On keeping public housing affordable

Dear Mr Teo,

I refer to the Straits Times report of your speech at the Kent Ridge Ministerial Forum dated 6 Apr 2010.

Your reported answer to worried young couples who asked you how they can afford a flat with prices going through the roof is to look at the Sengkang and Punggol flats right before their eyes. These flats that are supposedly nicer than a generation ago now house families that went through the same pains during the last property boom ten years ago.

But does the purchase of a Sengkang or Punggol flat ten years ago answer the question of affordability? With a possible 30-year loan to service, that question cannot be answered until 20 years later. For by then, these young couples would no longer be young any more and they would be asking you another question: ‘Do we have enough to retire?’

So you see, your answer is quite simply no answer. Sure you can ‘buy’ a flat by taking up a mountain of debt. But that does not mean that the flat is therefore affordable. Because you would ultimately have to repay the loan and if you spend your entire life servicing your housing loan, what would you be left with for retirement? If you have to sell your flat back to the government for retirement funds, doesn’t that show that you never earned enough to really get to keep the flat to begin with? Doesn’t that show that the flat was actually not affordable in the first place?

The young couples who bought during the last peak of 1995/96 would have ended up paying a lot more than those who bought later, between 2000 and 2006. The Senkang flat bought in 1995/96 will not be worth more today than a similar one bought between 2000 and 2006 even though the former cost a lot more. In other words, the young couples who asked you that question a decade ago paid more for nothing. So if they were to ask you today why have they paid more for nothing, what are you going to tell them?

You said if we keep our expectations realistic, public housing will be affordable. But expectations have not changed, prices have. The same Senkang flat that was $200,000 three years ago is now $300,000. You expect us to expect that to be realistic?

You said that generations after generations of Singaporeans have been able to afford flats. What you mean is that generations after generations of Singaporeans have been made to sign a lifetime contract to pay for flats. It is only now that the early generations have finally paid up their flats but are finding themselves with no money for retirement. For the later generations, their time will come. They too will find themselves with no money for retirement. Because generations after generations have paid all their moneys all their lives to the HDB and the government who have in turn lost them in billion dollar gambles like the UBS.


2 Responses to “On keeping public housing affordable”

  1. sgcynic Says:

    Definition of “it’s afforable”: we can go into more debt to pay for it (e.g. hire purchase, longer term for payback). Some lesser mortals earn too little to go into more debt while others already maxed out their credit. To these group of people, it’s not afffordable. To the older generations, they must be thinking: “thank God, I got my DIRT-CHEAP”. LOL

  2. Kaffein Says:

    Good response. It all boils down to what they deem affordability is. Like someone (in)famous said “How much do you want? Do you want three meals in a hawker centre, food court or restaurant?”

    I am certain Mr Teo knows the answer about the affordability but he cannot speak it out less he implied that someone higher ‘goofed up’, or the policy doesn’t work. And neither does he have the power to propose a radical solution.


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