Say a town has 1,000 houses worth $200k each. The housing stock is worth $200m. If 10 houses sell for $220k, those 10 buyers spent an extra $200k split between them, but the notional value of the housing stock went up by $20m.
There doesn’t actually have to be an extra $20m in the economy if the town. It only takes a few people with money to invest to drive house prices sky high.
It is entirely unsustainable. But we've been saying this for 15 years now.
Also, rent here is so expensive that most Singaporeans still stay with their parents even in their late 20s~30s. (Most people renting a room or apartment are none-Singaporeans (30% of the population).) So buying a house makes perfect economical sense if you are married and can somehow cover the down payment.
I wonder if this is becoming a trend across all first-world countries, as the world gets less predictable and people get more risk-adverse. Esp when rents are driven up by none-citizens so it becomes economical to buy instead of rent.
Housing is basically a govt supported investment program in Singapore. Not that different than most Western countries, just different mechanism.
HDB certainly helps to lower the barrier to entry in home ownership. But I don't think most forms of HDB purchases are investment-orientated. ROI for second-hand HDB is not high and buying a good first-hand one is like winning a lucky draw.
I would say HDB is more of the gov's mean to stabilize the housing market and it functions as more like the backbone of the economy. (Or you end up with runaway prices like in Hong Kong.)
HDBs are similar to property in most countries. It’s bought primary as a place to live but also as a store of value. The govt will buy out your HDB for cash in order to fund your CPF. The govt also constrains the supply of HDBs which pushes up values.
But you are right about the lucky draw. Someone people win BTO lottery and make out like bandits with new developments in mature estates.
And yes, the prices can be driven up by cheap loans, but from memory they were already rising steadily before the covid stimulus measures.
I am still unconvinced that there exists in NZ a mechanism that can generate so much money and drive up the prices to these levels. Haven't been back for a while but family and friends back there are just as bewildered as I am with these price rises.