Someone asked me if I prefer the housing system in Singapore, where there is a high ownership of homes through the CPF and HDB scheme, or the housing system in Hong Kong, where a high proportion can only afford to live in rental flats.
I prefer the Hong Kong system today. They give the choice to the people on whether they wish to rent or to buy a home. The people make their choice according to their preference and income capacity.
The Singapore system forces the workers to make a high contribution to the CPF and they can use it mainly to buy their own homes. This force a preference for home ownership, which in turn makes the property prices go through the roof. Even HDB flats are super expensive. This distorts the market.
The new HDB flats are now so expense that most new buyers can only afford them by getting government grants through the CPF.
Basically, we create a bubble market in property through the CPF housing scheme and then support it with a grant.
Renting a flat makes more sense for most workers. They can rent a flat close to their work place and avoid the long commuting journey each day.
I am not saying that everyone should rent a flat. I am saying that they should have the choice.
In the 1970s, the CPF/ HDB policy was better. The HDB flats were sold at affordable prices. Most people find it cheaper to buy the flats than to rent. That was a good policy. But the situation is different today .The HDB flats prices are far too high.
I prefer the Hong Kong system today. They give the choice to the people on whether they wish to rent or to buy a home. The people make their choice according to their preference and income capacity.
The Singapore system forces the workers to make a high contribution to the CPF and they can use it mainly to buy their own homes. This force a preference for home ownership, which in turn makes the property prices go through the roof. Even HDB flats are super expensive. This distorts the market.
The new HDB flats are now so expense that most new buyers can only afford them by getting government grants through the CPF.
Basically, we create a bubble market in property through the CPF housing scheme and then support it with a grant.
Renting a flat makes more sense for most workers. They can rent a flat close to their work place and avoid the long commuting journey each day.
I am not saying that everyone should rent a flat. I am saying that they should have the choice.
In the 1970s, the CPF/ HDB policy was better. The HDB flats were sold at affordable prices. Most people find it cheaper to buy the flats than to rent. That was a good policy. But the situation is different today .The HDB flats prices are far too high.
1 comment:
There is a nice compromise solution. Create a scheme that encourages both owning and renting.living near your work or near your parents is a desirable objective.currently we pay tax on all rental income. Can we not tax on rental if we own 1 property but choose not to live in it but rent elsewhere?
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