Tuesday, May 11, 2010

Sell New HDB flats at cost instead of asking citizens to sell flats for retirement

We refer to the interview of Minister Mah Bow Tan entitled “Mah Bow Tan on the frontline talking about HDB prices, COV and Elections” published in Lianhe Zaobao on 8th May 2010. On behalf of National Solidarity Party, I would like to make the following response:

We wish to remind Minister Mah Bow Tan that the success of HDB House Ownership scheme is built upon the sacrifices of our forefathers. Without the Land Acquisition Act which empowers and allows the ruling party to acquire almost 80% of land from our forefathers, Singapore would not be able to develop so rapidly and HDB would not be able to execute the House Ownership smoothly.

This is one of the most important land reforms since independence. We could only examine the role of HDB and the pricing mechanism for new HDB flats properly under this context. In its first 20 years, HDB has fulfilled its role under this land reform plan, i.e. utilize the acquired land to build HDB flats and sell them at cheap prices or even under cost to the people, in doing so, redistribute land to the people. This is the fundamental role of HDB. Most people who had their land forcefully acquired did not protest because they knew that they were making sacrifices for the people and the Nation. This is the social contract between the people and the ruling party. The HDB flats has only a 99-year lease and it provides stability to the whole system. It ensures future generations of Singaporeans will have a roof over their heads throughout their life span. This is the basic concept of land reform, distribution and public housing policy.

But now Minister Mah says, “The government cannot sell the new HDB flats at cost because this would mean that flat owners will not be able to sell it at market prices in future.” We do not understand on what basis does Minister Mah make such an assertion. Prior to 1990s, our father’s generation bought their HDB flats at cost or even under cost and now they can still sell their flats in the resale market at market prices. Isn’t this PAP’s policy? The government selling new HDB flats to Singaporeans at cost price has absolutely nothing to do with whether Singaporeans could sell off their flats in the open resale market or not.

Minister Mah also says, “The House Ownership Scheme is most beneficial to Singapore because it could ultimately allow house owners to sell their flats for a profit and use it for retirement. Selling flats at cost price would not achieve such aim.”

First of all, a HOME is not an “investment”. People only use properties as investment when they do not use it as a HOME. It is only when people have their second house then they could consider it as a “tool” for investment!

Secondly, if Singaporeans do not need to suffer from high HDB prices and use their CPF to pay for a 30-year mortgage, they will not need to “sell flats for retirement”! Minister Mah is simply putting the cart before the horse.

Thirdly, we can hardly imagine any first world country or world-class government asking their people to “sell house for retirement”!

Fourthly, can Minister Mah guarantee that each and every generation of Singaporeans can sell their flats at good prices when they retire? Can such scheme work in a rapidly aging society? From the economic perspective, it is totally unsound. In a rapidly aging society, there will be more elderly people than youngsters for the next 20 to 30 years, meaning more sellers of HDB flats than buyers! How can prices be good in such a market situation?

The root of the problem lies with the fact that prices of new HDB flats have outstripped income growth for the past 30 years. Our last generation paid only a 10 or 15-year mortgage for their HDB flats but now, our present and future generations will have to pay a 30-year mortgage for their new HDB flats! If they are married at 30 years old, they can only finish paying up their mortgage by 60 years old. By then, there will be little money left in their CPF. This is why they need to “sell flats for retirement”!

We call upon Minister Mah and PAP to take their responsibilities as embedded in the social contract of land reform seriously and fulfill them, instead of trying to shrug it off by using all sorts of flawed reasoning and excuses. We do not expect the ruling party to meddle with the resale market but we hope that HDB could resume its original role by publishing the cost of all new HDB flats and selling them at cost price to first time Singaporean buyers.

Goh Meng Seng
Secretary General
National Solidarity Party


Tong said...

Hi Mr. Goh,

Here to provide some feedback.

NSP's statement of " We do not understand on what basis does M.Mah make such an assertion" , will lose you more support than gain.

NSP MUST understand why he made that statement.

Mah is either digging his grave, or making economic duress. Think of it from a simple angle, home buyers in recent times have paid ridiculous prices(500k and above for NEW mature estate flats), the banks have given loans for these inflated house prices, if the next decision is to bring HDB selling price to cost, can you see the effects?
Can you also see the economical duress/decision held on these home owners?

NSP has not once, managed to win the belief of these people with all your post so far. We believe in change and the cost of it, but not at a 200k loss in the prime of our lives.

Anonymous said...

He has a logic problem. He doesn't know how to flow with the energy like the eastern martial art, Aikido.

Aikido is performed by blending with the motion of the attacker and redirecting the force of the attack rather than OPPOSING it head-on.

Comprehendo, stupido?

Anonymous said...

investors will flee or pull out and who bears the consequences of wide spread lost of jobs? and your talented will flee and seek for greener pastures(like foreign talents who come to our land) and it spiral downwards to hell - easy because we are tiny remember?

when that happens, even a $100k 5rm HDB you also can't afford. HA HA HA HA

Anonymous said...

Apparently, we have a lot of politician$$ and politician$$ wannabes who don't listen well.

Who bulldoze their cause(to be in power) without consideration.

A very dangerous situation.

Anonymous said...

Hi Meng Seng

You made strong points and you have my support.

I think one of Mah's underlying unspoken strategy of selling HDB houses at high prices is to encourage people to continue working hard. Sometimes, debts are necessary evil to push people to unleash their potential and test their limits.

