Have Singaporeans taken property ownership for granted?

SERS, or Selective Enbloc Redevelopment Scheme, is HDB’s way of extending the life of your apartment when its lease is almost up.

Last week, National Development Minister Lawerence Wong made public that it should not be assumed every HDB will undergo SERS. Some may become depreciating assets and when the lease runs out at 99 years, the land will be returned to the Singapore Land Authority and the properties on it will have no value.

Before we freak out at the thought of having a several hundred thousand dollar property evaporate in value, let us recall two very important points:

a.) Singapore is land scarce
b.) HDBs are meant to be homes and not cash cows

HDBs are very, very popular. They’re priced low and are often at the best locations, near to amenities and accessible to transport. They are no frill homes.

But some have fully capitalised on this national asset. Many own private properties in addition to their HDBs, living cheaply and taking profit on rentals. Some circumvent the rules and register private properties in the names of spouses, children, friends and continue living in HDBS.

Some have started to treat HDB homes as investments, ballooning the prices of homes in prime areas such as Tiong Bahru, Bishan and city areas to million dollar marks.

If Singaporeans consider SERs to be a fixture of all HDB homes, then wouldn’t this make every HDB a freehold property? How is this possible nor sustainable? If this was true, HDBs would climb in prices (sometimes very steeply as we have seen) and no matter what cooling measures the government has, it wouldn’t work.

This would completely defeat the purposes of having HDB apartments in the first place.

If I was the government, I would want to transit as many HDB owners as I can to private properties. The Executive Condos are a good means of doing that. The more people that move out of HDBs, the more supply they free up for people that really need it and the less popular they are, the easier it is to control the effects of inflation.

For a country so small, we’ve done very well in housing our citizens. A high 90% of Singaporeans own the home they live in. For the United Kingdom, the rate is 64%. For Hong Kong, this is 51%. For Switzerland, 44.5%.

It is actually very normal and common to rent instead of buy in many parts of the world, yet not only do we have a high degree of home ownership…this ownership is capable of not just preserving but accelerating wealth for citizens.

In this country, at least we have the option to “right size” when we’re in need of money – the property has accumulated reasonable wealth for its owners and is ready to be en-cashed when needed. This is certainly not the norm for citizens of many other countries.

I’m not so concerned about Lawrence Wong’s remark about SERs. I don’t believe HDBs should be used as money spinners for those whom already have the means of buying second properties.

As for those whom rely on on the HDB to preserve wealth, they don’t have to fear vanishing income. They can perform a lease buy back to the HDB, or they can sell it on the open market to those whom are looking at buying short term leases.

If you outlive your flat, you don’t have to worry either – there would be interim apartments or low-cost rental from the HDB that you can get for very cheap. And the condition that they are cheap, is that there must be supply in the first place. If people who can afford private property continue hogging supply, these won’t be cheap for those who really need it.

If you’re worried about having to pay back CPF when a HDB’s lease runs out…well, you don’t have to worry about it because chances are you won’t be alive either.

Home ownership and wealth preservation is the foundation of Singapore. The early leadership had wanted Singaporeans to have a piece of the nation, so as to take pride in it. Our wealth has grown tremendously since then, as have the price of our assets in tandem.

In order for future generations of Singaporeans to enjoy low cost housing, there must be some limit to what the present generation can earn with theirs and not take it for granted.



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