Grace Fu's reply

http://www.razor.tv/site/servlet/segment/main/news/35614.html

Do watch this session with Senior Minister of State Grace Fu. When quizzed by a participant on why his parents in 1988 could get a 4 room flat for $68K and now 21 years later a similar flat would cost at least 5 times as much, Grace Fu's reply was that in the past Singapore experienced such high economic growth that this appreciation was expected and was unlikely to repeat itself. Well answered but then came the most classic portion. She seemed to shoot herself in the foot when she quipped that in the past people in Singapore had the choice to either send money back to their homeland (ie, China, India, etc...) or invest in a country with no track record. The discussion was comparing prices in 1988 and from what I know, Singaporeans already considered themselves part of Singapore rather than normads who would work and earn in Singapore and then bring the money back to their homeland which was mostly China or India. I then would post her the question "which working adult in 1988 was thinking about sending money back to his homeland?"

The bottom line is as such. Singapore has grown increasingly unaffordable. Housing is too expensive and is taking up too much of our disposable income. I really do not fee that it is a fair comparison to say that the latest property boom is not a big a bubble as the one in 1997. That is like saying that a shark bite is not as bad as an aligator's bite. It still means that you are bleeding only a matter of how fast you're going to bleed to death. It's just a matter of time. In 1997, housing on the average would cost 40 times a person's annual income. Today it costs 25 years. It still means that any property must yield at least 4% rental to match the cost of servicing the property. ie. 4% times 25 equals 100%. How many properties can yield a 4% rental yield?

Many Singaporeans are falling into a vicious cycle of committing to too large a housing loan. Perhaps the government should look at how to make Singapore a more affordable place to live in. Then perhaps we would procreate more fervently. Our birth rates have gone below our replacement rate. ie. there isn't one baby to replace one adult. This leaves the government with just one option. That is to import foreigners. The problem with this trick is that foreigners do increase the work force which is what the government actually wants to eventually achieve when Singaporeans have more babies. The difference is that babies give the planners time to build more housing for the babies as they grow up and enter the workforce. Importing foreigners would mean that the demand for housing would be instantaneous. Thus creating a shortage of housing. This in turn pushes the prices up. Life becomes more stressful and Singaporeans lower the birth rate which was the initial problem in the first place. I find this a vicious cycle.

Dear Grace Fu, please do something about the prices and understand the situation before making a comment that Singaporeans had the option to send money back to places like China in 1988. Ok so she didn't specify 1988 but then the question had that reference and if so she failed to understand a simple question.