Posts Tagged ‘Singapore property’

PM’s salary in 1970 and in 2012

In Financial competency, Political governance, Property on 01/02/2012 at 7:07 am

(Or “PM’s salary in 1970 and today using a terrace hse’s price as a reference point” or “Fooling around with numbers: Can prove anything with numbers”)

According to this, LKY’s annual salary in 1970 was $42,000 a year. The value of my parents’ home was then $35,000  based on a neighbour’s transaction if I recollect correctly). So LKY could have bot the house and have $7,000 spare cash left over (17% of his annual salary).

His son now gets under the revised salary scheme a yearly salarly of $2.2m (assuming he gets his bonuses). My parents’ house now is valued at $1.5m (based on a neighbour’s 2010 transaction). The PM can buy the house and still have $700,000 in his pocket (32% of his salary). And this after a 36% pay cut. At his 2010 salary, he could have bot the house and have $1.5m (50% of salary) spare change.

Bottom line: LKY had a bad deal relative to that his son gave himself, and the one he has now accepted.  Even taking into account inflation, our PM is earning much more than his dad. In fact, the PM’s pay rose a lot more than the sum of the inflation rate, and rate of the appreciation of the terrace house’s value.

And unlike dad, who allowed ministers to earn more than he did, our PM is the top earner in the cabinet.

On how much David Marshall was earning (see this), I’ve been told that he could be wrong to claim he was getting $8,000 a month when he was Chief Minister in the late 1950s. When he gave the interview that mentioned that figure, he made several mistakes that were corrected before publication. This could have been one mistake that went uncorrected.

Will keep readers informed as this $8,000 figure had been widely (and unthinkingly) used to beat up the PAP: bunch of greedy pigs. As I’ve tried to show, it “proves”, if anything, PAP ministers are grossly underpaid using Marshall’s numbers. Juz as today’s example ‘proves” that our PM is overpaid.

My wider point is that numbers can be manipulated to support any view. There is no “truth” in numbers per se.

Finally, maybe Marshall was not mistaken over his $8,000 monthly salary because LKY was earning $3,500 in 1970. When he came into power in 1959, he slashed civil servants’ and ministers’ salaries by about half. And given the economic and political problems of the 1960s, he might not have dared to give himself a raise.

For that thank the Communists and their fellow leftists. They kept LKY on the straight and narrow,’cause he knew their power to cause trouble. If they were unhappy, they got protestors onto the streets, not mobilise anonymous grumblers on the Internet.

Finally on the performance bonuses.  The way the bonus scheme  is drawn up, esp how easy it is to achieve the targets (see here somewhere),  reminds me of the Caucus-race in Alice in Wonderland (a favourite book). This was a race where the runners all started in different positions, ran for as long as they liked and stopped in different places. Then everyone got a prize.


S’pore Property: But would banks be allowed to?

In Banks, Economy, Political economy, Political governance, Property on 27/01/2012 at 11:42 am

Mortgage rates make the difference

So what contributed to the recent decoupling of Singapore and Hong Kong home prices?

The simple answer is mortgage rates.

Driven by strong loan growth and rising loan-to-deposit ratios, Hong Kong banks have raised their mortgage rate spreads since early this year [2011]. This has resulted in higher mortgage rates and reduced demand for residential properties, which in turn led to the slide in private home prices since September.

On the other hand, the Government’s property cooling efforts have so far been thwarted by very low mortgage rates. With base interest rates remaining near record lows and Singapore banks charging very low mortgage spreads, affordability remains high.

However, there is a risk that Singapore mortgage rates would rise next year from their current low levels. Like their Hong Kong peers, Singapore banks have also experienced strong loan growth over the past year, which in turn has pushed up their loan-to-deposit ratios – although it must be said that ratios in Singapore dollars are generally still low.

Moreover, with the debt crisis that is plaguing the European Union, there has been anecdotal evidence that some European banks are pulling back their credit lines in Singapore to help boost capital ratios as required by the EU debt plan. If these banks continue to deleverage, it could result in less competition in the lending market for Singapore banks, which may then feel comfortable enough to raise their lending spreads, including mortgage spreads.

In fact, during the 2008/2009 global financial crisis, local banks such as UOB and OCBC were able to increase their net interest margins as foreign banks reduced their lending activities in Singapore.

