Veteran opposition politician and head of the People’s Power Party (PPP) Goh Meng Seng took to social media to offer solutions to Singapore’s “HDB Asset Enhancement Time Bomb”.
Explaining that Housing Development Board (HDB) issues were complex and involved other market forces at play, Goh added that “Properties are “durable” goods but at the same time, with a “long expiry date” aka leasehold”, which left many factors to consider when looking at solutions to HDB issues.
According to him, the three main problems pertaining to housing were the over-consumption of housing, inadequate finances left for retirement in Central Provident Fund (CPF) accounts, and the expiry of each flat’s 99-year lease.
He wrote that if flats will have little material impact on Singaporeans if they are only buying these properties for themselves as it is rare that people live longer than the lease period.
“The problem will become more acute when PAP keeps selling you the idea that your 99 lease HDB flat is some marvelous ASSETS that can make money for you, even help you to finance your retirement as an “investment asset””, Goh wrote.
He explained that as a result, “People will throw in all their money into buying HDB flats and hoping to make a pile of money out of it without much thinking. A 99 Lease Hold property, be it private or public housing HDB, will depreciate in value over time”.
He added that because about 300,000 to 400,000 flats were built between 1970 to 1985, these flats would have their leases expire between 2070 to 2085. “Imagine 300K to 400K of HDB flats expiry within a short period of time that would create a massive housing shock”, Goh said, stating the difficulty for HDB flats with less than 60 or 50 years left on the lease to be sold in resale market. “This will create an under-priced market for these old flats. It will create market inefficiency”, he said.
As one of his proposed solutions, Goh suggested that a reduction in the price of Built-To-Order (BTO) flats that would be accompanied by a cap on the amount of money one can use from their CPF accounts to purchase properties.
“We must start with the right concept and public perception of HDB as a public housing policy. It is NOT an investment asset for anyone to make big money from because it will become a Zero Sum game. Either you will suffer insufficient CPF funds for retirement or your future generations will suffer exorbitantly high property prices”, he said.
Goh added, “Ultimately, if you want to make more money than your current job, invest in businesses or equity, bank shares or stock market or simply start a business etc”.
“A nation will (sic) cannot take care of its own people’s basic needs of housing when they get old, is really not a nation worth fighting for”, he concluded. -/TISG
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