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Of course I know this already but if I say it, people will scold me rather than try to understand the issue in a mature adult way
So I let the report speak for itself
Published September 7, 2010
Slowing of foreigner inflows raises questions on labour, housing
By TEH SHI NING
(SINGAPORE) Sustained, slower rates of foreigner inflows could have implications for the labour force and housing market, a Citi report yesterday said.
A slowing of immigrant inflows, particularly skilled professionals and permanent residents (PRs), raises questions over whether future housing demand can absorb the significant increase in housing supply over the next three to five years, Citi economist Kit Wei Zheng wrote.
Last week, the Advance Release of Census 2010 showed population growth of 1.8 per cent, down from a 4 per cent average growth rate over the previous four years. This was largely due to a sharp slowdown to 1.5 per cent growth in the PR population, from an average rate of 8.4 per cent for 2006 to 2009, Mr Kit said.
Assuming population growth stays at 1.5 to 2 per cent, or 80,000 to 100,000 people a year, for the next five years, Mr Kit estimates that this translates into demand for 20,000 to 25,000 homes a year.
Estimates from the Urban Redevelopment Authority and those based on Housing Development Board announcements show that some 100,000 new public and private housing units are due over the period, so supply should match overall housing demand, Mr Kit said.
But, supply will not be evenly distributed and is likely to be backloaded in 2013/2014, which suggests supply will likely be tight in the next two years, but outstrip estimated demand in 2013 and 2014, at current population growth rates, he added.
'These back of the envelope estimates suggest that changes in immigration policy have the potential to exacerbate boom-bust cycles in the housing market,' said Mr Kit.
Risks of this are higher if demand is weaker than expected from 2013 onwards, or if political pressure leads to a further tightened inflow of foreign skilled professionals. Higher risk could also come from further hikes in public and private housing supply in response to overly optimistic demand projections, speculative demand, or pre-election political pressure, he said.
UniSIM labour economist Randolph Tan agrees that the planned increase in housing supply could coincide with weakened housing demand if the immigration slowdown is sustained, adding that PRs have been 'a significant factor behind the strong demand in housing markets in recent years.'
But DBS economist Irvin Seah thinks the overall impact of population growth changes on the property market 'will be quite benign', given the 'slow but steady' growth rate and the fact that government and developers can regulate the housing supply coming onstream.
Housing market aside, Mr Kit said that lower potential economic growth rates are expected, as any pick-up in productivity growth is unlikely to compensate for the implied slowdown in labour force expansion. The Economic Strategies Committee target of boosting productivity growth to 2-3 per cent while slowing labour force growth to one-2 per cent is 'ambitious', in his view.
Lower immigration rates - especially of PRs - is also likely to 'accelerate the ageing of the population, with implications for labour force growth and consumption patterns,' Mr Kit said.
Mr Tan too, thinks slowed PRs growth has a more immediate impact on labour supply than a fall in indigenous birth rates. 'PRs tend to be adults already in their prime and are often highly mobile individuals. We will almost certainly see a slowdown in employment growth as a result of this,' he said.
So I let the report speak for itself
Published September 7, 2010
Slowing of foreigner inflows raises questions on labour, housing
By TEH SHI NING
(SINGAPORE) Sustained, slower rates of foreigner inflows could have implications for the labour force and housing market, a Citi report yesterday said.
A slowing of immigrant inflows, particularly skilled professionals and permanent residents (PRs), raises questions over whether future housing demand can absorb the significant increase in housing supply over the next three to five years, Citi economist Kit Wei Zheng wrote.
Last week, the Advance Release of Census 2010 showed population growth of 1.8 per cent, down from a 4 per cent average growth rate over the previous four years. This was largely due to a sharp slowdown to 1.5 per cent growth in the PR population, from an average rate of 8.4 per cent for 2006 to 2009, Mr Kit said.
Assuming population growth stays at 1.5 to 2 per cent, or 80,000 to 100,000 people a year, for the next five years, Mr Kit estimates that this translates into demand for 20,000 to 25,000 homes a year.
Estimates from the Urban Redevelopment Authority and those based on Housing Development Board announcements show that some 100,000 new public and private housing units are due over the period, so supply should match overall housing demand, Mr Kit said.
But, supply will not be evenly distributed and is likely to be backloaded in 2013/2014, which suggests supply will likely be tight in the next two years, but outstrip estimated demand in 2013 and 2014, at current population growth rates, he added.
'These back of the envelope estimates suggest that changes in immigration policy have the potential to exacerbate boom-bust cycles in the housing market,' said Mr Kit.
Risks of this are higher if demand is weaker than expected from 2013 onwards, or if political pressure leads to a further tightened inflow of foreign skilled professionals. Higher risk could also come from further hikes in public and private housing supply in response to overly optimistic demand projections, speculative demand, or pre-election political pressure, he said.
UniSIM labour economist Randolph Tan agrees that the planned increase in housing supply could coincide with weakened housing demand if the immigration slowdown is sustained, adding that PRs have been 'a significant factor behind the strong demand in housing markets in recent years.'
But DBS economist Irvin Seah thinks the overall impact of population growth changes on the property market 'will be quite benign', given the 'slow but steady' growth rate and the fact that government and developers can regulate the housing supply coming onstream.
Housing market aside, Mr Kit said that lower potential economic growth rates are expected, as any pick-up in productivity growth is unlikely to compensate for the implied slowdown in labour force expansion. The Economic Strategies Committee target of boosting productivity growth to 2-3 per cent while slowing labour force growth to one-2 per cent is 'ambitious', in his view.
Lower immigration rates - especially of PRs - is also likely to 'accelerate the ageing of the population, with implications for labour force growth and consumption patterns,' Mr Kit said.
Mr Tan too, thinks slowed PRs growth has a more immediate impact on labour supply than a fall in indigenous birth rates. 'PRs tend to be adults already in their prime and are often highly mobile individuals. We will almost certainly see a slowdown in employment growth as a result of this,' he said.