Thus, while the recent decoupling in Singapore and Hong Kong residential property prices may make for an interesting read, we do not expect it to last for long, especially with the latest round of cooling measures introduced in Singapore.

Should happen as this UBS analyst postulated in late Dec 2011. But if the government thinks property prices will tank, not juz fall a little, the local banks will “do the right thing” by home owners, but not investors. It has happened before. In the crisis in the mid 80s, when many home owners had negative equity, the banks “did the right thing” and did not ask for more equity. Home owners had gd reason to vote PAP.  



Liberal immigration policies leads to higher property prices

In Economy, Property on 13/01/2012 at 5:39 am

No not PAP propoganda but a sober analysis by Deutsche Bank that looked at the relationship between demographics and house prices in Western economies.

An analysis by Ajay Kapur of Deutsche Bank shows this relationship is pretty robust. He finds a positive relationship between changes in the working age population ratio (15-64 year olds relative to the rest of the population) and residential property prices, real prices almost always rise when the working age ratio is improving. In contrast, real property prices fell in one in three years when the working age proportion was falling. This ratio is declining in many countries; indeed in some the absolute number of workers is set to fall.

What Grace Fu can’t afford

In Political governance, Property on 08/01/2012 at 5:19 am

(or “Why PAP Ministers feel underpaid”) 

So Grace Fu for one is unhappy about her salary cut. At least , for only a few hours sadly, she had the courage to voice her unhappiness. Then she repented her outburst or rather blamed us for “misunderstanding” her? Like we “misunderstood” Han or Han “misunderstood” SMRT’s SVP? At least Han had the excuse of his use of Singlish (his spoken English, let’s face it, is rubbish) for the former.

Well she should be very upset when she compares herself to S’pore’s last Chief Minister. Last March I wrote, Someone in TR wrote that David Marshall in an interview said he was paid $8000 a month in the 1950s as Chief Minister and went on like Marshall to rant against the PAP.

Based on $8000 a month, Marshall was paid $96,000 a year. From what I understand that could buy 3 bungalow properties in a then non-fashionable area in the East, say Frankel or Opera estate. He could have some change leftover. Today, a minister earning $3m a yr, may juz be able to buy a bungalow in these areas with his annual salary.

Well, assuming Grace Fu is earning say $935,000 (her new pay grade according to Gerald Ee and his maths-challenged committee), a 25% drop, she can’t buy nothing in the area on her salary. She can’t even buy a terrace house in a nearby estate.  They are going for around $1.5m.

(Now if this piece cannot find its way into “Petir” or “Fabrications about the PAP”, then Zaqy and friends on PAP’s new media team are sleeping.  As the efforts of Zaqy and gang based on the support the PAP is getting on the Internet, is so bad I’ll end as follows)

Ah well, she can still buy one 5-room and one 4-room HDB flat or a nice private condo apartment. But taz beneath her, I’m sure she thinks.


(Note Tan Jee say has a house in Frankel)

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Mortgagors: No gd scenarios

In Economy, Property on 29/09/2011 at 6:44 am

Commentators like Tan Kin Lian have been saying for ages that interest rates cannot remain at so low levels here and that they must rise one day. Then those homeowners who overleveraged by not anticipating having more in interest would face problems servicing their loans.

Well it seems that higher interest rates are occurring finally because the central bank no longer wants an appreciating S$. It now seems to want the S$ to weaken.

The central bank is forcing the value of the S$ down, making it unattractive to hold S$ deposits. It has reversed its policy of allowing the S$ to strengthen against the US$ because it is afraid that a stronger S$ will lead to weaker exports, slower growth and a recession. It allowed the S$ to strengthen because it wanted to fight inflation, a fight that has yet to be won.

If the central bank continues to allow the S$ to depreciate, then S$ interbank rates will have to rise to attract S$ funds. However analysts are divided on how much further the central bank will force down the S$. Those with property mortgages may hope that MAS reverts to a stronger S$ policy. But then the problem is whether they then still have the jobs to service the loans. A stronger S$ could hasten the recession.

Snigger, snigger.

Update on 29 September 2011 at 2.05am

Mortgagors: Double whammy?

