Property: Do something drastic or do nothing?

Dear Ms Chua,

I refer to your article dated 20 Apr 2010.

You said it is disingenuous to either ‘do something drastic’ or ‘do nothing’ because either action would cause the majority of Singaporeans who are neither first-time home owners nor super rich to be worse off. It is indeed disingenuous of you to think that the majority of Singaporeans aren’t first-time home owners. There are 3.2 million Singaporeans in 900,000 households. That means there are 2.3 million Singaporeans who do not as yet own homes and would thus be first-time home owners sooner or later. In other words, first-time home owners (sooner or later) outnumber existing home owners by more than 2 to 1. Thus, if the ingenuous thing to do is to make the majority better off, it follows that we should ‘do something drastic’ for current and future first-time home owners since they are in the majority.

You said the government’s handling of the property market has been a lot more right than wrong. There is not a lot of truth to what you say unless you can back it up with a lot more fact. HDB prices shot through the roof in 1997 and are shooting through the roof again. Two sudden spikes in a short span of twelve years and you call that a lot more right than wrong? How much more wrong can we get? One spike every other year?

‘Short-term glitch’ is a poor excuse for something that could essentially have been avoided had the government had better foresight.

A lot is not going right in housing, no thanks to the government’s insistence on treating the resale market as ‘free’ but pegging new flat prices to resale flat prices which essentially exposes new flat prices to ‘free’ market price fluctuations.

Yes, the government has turned housing into a social policy that has successfully enslaved the populace into ceaseless working for ever more expensive housing throughout their lives. Home ownership is not just a national objective but also a burden to be borne by all nationals.

It is not necessarily true that pandering to those who have been priced out of the market would be a great disservice to existing home owners. Many existing home owners have children who would someday become first-time home owners. Ensuring that buyers today are not priced out of the market will help ensure that the children of home owners today will also not be priced out of the market in the future. Because if prices keep increasing out of hand, the unaffordability issues of today will become exacerbated and compounded tomorrow. By arresting the unaffordability issues today, we are in fact helping to alleviate future unaffordability issues.

You said we should not disgruntle the majority who are the 900,000 home owners even if it means vexing the 30,000 young couples who set up homes each year. But majority refers not to the 900,000 home owners but to the 2.3 million children of the 900,000 home owners who would eventually set up homes. It is they whom we should not disgruntle, it is they whom we should not vex.

Sudden spikes in HDB prices show that Singapore hasn’t got the big picture right. The socialist provision of mass housing at capitalist prices is a double whammy for Singaporeans. We are forced into ceaseless queuing much like queuing for basic essentials such as bread and butter in previously socialist economies. At least, our socialist comrades paid socialist prices for socialist goods. Here, we are paying capitalist prices for socialist goods instead.

It is not correct to say that 90% of households can afford homes since a significant number of them will have no money left for retirement after having poured all their hard earned money into their homes. These people will be forced to sell their homes back to the government and will be left with no homes in the end. How can you call the home affordable when it gobbles up all your hard earned money leaving you with nothing for retirement? How can a house be affordable if buying it means having to pay for it with money meant for feeding you in old age?

You said new flats are not allowed to soar freely in tandem with a bullish market. That’s bullshit. New flats are pegged to resale flats and soar as freely as resale flats do.

You said market forces allow home owners to realise the value of their assets. But when the price of your asset shoots up by $100,000 overnight without you doing anything to enhance your asset, has your asset changed in anyway? No, your asset hasn’t changed in any way and is still the same asset as before albeit not as new and less pristine. So its value hasn’t increased yet its price has shot up by $100,000. This is no different from the price of rice shooting up overnight due to shortage in supply even though it is still the same rice. This is not realising the value of assets, this is hyper inflation.