Not published
6 August 2012
Editor, Voices
Today Paper
I agree with the Minister for National Development Mr Khaw Boon Wan
that Singaporeans should be prudent and avoid buying an expensive property
on a long term mortgage loan, such as the
50 year loan that is introduced recently by a local bank.
I urge the Minister to review the practice of pricing HDB flats and
the financing terms offered by the Housing and Development Board and their
partner banks.
Many Singaporeans are paying for their HDB flats on loans that stretch to
30 years and require the income of both spouses to service the loans.
Can these working people be sure that both of them can maintain their current jobs
and earning capacity over a long period?
The mortgage payments may appear to be affordable under the
low interest rate of 2.6% per annum. The current low interest
environment cannot continue forever. The mortgage payment will increase by a
hefty 26% when the interest rate is increased to (say) 4.5%, which is more
compatible with the prevailing inflation rate.
Recently, the Canadian government took the step to limit mortgage loans to
25 years to combat the bubble in property prices. I suggest that HDB should
follow this prudent example, and keep the prices of HDB prices at an
affordable level, representing not more than four years of the average combined
family income.
Tan Kin Lian
Mr Tan,
ReplyDeleteI don't think the present PAP government will do anything to curb the property bubble.
Firstly, it is their policy to appreciate housing cost. This is to the house owners "feel" the price of their property is rising and they will appreciate what the present PAP government is doing, "rising" the valuation of their most prized asset.
Second, PAP needs to use various upgrading programs as the carrot to win votes.
1. Upgrading
2. Appreciation of flat value
3. Higher property price.
4. ??????
5. PROFITS!!!!
People just don't understand this or refuse to understand this.
Third, higher property price leads to inflation and inflation leads more robust economy. Inflation is bad for the people but it is good for the economy, as more money change hands, more tax can be squeeze out from the changing of money. What is PAP best at? Creating a bigger economy pie. While creating a bigger economy pie, inflation will also occur. PAP just advertise on the bigger and better economy and doesn't tell you the inflation that comes hand-in-hand with it.
Lastly, a lot of industries depends on a booming housing market. The most direct dependent is the construction industry. Higher house value = more flats to be build = greater demand for renovation. Then, retail industry also depends on the booming housing market. A new house = need for new furniture and new electric applications. At least, these two industries are directly dependent on a booming property market.
These are just tip of the iceberg of what depends of a booming property industry. I'm not an economist, neither do I studied economy in A' Level. (I only remember the supply-and-demand from my JC 3-months) These are just my two cents' worth.
Higher HDB resale price was push up by middle class who downgrade to HDB flat. They are SG citizen as well.
ReplyDeleteI expect my HDB executive flat to match $1m in 5 years time. As retiree, I can enjoy my life after that. I might need the cash to topup medisave for my 90+ parents if needed. I might need the cash to help further education for my grandchild. What is wrong with higher price?
I am sorry for the young generation who have to struggle anf fight for their survival. They are still lucky than retirees who had experienced WWII, great depression,social unrest and one-room flat with common toilet.
Chee Ming, that is why Mr Tan's letter was not published. Not yet.????
ReplyDeleteIt is very difficult to educate those who choose to believe that the economy will only boom.
Sometimes, I do wish for a crash, especially the property sector right here!
Very bad and selfish of me. Incidentally, I only have a fully paid HDB.
Kooli,
ReplyDeleteThanks for expressing your views, which differ from my views, in a polite manner. You have given your reasons why you like to see high property prices, and you did not see the need to criticize my view (where I favor lower property prices).
I want to highlight this exchange as an example of how a discussion can be conducted with respect to both views.
There are many people who think that they can be "smart" by criticizing and attacking another view that they disagree with, and even be personal in their attacks.
I hope that these people will read my message and understand the point that I am making.
Hi Chee Ming,
ReplyDeleteYou have identified the positive aspects of higher property prices, and its impact on inflation and economic growth.
You have also identified that inflation is bad for the people. This is the key point. The cost of living has increased to a level that many people cannot bear, and it is accompanied by a increasing income gap. The rich are getting much richer - to a large extend due to relentless property price increases, and the poor are getting much poorer. This is the litmus test - and high property prices is bad for the economy and for the people.