Last Sunday (29 Apr), the South China Morning Post published an article highlighting Singapore’s en bloc fever.
Central to the article was how Pacific Mansions was sold to tycoon Kwek Leng Beng in an En Bloc sale for $980 million, and an owner thus reaped a 500% profit from a 1,346 sq ft apartment she bought 16 years ago.
Quoting ZACD Group Director Nicholas Mak, the article said that developers need “a reasonable profit” from such collective sales and thus had to “launch units of the new project at higher prices”. Given the cost pressures, the article said that it was the sizes of the new homes that will have to be compromised.
Concurrently, the prices of new homes will also be expected take an upward trend. Analyst Desmond Sim from CBRE expects private home prices to jump 5 per cent to 6 per cent in 2018. Echoing this, Colliers International Managing Director Tang Wei Leng said that the collective sale cycle “does not appear to be losing steam any time soon”.
ST forum writers: Developers should not be allowed to profit and make us feel stressed
Last Saturday (28 Apr), one Kwok So Ha wrote in to the ST Forum about her thoughts on such en bloc fever. She felt that these redevelopment would result in Singapore housing becoming like Hong Kong style shoebox housing, a phenomenon she does not want.
She shared how had previously lived in Hong Kong with her parents and 2 siblings in a 42 sq m (452 sq ft) apartment. The family “hardly had any free space to move around, and the cramped space made one feel stressed” before adding that such re-developments “benefit no one except property developers, who stand to make more money”.
This was agreed by another Hong Chee Meng in a subsequent letter on Thursday (3 May). He said that the average 3-bedroom apartments have shrunk from an average of 1,200 sq ft to just 900 sq ft now, while two-bedroom apartments have declined from 800 sq ft to 600 sq ft or less.
While acknowledging that this may be a “willing buyer, willing seller” market, he also added that the authorities should do something since the “property market is an oligopoly with just a few big players offering similar products”.
He added that “the way of Hong Kong, with its pigeonhole houses, is definitely not where we want to go”.
Khaw: HDB flats have not shrunk
Back in 2012, then Minister for National Development Khaw Boon Wan said that “HDB plans based on certain design norms… has not changed for the past 15 years”.
After backlash from netizens, the Minister then clarified that although the average size of a 4-room flat had shrunk from 105 sq m in the 1980s to 90 sq m since 1997, the average household correspondingly fell from 6.5 in the 1970s to the current 3.7. As a result, the average space per resident has increased.
But it’s not known if future National Development ministers will continue to shrink the size of HDB flats given that Singapore’s citizen population continues to decrease.
The declining quality of life
In the 1970s, a graduate’s starting pay was around $1,000 per month. In Marine Parade HDB estate then, the price of a new 5-room flat was $35,000. A young graduate could easily afford a 5-room flat at an affordability ratio (i.e. annual income to the price of the house) of slightly under 3.
By 1990, the average price of a new 5-room flat was $70,000 and a young graduate earned about $2,000 a month. The affordability ratio then was still under 3. Yet, in recent times (2014), for a 4-room HDB flat in Sengkang, the affordability ratio is calculated to be 5.4.
The World Bank considers a ratio of 5 or under as affordable for local residents and it should not go above 5.
Indeed, this has a real impact on aspirations of younger Singaporeans. One couple interviewed in the SCMP article were civil servant Lucas Ng and his wife Stella Tan. The pair eventually settled for a 5-room BTO flat as their initial desire for a condominium unit was “simply too expensive, given [their] starting graduate pay and rising prices.”
Do you think average Singaporeans are experiencing a decline in quality of life after having been squeezed out in the post-LKY era?