A Japan House Near Tokyo Costs Less than a Singapore HDB Flat of Same Travelling Distance, my Thoughts

I am not joking when I say this. Due to constant searches on housing in Japan, Facebook seems to be throwing its algo and think I am interested in a Japan property. So recently, they shared with me properties in Japan (Kawasaki City) going at USD$460,000 or about SGD$610,000 for properties of 50 mins travelling time to Tokyo Station and 50 mins to airport via train, of 1,100 square feet and a 2-3 years old house

If i were to extrapolate this to Singapore's context, it is akin to travelling from Woodlands or Sembawang area. While there is no data of 2-3 year old resale flat because Singapore law forbids the sale of such resale HDB, we do have data for 5 year old resale HDB flat of that floor area and in that area. 

A search on HDB resale transaction based on these parameters tells 5 year old HDB resales are going at SGD$680,000-$820,000. 

Fringe Properties in Tokyo Area are Much Cheaper than Singapore's and Why?

There are other areas of Tokyo too where like-for-like and travelling on public transport, their housing is cheaper than Singapore's. And unfortunately in Tokyo suburb areas, their property prices are not increasing much. 

For context, housing prices in Singapore has risen at a faster rate than Tokyo's. Why is this so? This is due to Japan's cultural reluctance to accept foreigners.

Due to this, the number of foreigners on long term pass and PR residing in Japan is extremely low at 3% vis-a-vis Singapore's 40%. While there are now foreign workers in Japan low-skill labour spectrum such as convincence stores or hotels; in proportion, it is still a small number. In short, the population trend of Japan has hampered Japan's housing prices.

Jap's population problem is so well documented and known that overall the population is declining. Adding of foreigners has not offset the local's attrition due to death. Far flung places of Japan have seen home prices going at a few hundred or thousand dollars because they are now abandoned.

Reversal of Singapore Populaiton Policy will Cause Property Prices to Crash and People Here to Suffer

Doing a "what if" Marvel like thinking, the question is what happens if Singapore becomes as inward as Japan and is not accepting of foreigners. The answer is simple: 25-30% fall in housing prices.

Japan has seen it and is trying to stem the residential housing price decline. If Singapore does it, the first order effect is there will be a wave of bad loans and DBS will have to massively impair its home loan portfolio.

I am not sure if MAS has stress test a 25% decline in HDB and condo prices, but based on current parameters, there will be a tremendous amount of equity top up required of home owners in Singapore. Consumption will fall and the second order effect is that those who had just received TOP for condo are likely required to pay 15% more via cash or CPF or risk themselves being declared bankrupt and lose the condo they had put their CPF in.

In short, Singapore can never turn back the clock because residential prices will collapse and many individuals who own two or more properties via leverage will be in a world of pain. 

<Not vested in Any Property But Just Thinking How our population policy cannot be reversed because It means the end of the Property Bubble here with Many Asset-Rich people becoming bankrupts>

China is now Very Much Worse Off with Trump Tariffs

 Contrary to what many market experts say, the "Trump Tariffs" is hurting China very badly. To combat the tariffs, China has devalued its currency to a near time low.

A currency devaluation means China's exports are now more competitive, however, it comes at a cost where China citizens have less purchasing power buying imports and travelling overseas is now more expensive. Sound anything similar? Yes, that is its another form of import tariffs. Hence for a tit for tat import tariff, China has imposed an addiitonal import tariff via currency devalulattion which is causing more pain for its citizens.

In a way, the USA started tariff war is now hurting both countries' citizens. It is likely China too is going to be in a world of a pain as opposed to what Xi jinping is painting.

What I am Doing

Unlike what a certain blogger is saying, the investment in China companies is painful, investing in alibaba or China tracker fund 2800,HK will be painful, Therefore, my view is we should not add in addiitonal stakes into China/HK HSI funds. Just stick to what you have and hold on.

Additional funds into them will hurt you. Do take "fin fluencers" advice with a pinch of salt due to their investments. Both China and USA will be going down the drain, not just one country.