Buying property stocks: What can go wrong?

In Economy, Property on 15/09/2011 at 8:00 am

Maybe as part of a campaign to make us “feel good”, the constructive, nation-building local media are highlighting that stockbrokers are telling their clients that property stocks are trading at a discount to their net asset valuation (where once they traded at premiums)  or way below  their usual discount net asset valuation.

Hence there are gd buys around.

But there is the fine print that the MSM don’t report or don’t highlight. The brokers point out that they are assuming a slowdown in the economy, not a global recession. Neither they nor MSM highlight that investors are assuming the worst, a global recession, and hence are pricing the stocks at recession values i.e. investors do not believe the values brokers are pricing the assets at because they think the brokers are optimistic.

So if you believe that the world economy is only experiencing a slow-down, go ahead and buy the recommended property stocks. But if you are afraid of a recession, sit tight. The discounts will bet bigger

Property: What weed are these people smoking?

In Property on 22/08/2011 at 2:05 pm

I am amazed that any broker can call the Singapore real estate sector “Overweight”. But RBS did it on 16 August 2011

The valuation gap between developer stocks and physical properties widened over the past eight months. We expect it to narrow as home sales remain robust. Strong household and developer balance sheets should support prices and cooling measures may prove ineffective in quelling real demand. We upgrade our view on the sector to ‘overweight’ from ‘neutral’.

Developer stocks’ premium to NAV narrowed to just 4 per cent from 33 per cent in January, despite robust primary home sales of 11,197 units (up 13 per cent year on year) in the first seven months of 2011 and a 4.3 per cent half-on-half increase in home prices in H1 2011. The sector also underperformed the STI by 11 percentage points in the last eight months. Policy risks seem as low now in view of heightened global uncertainty. We think any policies to cool the market would prove ineffective as we believe there is virtually no speculation now. We expect mass-market homes to continue to be undersupplied in 2012 to 2013.

Growth in total stock averages 2.3 per cent a year from 2011-12, below the long-term average of 3 per cent, while occupancy rate is at 98 per cent. Hence, we expect the healthy churn of mass properties to persist. We stress-tested the household balance sheet and found that a 30 per cent drop in home prices would bring the debt-to-asset ratio to 18.6 per cent, slightly higher than the long-term average of 18 per cent but below the high of 21 per cent in the 1997 and 2001 booms.

Gearing of larger developers is low at 34 per cent vs 41 per cent during the pre-crisis level of 2008 while that of smaller players halved to 103 per cent. Given their low land bank, developers will not cut prices even if there is a recession, in our view.

RBS expects the economy to grow 6 per cent in 2010 and 5 per cent in 2012. We expect an equilibrium in the office sector, in the light of higher visibility of supply and likely slower demand. Hence, we moderate our office rental growth assumptions to 5 per cent in both 2011 and 2012.

Overall, retail rents may soften in view of an oversupply but quality malls owned by seasoned operators should continue to do well. We like hotels on a structural growth story in Singapore tourism. Capital values of commercial assets should also hold up in view of persistently low rates.

We are most positive on City Developments, which we believe could benefit from a lifting of policy risks and continued strength in the residential market. Hence, we upgrade the stock from a ‘hold’ to ‘buy’, for its large exposure to the residential sector which accounts for 39 per cent of its RNAV.

We maintain our ‘buy’ ratings on Keppel Land, OUE and UOL as these commercial stocks look undervalued, trading at 30 to 50 per cent discount to RNAV. We maintain our ‘hold’ rating on CapitaLand as we believe that the stock may lag in stock price performance in view of its complex shareholding structure.

Property developers should petition PM

In Economy, Property on 08/08/2011 at 6:46 am

Given the downgrade of US debt with the fear of higher global interest rates and weaker equity markets, property developers must be more worried today than they were this time last week. Maybe they should petition the PM to bring back Mah Bow Tan as housing minister? It is a well known fact that he can e3nsure that residential property prices rise in a recession.

That they were already very worried last Monday is evidenced by the meeting that day that Redas (the property developers trade union) held for 17 analysts from 14 stockbrokers and five consultants. Developers don’t call for such meetings when they are bullish. They are then too busy counting their potential profits.

