Ku Swee Yong: High homeownership rate could hurt Singapore’s progress

By Feily Sofian

/ The Edge Property |

March 28, 2016 11:04 AM SGT

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Many market watchers are trend followers. Only a few are visionary. In his fourth book, Weathering a Property Downturn: Defensive Plays for Real Estate Investors, Ku Swee Yong, CEO of Century 21 Singapore and key executive officer of International Property Advisor, shows his uncanny instinct for issues afflicting the property market.

As a real estate salesperson serving buyers, sellers and tenants, Ku is constantly attuned to the latest market intel while backing his commentaries with official sources

In the book’s preface, Ku says it is easy to blind ourselves to negative news. He is referring to the shrinking trade and manufacturing output, slow population growth and struggling businesses. However, the more pressing question, according to him, is how we, as industry participants and policymakers, can make Singapore attractive again for foreign and local real estate investors.

Against these thoughts, Ku’s latest book compels us to rethink some policies that we typically take for granted. For example, while most of us celebrate the high homeownership rate in Singapore, Ku’s opening chapter highlights the potential risks lurking beneath.

He does not discount the merits of high homeownership rate, which include wealth accumulation and anchoring residents to Singapore. In fact, he opens the discussion with heart-rending statistics that about one in four resident households in Singapore, or 292,800 households, earn less than $3,000 a month (including employers’ CPF contributions).

Ku says he is glad that the government considered the plight of low-income families and rolled out the Fresh Start Housing Scheme. One of the benefits is wealth accumulation for these families as their home appreciates in value.

However, he questions whether these families can monetise the wealth. The truth is, as we approach retirement with our one and only home, whether the price has appreciated or dropped, we will still need it as a shelter, he says. So, in Chapter 1, he suggests some bold alternatives to assist these families.

According to Ku, homeownership rates in the most economically developed nations in the world range at 36% for Switzerland (one of the role model countries for Singapore), 45% for Germany, 64% for the UK, 64% for the US, 61% for Japan and 67% for Australia. At 90%, Singapore’s homeownership rate ranks among the weaker East European countries (see chart).

Chart

This achievement does not come without sacrifices. For instance, homeownership with loans creates additional liabilities that stifle entrepreneurship and business investments. Tied down by a 30-year home mortgage, and perhaps a car loan and children’s expenses, Ku asks, how many young families have the appetite to take on additional risks?

He also points out that property ownership locks up capital in illiquid, unproductive assets, especially in the case of a prolonged downturn. This poses a risk as Singapore advances into a rapidly changing world that requires its people to be more entrepreneurial and nimble-footed, while addressing the needs of its ageing population.

He concludes the chapter with suggestions for how policymakers might house the entire nation’s needs into the future. Meanwhile, one of the subsequent chapters discusses whether Singapore will remain relevant and another chapter features a letter to Singapore’s minister for national development on issues that warrant urgent attention.

In his book, Ku also highlights several regional markets, such as Japan and Cambodia. He expects real estate returns in these markets to improve, along with substantial increases in tenant demand.

As a real estate salesperson serving buyers, sellers and tenants, Ku is constantly attuned to the latest market intel while backing his commentaries with official sources, including economic indicators and demographic and household data.

He is formerly a director in the real estate centre of expertise at Société Générale Private Banking, responsible for advising clients on real estate investments; director of marketing and business development at Savills Singapore; and general manager at Far East Organization’s Indonesia office.

Ku holds an MBA in marketing from the University of Hull, the UK; completed his Bachelor of Science at Imperial College London, the UK; and participated in the Erasmus Programme at the Institut Louis Pasteur, Université de Strasbourg, France.

Apart from Weathering a Property Downturn: Defensive Plays for Real Estate Investors, he has also authored three other books on the property market: Real Estate Riches, Building Your Real Estate Riches and Real Estate Realities.

Ku’s book highlights several regional markets, such as Japan and Cambodia, where he expects the real estate returns to improve along with substantial increases in tenant demand