<This post was penned down due to I noticing one online financial personality has been drumming up support for China which is beginning to be suspicious, Singapore government may not be doing anything but i feel it is contravening acts that Minister Alvin Tan may not have spotted.>

Portfolio Update April 2025- Addition of Olam; Buying Dividend Stocks in Current Period of Market Turmoil

Sold Petrochina and a few of Keppel REIT/ Asian Pay TV Trust during this past few days of "Tariff War Nightmare"

Added Alibaba, United Hampshire, Yanlord using the sales proceed. Alibaba was bought back because prices are below where I had made a partial divestment. As part of portfolio concentration, I will cap the total number of Alibaba shares I own to 15,000. Currently I own 14,700 shares.

A new stock of Olam was bought. A 7% dividend yielder due to the sell down in prices. It is similar to Keppel REIT sell down which made it attractive.

The portfolio is targeted to provide an average monthly dividend of $3,500 (5% yield on current portfolio of about $800,000). It has changed to that of a dividend-biased portfolio with some potential appreciation in Yanlord and Alibaba. 

While there is a global sell down to tariffs, I am buying into dividend stocks given they are now of higher yield. I do not expect many of their dividends to be adversely cut/

Dividend

LINK & United Hampshire US REITs are providing 7-8% dividend. Their tenant base sells relatively price inelastic goods comprising of supermarkets and essential good players.

Due to their resiliency and high dividend, I am confident owning these 2 REITS will place investors in a strong financial position in the current situation of trade war and economic contractions. Humans still need to eat and have essential groceries, these needs are met by the tenants of the above 02 REITs and hence their DPU will not be negatively affected to a great extent. I am confident these REITs are going to be great wealth accumulators in years to come, surpassing any Singapore condo investment. 

For Unitedhampshire, it may benefit from potential Fed Rate cuts and this places it to have higher DPU.

Unitedhampshire REIT and Asian Pay TV Trust dividend has come in, dividend collected year to date is: 

USD: $3,682

SGD: $5,250

Specially for United Hampshire US REIT, the current share price is US$0.445, so I am up 2.3% since Dec 2024, assuming a cost price of 45.5 cent in my Dec 2024 article where I stated United Hampshire will deliver better returns than big-sized condos in Singapore (this includes 2.05 US cents dividend).

HDB Resale Prices have Increased 50% in 5 years. Getting Unaffordable For Many Singaporeans and How We can Solve it to Benefit Housing Aspirations

HDB Prices have grown 52.7% from 1Q2020 (131.5) to 1Q2025 (200.9). That is a 52.7% rise in HDB resale prices. Like it or not, this is an unsustainable increase and is pricing many non home-owning Singaporeans out and affecting their housing aspirations.

Unaffordable and Making People not See Singapore as a Home

While Singapore has a cheaper housing scheme called the BTO and Balance of Sales, the number of housing applicants is overwhelming where people have not been able to get a home through this scheme despite the expanded supply; yours truly has experienced rejection letters from HDB more than the number of times I have been rejected by girls : p

Why has HDB Prices Gone to Unaffordable Levels?

Entirely my view, this is due to the influx of foreigners and their ability to pay a considerable amount for rental due to their lifecycle. This makes a HDB resale flat a great investment as dividend income.

For many foreigners or I would like to call sojourners, their time in Singapore amounts to about 20-30 years of their lifespan. During their 20s-50s, they migrate to Singapore to make money, squirrel aside savings for retirement at their home country (due to low cost of living and weak exchange rate) and then migrate back. Their expensive expenses (mainly housing) only lasts for 30 years.

Whereas for Singaporeans, post our age of 50-90, we are still stuck unable to move to another country (unless of course Singapore legislates a law to allow us dual citizenship). With double of our lifespan in this country, we are unable to bear the burden of a high accomodation cost for 60 years vis-a-vis foreigners of 30 years.

So back to the foreigner's life cycle, given they are only here for 30 years, they can pay up to 50% of their salary for rental expenses. This justifies why a 4 room HDB resale can be shared by 3 individuals at a monthly rental expense of $4,000. 

Maths wise, to an owner who is renting out a resale flat, a $48,000 rental income, netting off half a month commission and $6,600 in property taxes, a $1 million dollar 4 room resale flat still nets $39,300 in rental. That's a high rental yield and positive to an income statement given assuming a home interest loan at 2.6% interest.