A $300,000 can easily be settled in 15 years by two adults contributing $10,000 each per year.

A $500,000 will require the same two adults contributing $10,000 each per year 25 years to settle the debt.

When the debts are too easily settled, say by age 45, then people will have no goals in life and have a lot of free time to protest, organise rallies and challenge the government for more freedom and transparency.

If people continuously have to work just to keep their only shelter from being taken away because of non-repayment of debt, then these people has no time to think about something else and will blindly accept whatever policies the government proposed.

So it is an interesting strategy.

Anonymous said...

@Tong, you gotta read carefully. Don't be too focus that you will lose your $$$ at your prime.

We do not expect the ruling party to meddle with the resale market but we hope that HDB could resume its original role by publishing the cost of all new HDB flats and selling them at cost price to first time Singaporean buyers.

Can see?

Tong said...

Annon 12:03

I have read carefully. I think you're missing the same point as GMS. That is the ideal that focus is long term and not short term $, but you don't win support by leaving out concerns of those who already have houses or paid astronomical amounts for it.

To put some perspective into my comments, I am 26, newly married and looking for a house myself, so definitely its not greed that is making me blinded.

When the new transport scheme was released, part of the hooha, was that the benefits were not all inclusive and only 2/3 benefited.So I still strongly feel, to win more support, GMS must argue for both sides to achieve balance. After all we're all pawns of the system so far.

Anonymous said...

@Tong, having paid astronomical amounts for houses is a result of the poor policy that our current government has created for us i.e. leaving market forces decide the price. We are talking about PUBLIC HOUSING here and not commercial commodities. Your questions on this side of the balance should be posted to our government and not something that NSP has to address. Thats my opinion.

Tong said...

I am addressing public housing not private. Loans still have to be service regardless public or private and our main gripe is that public housing is too highly price.
I resist to brand the boonkeng and Dawson dbss fools, but look at the prices they pay.

It is unfortunate that you do not recognize yet, that if NSP wins it's seat, it is part of the government whom will be tasked to address this worries. A better democracy and society will be ALL inclusive to a certain extent, not just gathering a left wing vs right wing fight..

Again I emphasize, I am a supporter of change, any opposition must show ability to MANAGE change. We all should know it's methodical and gradually painful, not just a knee jerk change. That's what LKY has done, by threatning GMS supporterst hey are daft and assets will fall drastically

GMS it's really in your hands to take the fight and make LKY's words look blunt and not serve economic duress on neutrals.

Anonymous said...

@Tong, I'm a victim myself, having also paid high price public housing. I do not expect that GSM address this issue at all as I know clearly I am a victim of PAP's mis-management. Why burden GSM on addressing this? He doesn't owe us this mis-managment! I would like a CHANGE so that my future generation will not suffer further. I really cannot imagine how my children is going to afford buying a HDB flat 15-20 years down the road. We need to sacrifice so that a good CHANGE can take palce. We can't afford to be selfish and always think about how we can recover from the money that we lost. Can you see my point?

Tong said...

I see your point but you can never get change without managing change. And GMS has to prove he can manage that.

I'm seeing responses that address me of lacking support of GMS. But I believe otherwise. I want GMS to be able to contribute change but also understand the financial impact if it is done drastically without the solution being all inclusive.

GMS, I would appreciate your discussion in this thread. The discussions seem non confrontational and mature. We can build on this to discuss more about your approach. My stand is that you have to address the balance and inclusiveness of your plans. More inclusive = more votes

I have written in TOC as guest writer in the past. Do search for writer ash tong to see my grouses.

To all, we have families, kids and each have our commitments, pain must be planned and measured fir a better tomorrow. I work in change management and I speak from experience

cheers let's keep the discussion civil and good as it is now
GMS, please respond when you're back in sg

Anonymous said...

To: Tong

Quote GMS' again:
We do not expect the ruling party to meddle with the resale market but we hope that HDB could resume its original role by publishing the cost of all new HDB flats and selling them at cost price to first time Singaporean buyers.

Tong, your highly paid house is not a new house anymore. GMS is addressing selling price of NEW public housing. Like others here, I'm also worry that my children cannot afford HDB flats in future if Mah continues managing the HDB housing policies... I also want a CHANGE so that our future generation will not suffer. Just my 2 cents worth.

Tong said...

I quoted prices of new flats in mature estates. have not even mentioned resale yet.

And while we're happy to put blame on PRs for escalating housing cost, do you really think they are not correlated? For info, selling a resale below your price paid for the flat is currently not allowed, there is some silly rule in the hdb system that blocks the sale.

This is a dog chase tails system.

Please do take time to read and digest above discussions. It's disappointing that you engage without reading that I am caught in the problem of high housing problems myself..

I want change. But I want a person who can manage change. Thus it is controlled pain with a plan, not a whiplash

Anonymous said...

First of all, a HOME is not an “investment”. People only use properties as investment when they do not use it as a HOME.

Tong said...

I have not once mentioned the word " investment"
financial burden vs investment outlay are two very different issues and we should not blur the lines.

We need to spread our perspective to garner more support
the more all inclusive the solution, the greater the appeal. Can I please learn more about the age profiles on posters here? My guess is late thirties or early fourties?

I shall attempt a short write up to bring up the focus points I have been harping on.If possible I will link it to proven change management theories.

GMS, look forward to your participation.