They discussed issues such as “possible ways to facilitate sharing of information among industry stakeholders, the need to better understand and analyse new market dynamics and the changing nature of the demand for Singapore residential properties”, Redas said in response to queries from BT.

According to BT, Redas had suggested sharing in-house data to help analysts better study the property market. The supply of private homes in the pipeline was also discussed. The meeting took place days after Redas shared results from the latest Redas-NUS Real Estate Sentiment Index survey, which polled developers, consultants and other Redas members.

The findings reflected a softening in sentiments about the property market in the second quarter.

In recent months, several equity research houses also released reports about a potential glut in private homes. One of the most recent is a July 28 report from Bank of America Merrill Lynch, predicting ‘an inflection point in 2012, driven by excess supply, demand moderation and slowing economic growth’.

Its analysts expect around 12,500 new units to enter the market every year between 2011 and 2015 – 60 per cent higher than the 15-year historic average annual supply delivered to the market. At the same time, they expect demand for private homes to weaken due to factors such as tighter immigration policies and an influx of HDB flats.

Citi’s property analysts are among some who do not see an over-supply of private homes coming, as their June report shows.

Adding to reports from property analysts are views from National Development Minister Khaw Boon Wan, who blogs often. In a June entry, he had advised investors and upgraders to consider various factors, such as volatile global conditions, before buying a property.

According to Redas, its president Wong Heang Fine said that he would like to have such sessions on a regular basis, say, every six months.

Citi: No property glut

In Property on 29/06/2011 at 6:45 am

Citigroup thinks that the increase in the supply of new HDB flats and private apartments over the next few years will not lead to a housing glut in 2013 and 2014. A stand contrary to that held by most other brokers e.g. Morgan Stanley and CIMB.

The current “severe shortage”‘ of HDB flats is also likely to provide support for mass-market prices and demand. Most other brokers argue that a step-up in HDB supply will dampen demand for mass-market private homes and hit prices

“We estimate that the deficit in housing units is in excess of 50,000 currently and this undersupply situation will likely take several years to clear, just like the oversupply situation in the early 2000s. With a severe shortage, we are not overly concerned about the rise in supply in both HDB and private residential units.”

The coming HDB supply and the potential increase in the income ceiling for new HDB flats will reduce HDB resale transactions by 7-15% at most. The impact on the private property market would be even smaller. The shortfall in the HDB market will support demand for and prices of mass-market homes.

“rate for mass-market properties are at an all-time high of 97.5 per cent. With yields averaging at around 4.2 per cent versus mortgage rates of just between 1.2-1.6 per cent, investment demand for small units and mass-market units could remain strong.”

However any further price increase or spike in volume in the mass-market segment risks more property measures as the government is monitoring the market closely.

Property: 9 July 2011 is a day to watch

In Malaysia, Property, Uncategorized on 28/06/2011 at 6:21 am

In 2009, S’poreans expected property prices to weaken. There was a recession. They were wrong, prices went up. Lots of reasons were given in hindsight for example  low interest rates, high liquidity, enblocers needed homes. All true but another factor was the flood of FTs coming in from M’sia. Why did they come? In 2008 GE, the ruling BN lost its two-thirds majority in the federal parliament and lost control of five states.

Many Chinese and Indian professionals were fearful of racial riots breaking out. They came here.

On July 9 2011, Perkasa (a Malay supremacist organisation) is threatening to counter demonstrate if Bersih 2.o goes ahead a with demonstration.

The July 9 “Walk for Democracy” Kuala Lumpur protest will be attended by several civil societies, including a few opposition parties. Bersih and its coalition partners have six demands in mind, including an end to the misuse of government machinery and funds during elections. With an expected attendance of more than 100,000, the march is expected to the biggest of its kind since the group’s 2007 demonstrations.

If blood flows on KL streets, Malsysians will be rushing here.  And they need places to live in.

Weak property mkt?

In Political governance on 22/06/2011 at 9:56 am

Wow prices are off 12% in less than a week. Sim Lian less than a week ago priced its 5-room HDB flats at $880,000. Now they are going for $778,000, a 12% discount.

Thanks Super Khaw! When he became minister of MND, I tot he would offshore HDB flats to Batam, Bintang and Johor. S’poreans would commute in. I was planning to buy Penguin (ferries to Indon islands, and SMRT and DelGro). Glad I didn’t 

BTW, trumpets pls. I predicted Sim Lian would be forced to cut its prices.

