A case for non-interv​ention

Dear Straits Times,

I refer to the 10 Oct 2011 letter by Mr Tan Han Sing.

Mr Tan considers buying private property as being no different from taking a cab instead of taking public transport or dining in a restaurant instead of eating at a food court.

We know that HDB flats are always over-subscribed manifold. Let’s say HDB flats are three times over-subscribed. The corresponding analogy for public transport would be that three times as many people want to get on the bus but most couldn’t because there is only one bus for every three busloads of people waiting for the bus. The corresponding analogy for the food court would be that for every seat available, there are three persons fighting for that seat. Fortunately, our public transport and food court crowdedness are not as severe as our undersupply of flats. Therefore, Mr Tan’s analogy is inappropriate because it doesn’t illustrate the severity of our housing situation which has forced many people to consider buying private property instead.

Also, Mr Tan’s analogy doesn’t take into consideration the fact that there are eligibility criteria for buying new HDB flats. No such criteria exist for public transport or food courts. Buses and food courts do not close their doors on those who are single and below 35 years old or who are above the income ceiling.

Mr Tan portrays the private property buyer as one who cannot afford a dearer housing choice but insists on getting one. But it is also possible that the private property buyer has little cheaper alternatives due to HDB restrictions.

It is also wrong for Mr Tan to say that, as far as the government is concerned, buying private property is a matter of free competition and free choice. Government policies strongly influence the competition and these choices. The government controls land sales and in so doing, controls supply of private property and hence private property prices. It also controls private property prices through the income ceiling which forces those above the ceiling to buy resale flats or private property. By controlling the number of new flats built, it strongly influences resale flat prices which in turn affect private property prices. But most importantly, the government influences housing prices simply by inundating Singapore with foreigners. Mr Tan is being naive when he thinks of property prices as being determined by market forces without realising that the government is the key player of the market.

Mr Tan lambasts Singaporeans for asking the government to help them upgrade to bigger houses with better environments. His criticism is not fair. Singaporeans are just asking for sanity in housing prices that they can afford with their salaries.

Mr Tan feels that the private developer shouldn’t be taken to task if people can’t afford the prices it sets. But how can the private developer set high prices if there isn’t a glut of people wanting to buy its units due to the severe imbalance between land released and people let in? Shouldn’t the government be taken to task instead?

Mr Tan feels that a prospective buyer has many choices. Whatever the choice, it is bound to be far more expensive than it used to be.

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