$1 Million Resale Flat (affordable to investors but not affordable to Singaporeans who want a home)

As shown in the above example, to an investor, buying a $1 million resale flat makes good investment sense on the grand scale of things. Based on an LTV ratio of 70%, 2.6% interest for a 25 years loan tenure, an investor would need to make a cash outlay of $38,112 per year to finance his "investment" home, renting a HDB home out, an investor receives a cash inflow of $39,000 per month after property taxes and commission. 

At the end of the 25 years, the investor technically gets a home for free, only paying with CPF/Cash for 30% while paying nothing else; he/she can then rent for another 30-40 years, earning another cool $1 million in the process. It is a superb investment decision to use a HDB resale to earn money from foreigners.

However, to Singaporeans who are unable to ballot because of their income of say $15,000 per month, financing a $1 million resale flat is a financial disaster. An annual pay package of $195,000 (take home pay of $180,000) means 20% of their post tax income is used to finance a house. Of course, we know couples who are of slightly older age, earning less than $195,000 who does not wish to wait for a BTO and are buying such expensive resales so that they can have a home and family formation. Due to their circumstance, they are spending more than 20% of their income to actualize their housing and family aspirations.

The need to Equalize Difference between an Investor and Genuine Owners of HDB Flats

Simply based on finance, there is a difference beween an investor and genuine owners of HDB flats.

On one hand, investors find it easy to recoup gains utilising a HDB flat by renting it out. On the other, family owners due to them chasing the same unit of good, are killed financially trying for their aspirations. 

Solution

The simplest would be a return to the old pre-90s HDB policy where rental of HDB flats are not allowed for foreigners. However, the truth is that such a policy will lead to the destruction of property value and stress test will show banks such as DBS will collapse arising from underwater loans due to such a policy change. So stopping foreigners to rent HDB flats is a definite "no".

Alternative 1- Non Owner Occupied Property Tax Regime

Taxation is one of better policy measures, where non owner occupied tax rates should be increased. In my view, the current lower tier 12/20% taxation rate should be raised until mathematically investors of a resale HDB are in a worse off state than genuine owners of a HDB resale flat. My own back of the envelope calculation is that for E pass foreigners, they can afford up to 5k per month accomodation expenses based on a 15k post tax salary. This means Singapore has to formulate a property tax regime where it pains would be investors to stop investing in HDB resale.

Assuming (i) an interest expense of $18,000 on a HDB flat 25 years loan and LTV ratio of 70% for a 1 million resale flat, (ii) half a month agent commission of $2,000, idle cost of about $3,000 per year, the painpoint will only start when $34,000 out of the $60,000 rental income is taken out of the investment planning. This means $34,000 of the rental income should be deducted via taxation. Hence the lowest tier of HDB non-owner occupied should be set at 55% with the second lowest and thereafter set at 60%.

A reasonable non owner occupied HDB property tax should be as follows, which will benefit Singaporeans housing aspiration dreams while penalising investors of HDB resale:

Alternative 2- Accessible Housing to All Singaporeans for First Time Owning

Similar to what Ho Ching has suggested, all Singaporeans should have access to an HDB flat easily for their first time trying to purchase a home (with the only condition still limiting them to be the current monthly income limit). This means the government has to expand the BTO/ balance of sales supply to enable all Singaporeans are able to get a flat (singles or married and regardless of age) within 2 tries. This is due to the need to account for the fact there is a need to wait 4 years for it to be completely built.

This prevents would be genuine owners of HDB flat to compete with would be individuals who plan to use a HDB resale as investment.

HDB Should Not Be Used for Speculation or Investment, Otherwise if Investment is to Remain, HDB has to be Accessible to All Singaporeans

In summary, a HDB flat should be used to help Singaporeans achieve their housing and family formation aspirations. The current investment regime and alteration of HDB rental policies since 1990s have hurt us Singaporeans too much. There is an urgent need to restore parity between a genuine owner of HDB flat vs would be investors.

While a return to pre-90s rental policies is ideal, it would destroy the current banking sector dooming even DBS with under water HDB property loans. Hence, using the non-owner occupied property taxation is ideal. Second, adoption of the proposed taxation policy will help the government to get higher tax revenue and this eliminate financial budgetary headaches.

Otherwise as per alternative 2, all Singaporeans should have access to a HDB flat for the first time.