Sunday, September 16, 2012


80% of people are living in public housing and government have to upkeep the housing using taxpayer's money.
Slowly but surely, I think govt will start reducing the percentage of public housing to catered only to those in the need (ie, lower-middle income and below).
This will free up more capital for other expenditures.

That's why i think the DBSS will become like HUDC as the next step. Govt. wants to relinquish their role in using taxpayers money to maintance housing developments. So DBSS might have the option to be privatised and ebloc. 

Then the next step will be the HDB flats. The current way they are recycling capital is thru SERS of Prime HDB location. They sell the SERS land to developers and relocate the SERs owners to more ulu or cost-effective location. You can see 12 storeys of avg 1000sqft can become 25-35 storeys of avg size 800sqft. around 3 or 4 old development land size to exchange for 1 plot of new development land size. Those old flat in ulu location .. most govt have no choice but to do selective upgrading to keep them up till a date when they can ebloc them cost-effectively. And the way to do it now is .. you can see.. They are introducing 60yrs LH. So next time.. your 40yr old HDB .they will SERS and move you to a new 60yr LH.

So, in a way, if you are holding a 99LH condo, it is still safe. We are obviously going towards HK model. But 999/FH are obviously the GOLD Mine.

Saturday, September 15, 2012

Natural hedge against Inflation and Currency Depreciation.

From the wisdom of Buffett in a meeting with MBA students from the Richard Ivey School of Business

Will the U.S. dollar continue to be the world’s safety net?

- There is no question that the US$ will lose purchasing power over time. All paper currencies depreciate. In terms of how it will fare relative to other currencies is less certain.

- Depreciation is sad because it hurts unsophisticated investors and people who trust in the government.

- Best way to hedge against the dollar is to buy a house in a growing area and take out a 30 year 4% mortgage.  You are effectively shorting the dollar.

Remember, home can buy anytime as long as you can afford it. But investment properties must think carefully. I am still looking.

Thursday, September 13, 2012

Housing oversupply but sentiments overrides everything..

Originally Posted by XXXX
Taking 1million divided by 4 per family. Housing required is 250K from 2006 onwards.

From 2006 to 2011, a total of 34K of private residential was added. So where do this so called 216K families are living in? IF you look from 2006 to now, rental has jumped like crazy !!!!

You need to figure out how many are white collar, blue collar, construction related.

Souce :-

Pass Type As at Dec 2011
Employment Pass (EP) 176,000
S Pass 113,000
Work Permit (Total) 908,000
- Work Permit (Foreign Domestic Worker) 206,000
- Work Permit (Construction) 264,000

Total Foreign Workforce Around 1.19 million

So, let's work on these figures.
So, Work Permit holders account for almost 76% of the 1.2mil foreign workforce. These people do not need homes as they are housed within dormitories or employers' residence.

So we are left with the S-Pass (usually the service industry and lower wage office workers) and the EPs(the higher wages office workers).

The S-Pass holders usually congregates with each other(most without bringing family over) with min. of 4 pax per unit (but it is 8pax usually for those waitresses and cooks and drivers etc). So, let's divide, 113k S-pass with 4 pax which will give you the max units needed to house them of 113/4 = 28k units.

The EP holders will have some families and some singles, so let's assumed half of them are families and half are singles, so the amount of units needed to be 176k/2 = 88k units.

Adding all up, you need a supply of around 28k + 88k = 116k units.

Do not, this is the demand needed. Not the SUPPLY created during the boom years like you mentioned.

So now matching supply with demand.. we should use the SUPPLY of ALL outstanding units in singapore up for rental (HDB + condos, we'l ignore landed).

Again, googling for some info , turns up ..

Condos completed units
- available 270.9k
- occupied 254.7k
- vacant 16.1k
- Vacancy rate 6%

Condos supply pipeline
- under construction 49.5k
- planned (ignored this since planned can be deferred but under construtions mean supply will be created definitely).

This is only the condos hor.. i haven't counted the hdbs.

Assumed, one third of condos(33.33%) are rented out while the rest are actually owner-occupied. So there is an availability for rental of 270.9k/3 = 90.3k units available for rent.

Ok, let's assumed only EP holders rent private.. you will see from te previous research, we need 88K units. Now, we have 90.3k units COMPLETED(not counting the under construction ones), so the demand and supply is matched. Surprising... if you look at 88k/90.3k = 97.5% of all rental units available.

The Vacancy rate was indicated as 6%. So, I can only assumed I might have over-estimated the demand while the real figure(the vacancy rate) reflects an oversupply of 6%.

Now, the S-Pass holders.. I am lazy to do research laready... so i just hantam.. 80% of households are living in HDB.. we know roughly it's 5% landed, 15% condos, 80% public..

So, there's 1.44mil HDB available. But let's be conservative and take the 2010 numbers from Mah Bow Tan .
It is 800k HDB households.

So S-pass needs 28k HDB units.. so it's 28/800 = 3.5%. 
Only 3.5% of HDB households need to rent out their flat to meet the demand.

Ok.. so now... I am wondering.. do you thiink there is really an under-supply of housing if govt restricts the no. of EP and WP and SP into singapore for the next few years.. (if they do).

Friday, September 7, 2012

Food for Thought...

What can I say...
China had a stimulus of $800 BILLION in transport infrastructure....
ECB had annouced an unlimited spending on secondary market bonds ..MOT... ...
US will be doing something next week? ..QE

So what do we do now...

Time to ponder..  if governments around the world keep on doing stimulus until the global economy recovers, then the stock market will keep on trading in a big sideway trend of up 10%, down 10% evident since 2010 till the economy recovers.

This is much like the scenario I pointed about a sideway market till the bull market starts.

Now... If stock market ever gets back on its footing and start a new bull market.. Is the property market bull further away?

Saturday, September 1, 2012

Interesting chart of the Australia Stock Market from Philo Capital.
If you can read the article, this is the link from an advisor in Philo Capital about his views of Investment as a matter of timing the market, not time in the market.

Anyway, from the chart, the duration of the big falls to the previous peak last on avg about 7yrs. Since we are into the 5th year of the current one in Australia, I would think australia market represents could give a better relative return as compared to the STI.

That said, timing in the market is still important. I still don't believe the rally and recovery.

Luxury at its best. SC Global really have bested Wheelock this time round.