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TOC Blog Feature: Heart of the housing issue – cost of land

From Singapore Mind:

To watch Minister Tharman say that Singaporeans have it good, homes are easily affordable....better than all other developed countries just add to the frustration of Singaporeans coping with the high cost of housing. I'm sure regular readers of this blog can pick out the flaws in Tharman's argument easily but for those are having trouble figuring it out here is the explanation.

When Tharman talks about the relatively constant average quantum (23%) that 1st time buyers use to service loans, it counts only people who can afford a home - many can't afford homes give up looking for one. Also, they keep the quantum constant by buying homes smaller than what they want or need at less desirable locations and the tenure for loans has increased - in the past people finish paying their loans in 10 years or less now the tenture can be as long as 3 decades....there is a big difference between paying 23% of your income for 10 years vs 30 years.

He then goes on to say we are better off  than Hong Kong which is no consolation given the housing misery there (unhappy Hong Kongers come out in force to protest every weekend for a good reason). He then goes on to make a very strange and really hard to believe assertion that the housing situation in Singapore is better than all other developed countries. Singapore has the 2nd highest population densities[Link] in the world and many cities in develop countries have suburban areas where housing is very cheap.

Singapore is the 11th most expensive city in the world but is 43th and 49th in domestic wages and purchasing power respectively, along the likes of developing countries like Turkey, Slovakia and Qatar and far below the capitals of other Asian Tigers – Seoul, Taipei and Hong Kong[UBS ReportTemasek Review on the report]. Singapore has the highest income in equality among developed countries which means that the lower rungs of our society are more adversely affected by high housing costs than else where in the world. Tharman's denial that there is a problem with high housing costs shows that there is no interest in govt to solve what many Singaporeans think is serious problem.

The undisputable truth is housing is far less affordable that it was 20 years ago. The median income rose 111% (not inflation adjusted) while the price of housing as measured by the RPI rose 342%. That is the source of unhappiness among Singaporeans and it is a very real problem:

Read the rest of the article on Singapore Mind.