The HDB worry is unnecessary and imaginary

The stress is imaginary, the worry is unnecessary and the criticism is directed at the wrong points.

The social contract had done its work and I argue it continues to work.

The citizen’s fear is that by the time 70 years has lapsed, the estate would be taken from them and they would be left with absolutely nothing.

Widespread occurrence of this scenario is not possible. It would result in chaos and mayhem, two conditions that this government is allergic to. (There are instances of houses returning to the state, but these are terrace houses, sold on 60 year leases rather than entire blocks of apartments sold on 99)

It won’t happen because the government does not have the luxury of time either. They need land to return to the state and the only way they can do this without risking a revolt, is to buy it back. 

The administration today wants to keep things new, modern and updated. This can be observed in cars (PARF rebates encourage owners to scrap at 10 years) and also in buildings (old ones are always knocked down and built taller and deeper). There is economic impetus to keep the country at the forefront of modernisation.

Fortunately for citizens and unfortunately for policy makers, the government had successfully trapped itself into a doctrine of gainful home ownership. 

And as long as people want to live and work in Singapore, I am convinced that the property market in Singapore will never devalue. On the contrary, we need measures to cool a market that persistently overheats.

The real problem is this: expectations. We cannot expect windfalls, not at least not through HDBs. It was possible in the past when we grew from third world to first. But now we’re in first world, how do you expand further? 

The government appears to be seeking a realignment of expectations.

You can make money through property, and the real estate industry is not short of ideas on how you can do this. But you won’t, and shouldn’t, be able to do this through the HDB. 

The government would be more than happy if people upgrade from HDBs to private property because then they would free up the supply of public property. 

Public housing will at best, preserve your initial expenses and allow some appreciation that beats normal inflation. This way, the government can buy back apartments and rejuvenate them in an affordable way for the next generation.

The demand for property here, by citizens may I add, is just too strong. Singaporeans are risk averse, we don’t want to chance it in a foreign market or in stocks, so everyone puts spare cash into an apartment.

Buying property in Singapore is a no-brainer. The market is always rising. There are dips yes, but on the whole prices always increase.

The clear and present danger to the entire country are these:

a.) Dip in foreign manpower. Because these are the chaps that will be renting all this property.

b.) Rise in loan interest rates. And like hurricanes and earthquakes, this is out of the government’s control.

The academics, politicians and kopitiam uncles are arguing the linguistic nuances between ownership and lease but behind them looms this Godzilla sized problem.

If no one rents your house, you’ll be footing the mortgage on your own. If interest rises suddenly, you may not be able to foot the mortgage. 

When that happens, your property will be swept out of your hands in 99 days, never mind 99 years.

Stop worrying about the wrong, imaginary things and start paying attention to better exercise your wealth instead.

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