Property: Greedy developer?

In Property on 17/06/2011 at 3:32 pm

Given all the recent bad news about property (e.g. this, and this), I was surprised to read that a developer (listco Sim Lian) had priced some HDB flats in Tampines at S$750 per sq foot (5-room flats at S$880,000 and more (4 and 3-room flats).

Prices are higher than the resale HDB flats in the Tampines private housing in surrounding areas. Article

The developer paid only S$261 per sq ft, so it can’t claim that its cost of land was high.

But it will, in my view, end up like greedy en-blocers, cutting prices to get sales.

My sources tell me that million-dollar units in a development in a gd district that is within walking distance of an MRT station are going a-begging. It seems only about half the units on offer have been bought.

Market has moved from “Buy before prices go higher” to “Wait and see”. But Sim Lian seems to think that there are daft buyers out there.

Only one way for property stocks to go

In Property on 10/06/2011 at 9:46 am

Well the analysts got it right at the beginning of the yr telling us to sell or avoid property stocks because of possible govmin actions.

But I bet no-one tot a minister would use a blog posting as part of his plan.

Interesting read–Market-crash-or-ghost-towns

Consequences of Khaw’s HDB policies

In Property on 01/06/2011 at 7:08 am

I hope S’poreans realise that the HDB building spree means that in all probability their properties will lose value in the coming few yrs as HDB flats are available for occupancy. Remember also that there is a lot of private housing coming on-stream.  How much values fall depends on the complex interplay of housing demand and supply and the growth of the economy. Immigration policies play a part in this interplay.

Those who will be worst affected by a fall in values will be those who bot HDB flats, and lower end private condos in the last few yrs (say from 2006).

These property owners should demand that more FTs be let in to keep property prices buoyant. They should also demand that the PAP focus on GDP growth.

They will also be fans of Mah Bow Tan who even in a recession kept property prices going up. Every dog has its day and Mah will be popular soon. Khaw will be reviled.

Property: ignoring the Hard Truth of 2009

In Economy, Property, Uncategorized on 21/05/2011 at 5:16 am

“And I guess to the extent that in the last couple of years, housing prices went up very sharply, coinciding with the very dramatic turnaround in the economy, I guess that resulted in quite a lot of unhappiness on the ground. And I accept responsibility for that,” Mah Bow Tan said,

He missed out something in the above analysis. In 2009, S’pore had a recession, but property prices rose  . Specifically in a recession year, prices of HDB resale flats rose by 8.2%.

This showed that there was a massive inbalance between supply and demand, so much so that despite a recession there was a demand for housing.

Property prices

In Property on 03/05/2011 at 9:25 am

In 2009, prices moved up despite a recession. One reason we now know is that the M;sians were migrating here after the 2008 election results.

In that election the ruling BN lost its two-thirds majority and the MCA (the main Chinese party in the BN) lost badly in the seats it contested. There was concern abt the political situation (in particular about racial riots breaking out). So the Chinese left for S’pore.

Well the M’sian PM has just told the Chinese that they had better support the MCA. Otherwise that party would not be able to represent Chinese interests within the BN.

Expect more Chinese to migrate here. And expect property prices to remain strong.

Bang balls, property bears

In Property on 11/04/2011 at 2:41 pm

Based on the sale price of S$161.6 million of Amber Towers “and at the equivalent plot ratio of 3.55, the sale reflects a land rate of $1,118 psf ppr,” said Ms Suzie Mok, director of investment sales at Savills Singapore.

Note Amber Glades and Marine Point were recently sold to Far East Organisation and CapitaLand for $1,066 psf ppr and $1,056 psf ppr respectively, So despite all the govmin measures, and the supply coming onstream in the next few years,  developers remain bullish.

And they don’t think Goh Meng Seng and friends will get a chance to implement their plans to destroy the property markry by selling HDB flats at cost of construction prices.

Oil at US$120: Property prices

In Economy, Property on 22/03/2011 at 5:42 am

Well if oil goes to and remains at US$120, we could have a recession in the West and a recession here will follow.

