Tuesday, April 26, 2011

A housing matter

One of the biggest talking point in Singapore, especially with the May election, is the inflation in the cost of living – specifically, the cost of housing. I am particularly affected since I have, in the last few weeks, been going around house hunting in the resale market.

I was shocked after visiting countless HDB flats to realize that the cost of a 4-room unit that is currently valuated at S$370,000 rose from S$270,000 within a period of eight years! In other words, the cost of a house in general rose by a S$100,000 in less than ten years! While my wife and I could potentially afford it still, but it is ridiculous how steep the cost of houses have gone up in a relatively short span of time. Further, I am upset at the lack of regulation to manage this. While others might consider it a good thing, that the cost of land in Singapore has rose in value, yet it is unfortunate that little can be said with regards to the pay and salary of the everyday person. When an economy sees a rise in the cost of living that is not in line with the cost of labor, I would think, something is wrong somewhere with regards to the distribution of wealth.

In addition, it is ironic that the very institution that was initially set to provide affordable housing for all Singaporean, is making it challenging for a middle class person looking for a basic 4-room unit.

To add things worse, the cash-over-valuation or COV requested by buyers is also skyrocketing. Contrary to recent reports in the local media, the COVs are not cooling off by any stretch of the word. To that end, it’s probably high time the local media should be responsible and practice basic investigative journalism when reporting local current affairs.

To give you an idea, places at Tampines and Yishun were asking for 50k and 40k COVs. Places at Admiralty and Pasir Ris, would not have anything lower than 30k.

The Middle Class

I would consider myself in the low-middle class rung (an executive with a PhD wife), which means I may still not see the first million anytime soon but should still comfortably afford a 4-room unit. Yet, with the current valuation and COVs, I might be in debts my entire life paying for a roof over my head in the form of a 4-room flat!

From a macro point of view, what will be the quality of live for the daily Singaporean?

So I can understand why one scoff and laugh at comments made by the authority with regards to attempts to improve housing prices – especially considering most of this folks whom are paid millions to make things better for Singapore are staying in comfortable bungalows – when nothing tangible is seen or felt in the horizon for you and me.

Low Population Count?

My biggest complain is that the housing policies fail to correspond with the government push for procreation. Of course, I want to start a family but many people in my situation find it hard to do so when we can’t even afford a house!

Hence obviously, a more productive approach to encourage more Singaporean couples to have more babies is to look into this thorny housing issue. A more intuitive way, I would say, other than promoting more dating agencies and couples night or whatever they call it.

Also, perhaps the authorities should consider extending the support for first time buyers who are also looking into the resale market.

Regulation or People Power?

Having said all this, the government is not entirely at fault here. The buyers and market speculation generally drive the high COVs. Therefore, buyers and brokers or agents representing these buyers must also be realistic when considering the COV amount. They need to understand that they are also responsible for the market condition in the resale market. Herein lies a dilemma for buyers, should I go for big profit because the person upstairs got a high COV for this unit or create an example by affording others the chance of having a roof over their head. I don’t really believe much about karma or know about it, but I think there is a saying that goes: “what comes around, goes around”?

Of course, there is a causal reason for this – the high cost of living.

In Islam, while Muslims are not discourage to gain profits but there are other elements to a transaction beyond monetary profit. And that is the social or communal element where there are intangible (at least in the short term) outcomes. I realize it is hard to say all this while not sounding hypocritical because of the condition we are going through (which is not that bad lah actually when we apply tawakkal) but the wife and I had spoke briefly that if we ever sell our house, we will sell it to someone based other considerations beyond the COV potential. We hope not to waiver from the consideration.

But here's the biggest thing on my mind, in the long run, what kind of society are or will we to become, economically or socially, when we are driven or measured by capital rather than values? How engulfed are we by the system that we created to the extend of not being able to see the long-term and short-term impact into our society if these conditions perpetuate?

God help us ...

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