Something’s not right with HDB policies

Today’s ST Forum page published a letter from an acquaintance of mine from qigong class many years ago. Mr Koh How Nam seeks a more “dynamic HDB rental market”. (see letter reproduced below).

That might be one solution but I think what was once a fantastic housing policy when Singapore was very much third world (mayb even fourth world, if there’s such a classification) has over the decades become warped and distorted.

Let me just point out some ridiculous developments.

1) Singapore is very proud of the boast that 80% of the nation lives in public housing ie HDB. Most, if not all, other countries would weep over this, because public housing is meant for the indigent.

2) Yet clearly, the income limit for HDB and Executive Condo — both subsidised public housing — at $10K and $12K per family unit shows that Singapore’s public housing ain’t intended for the indigent by and large. And the recent grab of $1 million+ flats in new EC developments by those earning below the $12K limit again underlines in no uncertain terms that Singapore’s public housing doesn’t cater to the indigent.

3) This being the ridiculous state of public housing in SG, it’s no wonder other ridiculous anomalies stick out like sore thumbs in our public housing policies. For example:

a) the policy to provide a 2nd HDB subsidised home for “second timers”. Hello, talk of getting a second bite of the cherry 😡 😡

b) the policy that permits HDB owners to continue to buy private property, even though the privilege for private property owners to buy ressale HDB has been withdrawn — to cool the property market it seems. What this uneven handed policy has done is to give HDB owners a helping hand in building up their assets while drying up the HDB resale market, as their owners hang on to them to earn passive income or to live in — while renting out private property acquisitions. As HDB prices form the base line for residential property in SG, it’s no wonder that firm HDB resale prices — due to a reduced supply — continues to underpin overall property prices n make nonsense of any cooling measure 😥

If anything besides AIM needs a thorough review including “re-examining the fundamental nature”, it is surely our HDB housing policies!

Encourage vibrant HDB rental market

SINGAPORE’S housing policies are based on one hard truth – if you need accommodation, then you must buy a property, since you can use your Central Provident Fund (CPF) savings to pay the loan instalments.

While the Government’s stated objective is a large home-owning population, there have been some undesired results. People have delayed their marriages to save for the down payment on their homes, and then commit to many years of repayment.

With so much of our wealth and savings tied up in real estate, our well-being is held hostage to the continuation of stable property prices as well as job security, in order for us to pay off our mortgage loans.

Nobody can guarantee that property prices will not decline and, indeed, the financial crisis of 2008 highlights the dangers of high indebtedness and the vulnerabilities of a high home-owning society.

In Germany, the most economically successful country in Europe, the home ownership rate is only about 42 per cent.

Home ownership is not necessarily the best way to go. Singapore’s situation is more complex due to our ageing population and slowing economy, which will affect future property trends.

We should encourage a more active and vibrant HDB rental market. This is possible only if rules are changed to allow rentals to be paid with CPF funds.

We can place conditions on the quantum and length of use of such funds, as well as stipulate that CPF-paid rentals be credited only into the home owner’s CPF account. HDB flat owners should also be restricted to renting their homes only to those who qualify for HDB flats.

With more options, there will be less pressure to purchase a home. This is beneficial for people who are waiting or unable to buy an HDB flat.

Essentially, the change will result in more options and flexibility for many individuals, who can then pay rental for their accommodation instead of being forced to buy.

Kuo How Nam

Copyright © 2013 Singapore Press Holdings. All rights reserved.
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6 thoughts on “Something’s not right with HDB policies

  1. Pingback: Daily SG: 11 Jan 2013 | The Singapore Daily

  2. And you missed the most ignored point of this whole property Ponzi scheme … the amount of debt incurred and rate of debt growth in the relentless pursue of the property wealth, and not counting the humongous risk exposure to our banking system and HBD balance sheet.

  3. Pingback: Khaw Boon Wan doesn’t geddit! | FOOD fuels me to talk...

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