one’s head, a place to call home and build a family – is coveted by many Singaporeans as an investment in which to park one’s money for wealth preservation and growth.
The lack of alternative investment options is often cited as a key reason that people here want to own multiple properties.
In the 15 years to Jun 30, 2023, the Singapore stock market benchmark Straits Times Index rose just 8.8 per cent. The Urban Redevelopment Authority’s overall price index for private homes, in contrast, climbed 53.2 per cent between Q2 2008 and Q2 2023.
Over the same period, the Housing and Development Board (HDB) resale flat price index increased 84.7 per cent, though not everyone qualifies to buy a public housing flat.
Savvy investors with the wherewithal have always made a strong case for investing in property. Those with fewer resources are following suit.
“Sell one, buy two” strategy
During the Covid-19 outbreak, when working from home was mandatory, property agencies started using webinars to convert HDB dwellers into legions of property investors.
They were taught to sell their HDB flat if it had reached the five-year minimum occupation period, and use the sale proceeds plus a loan to buy not one, but two private residential properties: the first as a replacement home to live in and the second, probably a smaller unit for those with stretched budgets, as an investment property. This was dubbed the “sell one, buy two” strategy.
The more affluent, too, have not lost their appetite for properties, often acquiring residential properties in the names of their next generation or other family members for whom it would be their first property – and hence not subject to ABSD.
No amount of new homes may be enough, no matter how hard the authorities work to increase supply, if Singaporeans continue to display an insatiable appetite for property.
This raises the question: How much property do we actually need?
Based on past experience, buying properties in this former backwater-turned-global-business-hub has been a tried-and-tested path to enhance wealth, with rental income along the way to defray monthly mortgage repayments.
Past performance no guarantee of future results
There is no guarantee, however, that amassing properties will continue to be a sure strategy for wealth preservation and growth.
Global warming and climate change present uncharted scenarios. The predictions about sinking cities, rising sea levels and extreme weather conditions of floods and droughts, once studied in geography lessons, have started to become reality.
Who can be sure that property will continue to be a safe store of value?
It may be wise to diversify one’s wealth holdings to include more of other asset classes. More fundamentally, instead of endlessly bingeing on real estate, it may be more fulfilling and fruitful to take care of our larger home: the planet.
Taking urgent action to combat climate change and its impacts is one of the United Nations’ 17 Sustainable Development Goals. Of course, those looking to allocate a bigger portion of their resources to help make the world a better place will find a range of satisfying options among the other 16 goals.
These include ending hunger and poverty; achieving gender equality and empowering all women and girls; and making cities and human settlements inclusive, safe, resilient and sustainable. Another goal is to reduce inequality within and among countries.
These form the bigger picture – which we can easily lose sight of when we become engrossed in chasing our dream homes in safe Singapore.
Even if we manage to fare relatively better than other parts of the world in the face of extreme weather patterns, one could ask: Can we truly be happy living in beautiful properties in coveted locations – on a sick planet? One of the most important lessons the Covid-19 outbreak has taught us, is that we cannot be safe until everyone is safe.
Do we keep buying as many properties as we can get hold of, just because we have the means? Or do we take stock of the situation with the earth, and say: “No, this is enough.” To be able to realise and say “I have enough” is the end of greed.
Instead of acquiring properties for the next generation, how about working towards leaving them with a healthier planet?
https://www.businesstimes.com.sg/opinion-features/it-time-stop-bingeing-real-estate