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Aug 22, 2009
Citigroup economist Kit Wei Zheng: The rich got richer, and the poor got poorer
Relatively cheaper than in 1996 boom year, data from two reports say
By Joyce Teo, Property Correspondent
Shoes left outside the Caspian condo showroom in Jurong West by potential buyers testify to the demand for private homes despite the downturn. Thanks to the boom years, wage growth has outpaced property price growth for many, making private homes more affordable. -- ST FILE PHOTO
PRIVATE home prices may be on the rise again but new data suggest home buyers swept up in the latest frenzy are not necessarily overstretching themselves.
Buyers are finding condominiums far more affordable relative to their income now than they did during the mass market property boom of 1996, thanks to strong wealth creation in recent years.
This is the conclusion of separate new figures from financial giant Citigroup and property consultancy Jones Lang LaSalle.
Citigroup economist Kit Wei Zheng said: 'Today, the average condominium is probably selling for around 19 times the annual income of the average Singaporean. While this is by no means cheap, it is still significantly lower than the peak of over 40 times in 1996, and around 24 times in 2007, though obviously higher than the lows of around 15 times from 2003-2006.'
Mr Kit's study looked at absolute prices rather than the price per square foot.
His measure of affordability does not take account of a couple of factors boosting affordability in the current market.
First, the average condo buyer earns a higher-than-average wage, and is likely to have enjoyed faster wages growth.
Second, interest rates are far lower now than in 1996 and 2007. Analysts say this is helping to fuel demand.
Also, Mr Kit's study uses average income, which could be significantly higher than the median - or midpoint - given the widening gap between rich and poor.
As well, he uses the average selling price of condos, which also could be higher than the median as the former is pulled up by the sale of expensive prime units, especially in recent years.
Latest comments
What is the actual unemployment rate of citizens in Singapore, and I don't mean residents?
Posted by: Misnomer at Sat Aug 22 23:40:20 SGT 2009
I believe not many country in the world can suffer huge negative GDP and yet still see long queues of people buying private property. It is yet another proof of how well-run our country is despite all the complaints in this discussion board. Indeed, even those who are complaining here are no doubt leading a better lives than many others are who more busy worrying about the next meal or their job and cannot even afford to pay their Internet bills to complain. So people, learn to be contented, we are now even much better off than many developed countries, e.g.: US is suffering 9%+ of unemployment.
Posted by: ilovetocomment at Sat Aug 22 23:02:21 SGT 2009
busloads of reason are given from time to time to explain the strange phenomena that is going on in the housing sector. it is also clear that easy financing is the mainframe of this combustion. whatever it is " alls well that ends well ". however if other parts of the economy gets affected due to rising bad loans like further reductions in savings interest or a pull back in business loans, etc it will no different than the circus that's going on in US due to subprime crisis when 'regulators fell asleep at the switch'. similarly here someone should take the fall if things sours..
Posted by: gemini58 at Sat Aug 22 14:40:57 SGT 2009
What is he talking about?
Income rises since 1996?
Those were the times when CPF savings was 50% of salary - compare that with now.
Indeed salaries did rise, but what about the wage cuts along the way?
The 2000 financial crisis when retrenched people were rehired at much lower wages.
And the unrestored CPF cuts.
Good grief... what is he talking about?
Posted by: Misnomer at Sat Aug 22 13:11:40 SGT 2009
AFFORDABLE????
WHO SAYS????
THE GUY who wrote this must be BLIND!
Posted by: sakuratoratora at Sat Aug 22 11:02:31 SGT 2009
Aug 22, 2009
Citigroup economist Kit Wei Zheng: The rich got richer, and the poor got poorer
Relatively cheaper than in 1996 boom year, data from two reports say
By Joyce Teo, Property Correspondent
Shoes left outside the Caspian condo showroom in Jurong West by potential buyers testify to the demand for private homes despite the downturn. Thanks to the boom years, wage growth has outpaced property price growth for many, making private homes more affordable. -- ST FILE PHOTO
PRIVATE home prices may be on the rise again but new data suggest home buyers swept up in the latest frenzy are not necessarily overstretching themselves.
Buyers are finding condominiums far more affordable relative to their income now than they did during the mass market property boom of 1996, thanks to strong wealth creation in recent years.
This is the conclusion of separate new figures from financial giant Citigroup and property consultancy Jones Lang LaSalle.
Citigroup economist Kit Wei Zheng said: 'Today, the average condominium is probably selling for around 19 times the annual income of the average Singaporean. While this is by no means cheap, it is still significantly lower than the peak of over 40 times in 1996, and around 24 times in 2007, though obviously higher than the lows of around 15 times from 2003-2006.'
Mr Kit's study looked at absolute prices rather than the price per square foot.
His measure of affordability does not take account of a couple of factors boosting affordability in the current market.
First, the average condo buyer earns a higher-than-average wage, and is likely to have enjoyed faster wages growth.
Second, interest rates are far lower now than in 1996 and 2007. Analysts say this is helping to fuel demand.
Also, Mr Kit's study uses average income, which could be significantly higher than the median - or midpoint - given the widening gap between rich and poor.
As well, he uses the average selling price of condos, which also could be higher than the median as the former is pulled up by the sale of expensive prime units, especially in recent years.
Latest comments
What is the actual unemployment rate of citizens in Singapore, and I don't mean residents?
Posted by: Misnomer at Sat Aug 22 23:40:20 SGT 2009
I believe not many country in the world can suffer huge negative GDP and yet still see long queues of people buying private property. It is yet another proof of how well-run our country is despite all the complaints in this discussion board. Indeed, even those who are complaining here are no doubt leading a better lives than many others are who more busy worrying about the next meal or their job and cannot even afford to pay their Internet bills to complain. So people, learn to be contented, we are now even much better off than many developed countries, e.g.: US is suffering 9%+ of unemployment.
Posted by: ilovetocomment at Sat Aug 22 23:02:21 SGT 2009
busloads of reason are given from time to time to explain the strange phenomena that is going on in the housing sector. it is also clear that easy financing is the mainframe of this combustion. whatever it is " alls well that ends well ". however if other parts of the economy gets affected due to rising bad loans like further reductions in savings interest or a pull back in business loans, etc it will no different than the circus that's going on in US due to subprime crisis when 'regulators fell asleep at the switch'. similarly here someone should take the fall if things sours..
Posted by: gemini58 at Sat Aug 22 14:40:57 SGT 2009
What is he talking about?
Income rises since 1996?
Those were the times when CPF savings was 50% of salary - compare that with now.
Indeed salaries did rise, but what about the wage cuts along the way?
The 2000 financial crisis when retrenched people were rehired at much lower wages.
And the unrestored CPF cuts.
Good grief... what is he talking about?
Posted by: Misnomer at Sat Aug 22 13:11:40 SGT 2009
AFFORDABLE????
WHO SAYS????
THE GUY who wrote this must be BLIND!
Posted by: sakuratoratora at Sat Aug 22 11:02:31 SGT 2009
