More help on the way for the low and middle-income families
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam delivering Budget 2014 earlier today. Photo: Screen grab from Singapore Budget 2014 live webcast.
Expect no changes to the property cooling measures, more help for the low-to middle-income families and more steps to take care of senior citizens – that is the takeaway from today’s Budget 2014 announcement by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam.
The property curbs, particularly the Total Debt Servicing Ratio (TDSR) introduced in July last year, have worked to reduce sales volumes and transactions.
It takes into account existing loans, making it even more difficult for property investors to obtain housing loans.
As a result, prices of private residential properties fell for the first time since the first quarter 2012.
According to the Urban Redevelopment Authority (URA), the Private Property Index (PPI) decreased by 0.9 percent in the fourth quarter of 2013 to reach 214.3 points.
For the whole of 2013, developers sold 14,948 units, significantly lower than the 22,197 units sold in 2012.
In the HDB market, the Resale Price Index (RPI) fell by 1.5 percent from 204.8 points in the third quarter to 201.7 points in the fourth quarter of 2013.
For the entire 2013, the RPI registered a decline of 0.6 per cent – the first annual decline since 2005.
Meanwhile, zero or low cash-over-valuations are now the norm.
Collectively, the cooling measures seem to have worked effectively to ensure property prices remain affordable for all.
A more polarised society?
Singapore has over the years, become an increasingly polarised society defined by the haves and have-nots.
In early 2000, the government introduced various immigration policies and tax incentives to attract the wealthy to make Singapore their home.
The city is currently home to Jim Rodgers and Eduardo Saverin.
The tiny city-state also has a special zone called Sentosa Cove with the tagline: “The world’s most desirable address”.
Wealthy foreigners applying to buy homes on Sentosa Cove can get fast track approval from the Singapore Land Dealings (Approval) Unit.
According to the Boston Consulting Group, the city-state boasts the highest concentration of high net worth individuals in 2012 at 16 percent.
In less than a decade, the city has become a playground for the rich.
Interestingly, during the same year, Singapore’s income inequality, also defined as the Gini coefficient, was the second highest after Hong Kong among developed economies at 0.478 points.
That, however, had eased in 2013 according to recent government data to 0.463 points.
Budget 2014 – a more caring government?
Singapore’s glitzy city skyline. The city is a playground for the rich. However, it also has the second widest income gap among developed economies after Hong Kong. Photo: Shutter stock.
The measures announced by Mr Tharman earlier today seem to indicate that the government is listening to the growing voices of discontent and is prepared to do more to narrow the income gap.
In fact, it appears more help is on the way to help the less well-off.
One of the measures is a one-off GST Voucher-U-Save Special Payment this year to help low and middle-income families deal with the high cost of living in Singapore.
Those living in smaller HDB flats will also be given a helping hand in the form of housing rebates.
This means the lower income will have more cash in hand to cope with day-to-day living expenses.
Mr Tharman said around 800,000 flat dwellers are expected to benefit from the rebates.
Another reprieve the government has given is the rebates for the Service & Conservancy Charges, ranging from one to three months.
Families living in one- and two-room HDB flats will get the most help with three months worth of rebates for this year.
Meanwhile, three- and four-room households will receive two months of rebates.
There is no way to tell how poor the really poor are in Singapore as there is no clear definition on the official poverty line.
However, a recent BBC report about the poor in Singapore shows just how far some in society have been left behind despite the country’s economic success.
“In this house no one can afford to fall sick at all,” said Nurhaidah Jantan who was quoted in the report.
Mahatma Ghandi once said: “A nation’s greatness is measured by how it treats its weakest members.”
Now, that is something worth pondering on the current state Singapore is in.
This article was first published by PropertyGuru Singapore.