Wednesday, April 7, 2010

Mr Minister, a nice home with nice view now please

WITH prices of public housing busting records in recent months and concerns escalating over supply and affordability, the man overseeing Singapore’s red-hot property market has found himself in the hot seat.

But the ever unflappable National Development Minister refuses to be unnerved by the emotionally charged debate now playing out online and in newspaper forums.

Rather, in his first full interview with The Straits Times since a year ago, Mr Mah Bow Tan gives this calm assurance: Housing prices have not moved faster than household incomes in the past decade, contrary to popular opinion.

To back it up, he whips out a chart of fresh figures collated by the Housing Board (HDB) and the Department of Statistics. It maps out the HDB resale flat price index and median household income levels over the past 10 years, with 1999 as the base year.

It shows that from 1999 to 2001, median household incomes actually outstripped resale home prices, rising 10 per cent, while home prices fell 13 per cent. From 2001 to 2006, the two inched upwards in tandem.

Both indicators rose sharply from 2006 onwards during Singapore’s last property boom – until a major blip: Median household incomes fell from 2008 to 2009 because of the financial crisis, while resale flat prices continued to inch up.

‘So, when people say prices have moved faster than incomes, it’s not true…Realistically, in the last 10 years, prices have moved in tandem with income – except the last year. And this was an anomaly,’ he says.

So how exactly did this happen?

He points to a confluence of factors.

While many disgruntled home buyers have blamed all sorts of people from the growing legions of cash-rich permanent residents (PRs) to private property owners investing in HDB flats for the rocketing prices, Mr Mah says the true picture is not so simple.

Yes, he concedes, to some extent, PRs have contributed to housing demand as a result of simple economics: There are more of them, demand increases, prices go up.

But there is also the improving economy, which means home hunters, more confident of holding their jobs, can afford to pay higher prices. Another factor: Pent-up demand from those who deferred purchases in the flattish years from 2001 to 2006.

Then there are others who may not have thought about buying but are doing so now because they are afraid prices will go up further, he says. ‘So you add this group of factors, and you get this huge increase in demand, and that’s why prices are going up.’

This ‘anomaly’, as he puts it, has not gone unnoticed by the opposition parties, which have signalled their intention to contest Mr Mah’s Tampines ward by playing on the unhappiness surrounding housing issues.

To that, the 61-year-old, who has fought and won four general elections in Tampines, responds coolly: ‘Whoever thinks they can do a better job, please come forward.

‘The election is not about me or about any MP, but about the residents…They will have to decide who is better able to improve their lives,’ he says.

But hard facts and statistics aside, what about the public angst that housing prices are spiralling out of reach?

‘Every time someone like that comes to me, I say: ‘Sit down’. I ask about their flats: ‘What’s your monthly instalment, what’s your salary, why do you say it’s unaffordable?’

‘They tell me their father bought it years ago and it was so cheap…and compare home prices to 40 years ago,’ he says with a hint of frustration.

‘So many things have changed over four decades, and if you want to compare something 40 years ago and today, you can compare a lot of other things. I don’t want to go there,’ he says emphatically.

The reality on the ground, he says, is that every year, 12,000 flats are sold, and the average proportion of monthly income spent on mortgage repayments is about 22 per cent – a very healthy level, according to international standards.

‘So I ask, what are you questioning? Am I telling lies or fudging the figures? Which part is wrong? Point it out to me,’ Mr Mah says.

He attributes the sense of unhappiness among home seekers to a combination of rising expectations and how the ‘Singapore dream’ has evolved too quickly today.

He brings up his own HDB story, which he shared previously in Parliament: After he lost his father at the age of three, he and his mother, a domestic servant, moved from a kampung in Lorong Ah Soo first to a shophouse in High Street, then to a one-room flat in Bugis Street, and eventually to Kim Keat Avenue with his aunt.

‘There, eight of us in a three-room flat shared one toilet and bathroom, while my mother stayed in a one-room rental flat in Whampoa Road,’ he recounts. His family later upgraded to a four-room flat in Toa Payoh – what he calls a ‘typical Singapore story of my generation’.

‘Many people in my generation…started off small and modestly, worked hard, then upgraded our homes later. That’s how it was…but because we progressed so fast and so far in our generation, I think people may have forgotten how we started,’ he says.

Unfortunately, he notes, there are many buyers who expect the ideal flat the moment they get married, ‘in an ideal location with nice views’.

‘I think that’s not doable. It’s not realistic for us to build enough flats of so- called ideal character to satisfy everybody. So our commitment is, we will build sufficient new flats that are affordable in good locations. That may not mean in the city centre, but they are well serviced with good facilities – within a three-year timeframe,’ he says.

But does he think that will be enough to satisfy a new generation of home seekers who seem to want it all now?

He says he believes Singapore’s housing philosophy is for the benefit of the majority and will stand the test of time.

Over the four decades since Singapore attained self-governance, HDB has had to make some hard choices that were proved right, he maintains.

For example, HDB adopted a home ownership, instead of a rental, model. It also decided to liberalise the resale flat market, and chose to adopt a ‘maximum’ approach – where HDB would provide for the majority of the population, instead of just the bottom 20 per cent, as in most other cities.

‘We managed to make Singaporeans feel they own a part of the country. This is important because it created a sense of nationhood,’ he says.

‘If you don’t own a home, and rent a home, where’s your sense of belonging? Would you go for national service, and what are you fighting for?’

But some detractors reason that HDB’s woes today stem from it taking on too many onerous political and socio-economic roles over the years.

These range, they argue, from creating a sense of national identity, to social cohesion, to asset enhancement, to saving for retirement and encouraging marriage.

They ask: Should HDB take on fewer functions and focus on its fundamental mandate of providing affordable housing?

To that, Mr Mah says that HDB was never meant to be a ‘mere developer’.

If it were, ‘we’d just build a flat and sell it. That’s it. But as a public housing authority, HDB not just sells the flat, but manages your flat, looks after it and eventually…it facilitates the monetisation of flats. So it’s really a whole life cycle’, he says.

Looking ahead to the next decade, Mr Mah acknowledges that HDB – and more broadly, the Ministry of National Development – has its work cut out for it, as Singapore is on the cusp of great demographic change.

Tricky challenges he foresees include raising the quality of housing to match expectations and maximising the nation’s scarce land while trying to provide adequate spaces for residents as ever more people converge on Singapore.

He believes the Government will rise to the challenge, but he cautions against the people taking things for granted.

‘I just want to remind Singaporeans it was not that long ago that we were at that situation (where people were still living in kampungs). We had to work hard for what we have. Life doesn’t hand things to us on a silver platter, and I think that has not changed.’

Source: Straits Times, 7 Apr 2010

No comments:

Post a Comment