Singapore is expensive because of property prices

TRS article “The real reason why Singapore is so expensive” is certainly out of touch with reality.

The writer, Charles Tan, uses a recent incident of his inability to find a reasonably priced repairman in London to fix his oven which had broken down. His bill could have been $350 had he not DIY.
But the issues Singaporeans are facing pertains to the suppression of wages for the lower income and loss of jobs to foreigners because of bad policies which have led to an increasing GINI coefficient.
By the way, we are talking about a fraction of $350.

The reversal of these policies is an acknowledgement and a right step forward by our government – “Govt will not U-turn on foreign manpower policies in near future: Tan Chuan-Jin”, CAN 15 Apr.

Charles claims that “the British government has taken the easy way out of the immigration debate”, doing the exact opposite of the PAP.
He again misses the big picture – Singaporeans are unhappy because of the mindless rate of immigration and not to discourage it altogether.

The issue has been repeatedly reframed by the PAP into one of Singaporeans being unreasonable, totally rejecting every foreign worker.

The reason why Singapore is so expensive is due mainly to land cost. Almost all land is directly controlled by the government, indirectly through listed companies.
Supply being totally inelastic, all it takes is for the government’s lack of foresight and planning for property prices to go through the roof, as in recent years.

Land prices is the main driver of inflation in Singapore because there are knock on effects on wages and all other business costs. Businesses mark up profits relative to costs.
Many retail businesses ‘close shop’ not due to a lack of business but high property prices.

Since the government could not have shot itself in the foot by reducing property prices, business costs was reduced by turning on the immigration tap without the intention of turning it off, until recently.

Charles’ bowl of bak chor mee, at $4 per bowl could not have been going up “by 50 cents every other year or so”. The government could have been sleeping on housing issues but inflation is certainly not as bad as made out to be.

Bak chor mee will continue to remain pricey at $4 because the real issue of high land costs has not been addressed by the government. MND Minister Khaw has preferred a ‘targeted’ approach ie. only direct buyers of flats from the HDB. Despite a number of drastic property measures, property prices continue creeping upwards because the bubble has been in the making for years.

Tackling the issue head-on by reducing property prices is political hara-kiri because the negative wealth effect will reverse foreign funds out of Singapore.

The inflation spiral, in the case of Singapore, starts from land prices.

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