MR TAN, I respect you for having the creativity and boldness in thinking out of the box and find practical solution. This HDB flat of "buy at cost" and "sell at cost plus adjustment" seems to achieve economical and social objective for Singaporean.
What is the mean household monthly income for HDB households? Judging on 6k monthly income (i.e. based on 20% loan, 1.2k for loan over 30 years), most of the new flats are still affordable, not talking about the ones in prime locations. Although if the household becomes a single income family (i.e. say surviving on 3k monthly income), it will be fairly unmanageable to the breadwinner. Prudent saving and dabbling in some forms of investments are essential to combat inflation and rising living costs.
I do not like the use of the word "affordable". Ministers have used it regularly to justify the high HDB prices.
An online dictionary defines "affordable" as:- that can be afforded; believed to be within one's financial means: eg attractive new cars at affordable prices.
If that be so, then affordability is relative, and not absolute. An expensive item can be affordable to a rich man but not a poor man. A billionaire can afford a plate of char kwey tiau costing $100, while a beggar may not be able to afford one costing only $3. So, this affordability arguement put up by ministers holds no water. Yet they are using it to justify high HDB prices.
I think the idea of pricing at market price less a subsidy is better.
Cost price is irrelevant. Something that cost $1m now may have cost $500K 15 years ago, $100K 30 years ago and $10K 50 years ago.
For example, if A and B get 1kg of gold as a gift, the opportunity cost to the giver is the market value of the gold, not the historical cost of the gold. The giver may have bought the 1st kg at half the price of the 2nd kg, but the real costs to him in giving away the gold is the prevailing market price.
Market prices more closely reflect opportunity costs, which in the economic sense is the real cost.
If certain groups of people need more subsidy, so be it. Reflect the opportunity costs of the subsidy, not the historical costs.
I think affordability is still relevant, even though it may be subjective. We need to have a means to decide how to allocate limited resources and subsidies should be targeted more at those who need them more.
The country's reserves need to used prudently. I acknowledge the need to have a caring society and it is good to help those in need . We must also be wary that we don't end up making social services into a chronic problem like some countries in the west where pensions, social security, healthcare subsidies are becoming a burden to the country and future generations.
As an individual we should spend wisely and save for the future and have contingency funds for emergencies or "rainy days". When there is a need to spend, we should spend. A prudent government will behave likewise.
MR TAN,
ReplyDeleteI respect you for having the creativity and boldness in thinking out of the box and find practical solution. This HDB flat of "buy at cost" and "sell at cost plus adjustment" seems to achieve economical and social objective for Singaporean.
FROM CASHEW NUT
I like the idea of buying and selling back at cost.
ReplyDeleteLet those people who want to play the property market play in their own private field.
HDB is not a product that people can buy and sell frequently.
What is the mean household monthly income for HDB households? Judging on 6k monthly income (i.e. based on 20% loan, 1.2k for loan over 30 years), most of the new flats are still affordable, not talking about the ones in prime locations. Although if the household becomes a single income family (i.e. say surviving on 3k monthly income), it will be fairly unmanageable to the breadwinner. Prudent saving and dabbling in some forms of investments are essential to combat inflation and rising living costs.
ReplyDeleteI do not like the use of the word "affordable". Ministers have used it regularly to justify the high HDB prices.
ReplyDeleteAn online dictionary defines "affordable" as:-
that can be afforded; believed to be within one's financial means: eg attractive new cars at affordable prices.
If that be so, then affordability is relative, and not absolute. An expensive item can be affordable to a rich man but not a poor man. A billionaire can afford a plate of char kwey tiau costing $100, while a beggar may not be able to afford one costing only $3. So, this affordability arguement put up by ministers holds no water. Yet they are using it to justify high HDB prices.
It's highly unlikely that you and your spouse will be able to stay continuously employed for the full 30 years of your HDB loan.
ReplyDeleteAfter retrenchment, or being asked or forced to leave, you will have to retrain and settle for a job at half your last drawn salary.
That's your future fate and the fate of all our children.
I think the idea of pricing at market price less a subsidy is better.
ReplyDeleteCost price is irrelevant. Something that cost $1m now may have cost $500K 15 years ago, $100K 30 years ago and $10K 50 years ago.
For example, if A and B get 1kg of gold as a gift, the opportunity cost to the giver is the market value of the gold, not the historical cost of the gold. The giver may have bought the 1st kg at half the price of the 2nd kg, but the real costs to him in giving away the gold is the prevailing market price.
Market prices more closely reflect opportunity costs, which in the economic sense is the real cost.
If certain groups of people need more subsidy, so be it. Reflect the opportunity costs of the subsidy, not the historical costs.
I think affordability is still relevant, even though it may be subjective. We need to have a means to decide how to allocate limited resources and subsidies should be targeted more at those who need them more.
The country's reserves need to used prudently. I acknowledge the need to have a caring society and it is good to help those in need . We must also be wary that we don't end up making social services into a chronic problem like some countries in the west where pensions, social security, healthcare subsidies are becoming a burden to the country and future generations.
As an individual we should spend wisely and save for the future and have contingency funds for emergencies or "rainy days". When there is a need to spend, we should spend. A prudent government will behave likewise.