Custom Search

Saturday, September 12, 2009

HDB price skyrocketing...

Familiar? This is the talk of the town.

So far I hear only rubbish on the high price of HDB flats. The letter by HDB deputy CEO is logical and reasonable, yet it cannot calm the anger among some Singaporeans. But who is right? ...I tell you what the problem is.

HDB has many choices for flat ranging from 2 room to executive flats. Buy the one you can afford. So what is the issue? The issue is people want big flats that they cannot afford at very good locations where land is scarce. These people are the ones who are unhappy and keep whining - they are choosy and want cheap and good. But Singapore of today is not the Singapore of 20 years ago - we are a financial center, R&D center and GDP has grown by leaps and bounds- Singapore has the highest millionaires per capita. Imagine if HDB price the flat in prime areas like Tiong Bahru below market - it will just mean more people queuing up because it is just too cheap. Is it responsible for a govt to sell tax payer's property cheaply to some people? This people can just turn around 5 years later and sell the flat in the open market and make a few hundred thousand profits for doing nothing at the expense of other tax payers. It is therefore best for the govt to price the HDB flats in relation to the market price so as to avoid creating risk-free profits for some people and not others.

The HDB cannot push HDB prices down or distort the market by regulation. There are more flats that are already held and owned by Singaporeans than property coming onto the market. The high prices benefit more Singaporeans than if artificially pushed down because most are owners rather than buyers. There are also the unfortunate people who bought in 1996 still waiting for small profit because of high interest in 1997-1998 and their high buying price, it is unfair for the govt to step in push the prices down so that a small minority can benefit. What about the thousands of aged people with fully paid HDB flats who are counting on this single asset for a better retirement.

People who are asking for lower HDB prices for selfish reasons should be told to go fly a kite. They want HDB to meet their own expectations which is wrong. HDB has to act for the benefit of the majority of Singaporeans. Prices are going up because incomes have gone up, people are optimistic about the future and in land scarce Singapore, it is an excellent investment. If HDB sell the flats cheaper and below market prices, these people can 5 yrs from now cash out with extraordinary profits at the market price and walk away with a few hundred thousand of what is taxpayers money - why should govt hand money to these people when there are poor, sick and disabled people to help.

All the noise about HDB flat prices borders on the ridiculous - they show a lack of understanding of market forces and departs from the shows a lack of flexibility in the expectations of these people because there are choices - choice they don't want to take because they insist on having the best at less than the market price.

No comments: