New flats will stay affordable: PM Lee

Dear Mr Lee,

I refer to your comments as reported by Straits Times on 27 Jan 2010.

You said that the government has less control over prices in the resale market. You under state the power of your own government. Imagine if the government were to suddenly build 500,000 new flats all over Singapore. What would happen to resale flat prices? They will simply plummet. So by controlling the number of new flats being built, the government indirectly controls the price of resale flats. While the control is not direct, it is no less potent.

Even though resale prices are set by individuals on a willing buyer, willing seller basis, the willingness of a buyer to pay top dollar for a resale flat also depends on the availability or lack thereof of alternatives. It is because there are no viable alternatives, not enough new flats, that buyers are compelled to buy from the resale market.

You said that flats prices fluctuate from year to year. But that’s not the case over the last three years where prices have been shooting up higher and higher and does not seem to be abating at all.

You said that the value of our flats depends on the strength of our economy. But how come flat prices continue to go up even during a recession when the strength of the economy is at its weakest? Isn’t that a ‘daft’ argument?

You said that Singaporeans can enjoy an appreciating asset. But how real is that enjoyment? If I sell my flat at $100,000 profit, some poor buyer will end up making a loss of $100,000. So one man’s enjoyment will be another man’s suffering. Seen as a whole, Singaporeans do not enjoy more than they suffer. This is a zero sum game that contributes absolutely nothing to the productivity of our nation. Instead, it is like the transfer of money over a gambling table in a casino.

You said that the expectations and aspirations of the people have risen sharply. That is not the case. It is the price of flats that have risen sharply. It is not the case of us demanding more now. It is the case of us demanding that things don’t go out of hand.

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