Discussion Forum

woohoooo! kopi peng $1.20 become $1.30! solid la! aiyah 10 cent? what is 10 cent, peanuts la! nothing compared to how much our ministers earn in 1 minute la! i should cut down on kopi and drink plain water instead, more healthy! actually no money! inflation how? eat myself lor! Power la Singapore, I love you so much!

Another reason for inflation is the abnormally low interest rates that makes everything look cheaper than it is. The US will maintain their exceedingly low rates for the next few years. They ll do what it takes, print money, keep the rates low, whatever you name it they ll do it to keep their economy humming along, even if it does damage to the other side of the world.

So your housing loan suddenly looks cheaper, your 100% car loan looks cheaper. This will drive inflation down the road. 2012 will be a terrible year for us, because inflation will erode most of our savings.

Our situation is no different from Spain, Ireland during the boom times. Low interest rates, high liquidity, except that we ve tighter regulations. I just hope we do not become like one of these European countries when the bubble bursts. It is a deep hole to get out of. Anecdotally I see alot of people stretching themselves when they shouldn t be.

They say that increasing wages is the best method of dealing with inflation. I disagree. But it is definitely one of the methods. Why do I say that?

Take a middle class person who draws $2,500 per month. Throw in bonus and lets put annual income at $35,000. A 5% wage increase translates to $1,750 per year. A 5% increase in a big ticket item like a flat of $300,000 translates to $15,000 per year. The wages are not enough to even catch up with the persnon s first house.

Of course you ve subdidies, etc but lets not forget the middle class person of now is different from before. He/ she has higher aspirations and really would want a better standard of living. Some say we can go for BTO but we ve to understand singaporeans are also getting married later nowdadays, so when they want a flat, they want it fast to quickly settle down and have kids, and that is why many people have no choice but to go for expensive resale flats.

Lets also not forget big ticket items have been increasing for the past few years, so you can see wages have not been keeping up. I believe it has already been shown statistically that it takes more years for an average singapore to pay off a property compared to 10 or 20 years ago. I ve not even thrown in transport, food and assuming the person intends to start a family costs of childcare, which has become very expensive as well.

So wage increases alone are not enough. Subsidies help, but I think there must be more demand side measures to curb over investment in everything thats bringing up prices. And of course we all know full well by now that excessive immigration has probably contributed to excessive demand at the moment for everything.

Inflation is a real issue not only for the average Singaporeans but also for the rich Singaporeans.  You give a good example that a person annual wage increase always cannot catch up with the price increase of his first house that he intend to purchase.

Inflation control is largely a function of government policies.

High inflation affects common folks from low and middle income most; high income folks do not feel the pinch as much. Businesses have even less impact as inflationary cost and expenses are passed on to consumers.

Government focus and priority is pro growth and pro businesses; policies for reducing inflation that affect businesses would be rejected to the bottom of the queue!

Singaporeans all along can tahan price increases very well – so please wait long long for the high prices to come down.

To tackle the HDB woes, the solutions can be:

1. If we re not going to ban PRs from buying HDBs, than we should increase their MOPs. From 5 to 10 years. If these people are keen to live out their lives in Singapore, 10 years should not be a problem for them. If not they should look towards the private property segment if they re keen in upgrading soon.

2. Ban PRs from subletting flats. Flats are meant for living, not speculation by PRs. Singaporeans can rent out their flats because it is a privilege given to Singapore citizens. If PRs are keen to enjoy these privileges, they should convert to Singapore citizenship.


Singapore citizenship and PR is a privilege, not a right. If these people are not happy, they can try the US or Europe, where I m sure there re plenty of jobs awaiting them.

The hard truth is that in the past we could afford liberal housing policies because supply was adequate. But right now, supply is woefully in adequate even for Singaporeans, and it will take years before more flats come on stream.

These solutions not only tacke the demand side of the problem in the short run, they are also applicable in the long as they further cement the advantages of being a Singaporean citizen. Furthermore, they are not erroneously disadvantageous to PRs, but rather require more long term commitment to Singapore from the PRs.

Housing prices will affect rental, they are tied together, its a symbiotic relationship. If you do not arrest rising housing prices, you cannot arrest rental prices properly, and therefore you cannot tackle inflation properly.

If you look at the latest housing statistics, everything is up again, including foreigner purchases. That shows the effects of the last government measure has already started to wear off. I ve said before, our government so far has been behind the curve in housing, from providing the necessary supply to demand side measures for at least the last 5 years. Its a serious problem. If we are to curb prices from rising some more, there must be continuous pressure on the housing market.

Action, not just talk. Look at Japan, all they do is talk only, thats why the yen coninues to rise and their exports and economy continues to suffer.

Look at the Europe and US. They re going to print money again in the next 6 months. So more liquidity will flow to safe haven countries again. Housing prices in countries like Switzerland, Norway, HK, singapore etc will continue heading up. Its one of the main ways to hedge agains a falling EUR and USD as well.

It will take about 3 years for the BTO HDBs to come on stream and for supply of private condos to fully affect the market. In between I d say prices will rise anything between 10-15%. Fed will keep their interest rates low, so borrowing cost will remain cheap. Don t believe, just go out there and you will see there are still alot of people out there piling their money into hard assets. This is human behaviour that will never change, be it singapore, US, Japan, Europe etc.

Singapore can also print more money to buy undervalue  euro and America  assets.