We are told that there is plenty of private property coming on stream in the next few years, and that Mah Bow Tan is building HDB flats like crazy to compensate for his goof-up in not ramping up supply when the government was allowing FTs in.

We could be in for some sharp falls if there isn’t unrest in Malaysia and we see another influx of M’sian Chinese into S’pore as we saw in 2008.

How many houses David Marshall could buy on his salary?

In Political governance, Property on 18/03/2011 at 5:46 am

Someone in TR wrote that David Marshall in an interview said he was paid $8000 a month in the 1950s as Chief Minister and went on like Marshall to rant against the PAP.

Based on $8000 a month, Marshall was paid $96,000 a year. From what I understand that could buy 3 bungalow properties in a then non-fashionable area in the East, say Frankel or Opera estate. He could have some change leftover.

Today, a minister earning $3m a yr, may juz be able to buy a bungalow in these areas with his annual salary.

Want to beat up PAP, join in the bashing, But don’t talk rubbish. Only helps PAP.

Property: What a minister’s salary can buy in 1957 and 2010?

In Holidays and Festivals, Political governance, Property on 29/12/2010 at 5:19 am

Or why PAP ministers deserve our compassion in this season of gdwill. Another Christmas macabre tale. Who would think they deserve our compassion? But they do.

David Marshall said he was paid $8000 a month in the 1950s as CM. Taz $96,000. From what I hear* that could buy 3 bungalow properties in a then non-fashionable area in the East, say Frankel or Opera estates. He could have some change leftover.

Today, a minister earning $2m a yr, can’t buy even one bungalow in these areas with his annual salary. He could possibly get a two-storey terrace house for $1.5m. He has to borrow money from the bank to buy a bungalow.

Other macabre Christmas tales


*too young and can’t find written records. Have to depend on old people’s memories.  You know what can go wrong, I mean if MM can forget that the Malays are the second biggest group ….

Nuclear power: will property prices implode?

In Economy, Energy, Property on 12/11/2010 at 5:23 am

In 2008, I attended a seminar where a very senior Shell analyst dismissed the possibility of nuclear energy as an option for S’pore. He said that if a nuclear plant was sited on the NE side of S’pore, the safety or protection zone would stretch somewhere to the SW side of S’pore, in Jurong.

So with all the recent talk of building a nuclear power plant, I was surprised that there doesn’t seem to be anything said or written on safety issues.

For example what are safety zones and their extent?

Googling brought me to the website of the US Dept of Homeland Security: Local and state governments, federal agencies, and the electric utilities have emergency response plans in the event of a nuclear power plant incident. The plans define two “emergency planning zones.” One zone covers an area within a 10-mile radius of the plant, where it is possible that people could be harmed by direct radiation exposure. The second zone covers a broader area, usually up to a 50-mile radius from the plant, where radioactive materials could contaminate water supplies, food crops, and livestock.

So a 10-mile (16-km) zone is needed to prevent us from being exposed to direct radiation. To give you an idea of the distances involved, Changi Airport is 20 km from Orchard Rd. So if the plant were at Changi Airport, the zone would include Toa Payoh, AMK, Bishan, Marine Parade and some pretty posh places along Dunearn Rd and Bukit Timah Rd. And although the Istana is not within the 16 km radius, radioactive particles don’t know where the 16-km mark is. It all depends on weather conditions how far they will travel. Hence the wider zone given by the analyst from Shell: he added a margin just to be cautious. Read the rest of this entry »

Bullish on S’pore property: Deutsche Bank

In Property on 22/04/2010 at 5:09 am

For the residential market, we see news flow and activity this year dominated by the highend segment. Unlike the mass- to mid-segments, where prices have rebounded to peak levels, high-end prices are still around 5-150% below peak and demand should be supported by the improving economic outlook, low interest rates and rising foreigner participation. We expect modest growth for the low-end segment (+3%), with government policy more restrictive and pent-up demand largely consumed, and a larger 6-12% upside for high-end prices. With declining inventory levels, most developers are actively looking to restock,resulting in fairly aggressive bids for recent GLS land tenders. With more sites to be made available for the 2H10 GLS, we expect bidding to be more rational and potentially more NAV accretive.

Its pick in the residential sector: Allgreen for its exposure to the upper- and mid–residential segment.