Singaporeans were thrown into further uncertainty regarding the 99-year leases of Housing Development Board (HDB) flats after Minister for Transport Khaw Boon Wan announced on Sunday, September 2, that those who buy a 50-year-old HDB flat today can expect prices to continue to appreciate over the next 10 years.
Speaking to more than 200 young people from Sembawang GRC at a dialogue session, Mr Khaw explained how one cannot claim that a HDB flat is not an asset just because of its 99-year lease.
He also added, “If you buy a 70-year-old flat, there is still appreciation potential especially because this Government is prepared to continue to invest in it through Home Improvement Programme (HIP) II and the Voluntary Early Redevelopment Scheme (Vers)”.
Mr Khaw was referring to new schemes announced by Prime Minister Lee Hsien Loong during his National Day Rally that aim to help older flats retain their value.
However, Mr Khaw also said that while a flat is an appreciating asset for as long as the economy continues to grow, at some stage it would begin to depreciate.
“When will that turning point be? Year 80? Year 70? Year 90? I don’t know,” he said. “There are no market statistics for it.”
Contradictorily, he also explained why flat prices are appreciating at a slower rate now, compared with the past.
“In your parents’ and grandparents’ generation, we were lucky because we were transforming from third world to first world, so our economic growth was very strong… That’s why you hear of your grandparents buying a flat for $30,000 to $35,000, and can now sell for about $400,000. So, it’s an asset that appreciated significantly.”
He added, “Your generation is less likely to enjoy that same sharp rate of growth because the economy is now growing at 2-3 per cent, which is very good for a matured economy… We can expect appreciation but not as fast as the one experienced by your parents and grandparents”.
Many Singaporeans felt misled by both PM Lee’s and Mr Khaw’s speeches, and took to Facebook to gripe about the issue.
One netizen, Philip Ang shared an infographic and said, “Didn’t PM Lee tell Singaporeans that the value of HDB flats would continue to appreciate?”
Others also called out Deputy Prime Minister Tharman Shanmugaratnam who said in Parliament in 2012 that “a family with a monthly income of as low as $1,000 can now purchase a small flat”.