1. You really don’t own your flat because it’s on a 99-yr lease from HDB
Actually you do. It’s the land below your flat that you don’t own. But not to be pedantic, what they mean is that one day the Govt will either evict you from your flat, or extract a high price from you for a fresh 99-year lease.
True or false?
Actually it’s really premature to speculate what will happen when the lease runs out, because no HDB flat has ever run out of its lease yet. Even the oldest SIT (pre-cursor to HDB) flats in Tiong Bahru were built in the 30’s and still have around 20+ years to go. So it will be quite some time before anyone has to deal with the problem.
So far HDB has avoided the issue through SERS, ie by moving flat owners from old flats to new ones with a fresh lease. But if it ever comes down to 10 years or less, the govt of the day, hopefully a non-PAP govt, will have to deal with it. It’ll be a political hot-potato, and I think the govt of the day will do the right thing to win votes.
I bet condo owners who reach the end of their 99-year lease will face a tougher time than HDB flat owners.
2. The Govt has made us slaves to HDB with 30-yr mortgages.
Notwithstanding that only a tiny minority of flat buyers take 30-yr mortgages, people actually have a choice who they want to be slaves to. They can choose DBS, UOB, Citibank, etc.
In other words, you don’t have to borrow from HDB. And in today’s low-interest rate env, I see no reason why anyone shld pay 2.6% to HDB when banks offer less than 1% for the first two years.
So if you are a slave to HDB, it’s your choice.
The other point of this utterance is that new flat prices are way too high. That is sad but true. The world has changed. Policemen no longer wear shorts. The days of paying off your HDB flat in 5 years will never come again. I doubt any Govt you could elect would be able to bring back those times.
Yet, first-timers still overwhelmingly go for new/resale HDB flats.
Why is that?
3. HDB is a ploy by the Govt to cheat us of our CPF money, leaving us nothing for retirement.
If you prefer, you can be cheated by DBS Land, or Keppel Land, or CDL, etc. Or you can buy resale, and get cheated by complete strangers.
The point is, property prices are high, and people want to find a way to pay without touching their cash. So they use CPF. No one forced them to.
“Opp” politicians conveniently forget that, back in the 80’s, CPF contribution rate was 40%, and there were many restrictions on what people could do with their CPF. People were begging the Govt to allow more of CPF to be used for housing, so that servicing mortgage payments would not impact their cash so much. So the Govt gave in, liberalised the use of CPF for property, allowed 100% of OA to be used.
And people still wanted more, so they allowed CPF OA to be used for investments– stocks and bonds, gold, unit trusts, etc. They even allowed parents to loan their CPF money for their children’s university education!
Now after fulfilling peoples’ demands for CPF liberalisation, the govt is accused of sucking dry peoples’ CPF leaving them nothing for retirement!
Does anyone want to go back to the 80’s?
4. As the largest landowner and mortagor in Singapore, the Govt is in a conflict of interest and thus it wants to keep prices of flats high.
Actually, it is in the interest of all housing developers and banks to keep property prices high, because they are in the business to make $$. So if HDB exited the housing market and left it all to private developers, do you really think it would make any difference in market players’ behaviour?
I think if a govt did that, 20 years later people will talk of the good old days when HDB sold them much cheaper flats!
Of course, the Govt can control property prices through its actions, such as “cooling” measures. But if you believe in free markets, the govt should minimise intervention, and let markets do their job. Remember, constantly falling property prices hurt the people as much as constantly rising property prices.
If a govt can create good economic growth with strong fundamentals, given Singapore’s limited land area, is it not obvious that housing prices will rise, with or without HDB as a player?
5. The Govt should exit the property market, and let private developers build low-cost flats.
They say Singapore is peculiar because HDB houses 85% of the population. In other countries, public housing is just rent-control housing for the very poor and private developers supply the rest of the market.
But do you really believe private developers could do better than HDB? Especially if they have to bid for land?
6. The Govt makes huge profits selling HDB flats. It should sell flats at cost-plus.
I think the Govt probably did that in the 60’s and 70’s, when it started HDB. That’s how our parents and grandparents were able to pay off their first flat in five years!
But it soon became clear that there was a disconnect between new and resale flat prices. Smart people were buying new flats on the cheap and selling them five years later on the resale market for huge profits before “upgrading” to condos. Or they would then buy a second new flat and repeat the cycle, while using the profits for investment into condos to rent out. It was so hot that couples in university were queuing up for new flats under the fiance/fiancee scheme. “Should we get a HDB queue number?” was how guys proposed marriage in those days.
The situation was ridiculous! It also let to overbuilding because there were so many couples in the queue.
The Govt saw through this and tried to stop it, but even measures such as “two bites of the cherry” and resale levies could not stem the problem. So they eventually decided, no more cost-plus, peg new flat prices to resale flat prices.
Yes, there’s still profits to be made, but not supernormal profits. And so we have today’s situation.
The more important question is, should Singapore go back to cost-plus? Apart from encouraging speculation, would there be other undesirable consequences such as a plunge in resale flat values?