As we at BLUTA monitor the various media for all things related to property, we’ve noticed a few trends in response to the recent spate of property and housing announcements by the government to hit Singapore. These have turned up on various other websites, including some that feature a recent article of ours.

There are the rabidly angry and frustrated netizens, who have become so incensed that they cannot post anything except incoherent rants and diatribes against the government and People’s Action Party (PAP) in general.

Just as frustrated as the above are the pessimistic netizens. These have totally given up on the ruling party, as they no longer believe that the PAP as the ability or desire to fix the issues. So disillusioned are they that they can only see a solution in 2016, when they hope to make a change by vote.

There are also those who feel that the situation can be reversed. However, these instant fixers want the government to implement drastic and immediate changes to the property market that will bring instant affordability. For example, we have seen many calls for immediately dropping build-to-order (BTO) prices to just above cost, or to remove the resale market as soon as possible.

Finally, we have also seen responses that are best categorised as measured steps. These commenters call for a coherent plan of action that will have a deflationary effect over time, eventually reaching the goal of affordable housing for the masses of core Singaporeans.

Now, all the above responses, although diverse in motivation and technique, do have one thing in common. They recognise that something is seriously wrong and must be fixed. But there is one final type of response that we are just including for the sake of completeness, and that is the fervent PAP supporter. Such responses convey the idea that the present government can do no wrong, and thus no change is needed whatsoever.  While they are certainly entitled to their opinion, can any government really be so perfect?

Apart from the last type of response, they all reflect the frustration on the ground. The issues that give rise to this very apparent discontent have been brought about by previous policies, implemented many years, or even decades ago, and allowed to slowly but surely wreak the havoc we see today. Now, the government is stuck between the proverbial rock and hard place. But we can say this now because we have the benefit of hind sight, unlike our leaders a couple of decades ago.

Whether you personally feel PAP is to blame or not, we should not be hasty now, or we will be repeating the mistakes of past. We feel that clamouring for an instant fix may do more harm than good. It should be fairly obvious to all that decisions made from now on should be more careful, since we have historical evidence to show that leaders are not infallible. This would apply to anyone in the ruling party, PAP or not, Singapore and beyond.

Here is what we think the final public housing landscape should look like:

  • It should consist mainly of non-resale public housing, which can only be sold back to Housing Development Board (HDB).
  • There should be an expanded, improved and comprehensive rental scheme for ordinary residents as well as needy Singaporeans (see BLUTA on Housing), including a dorming or hostel-type system (See tables 1 to 3). This would make up 25% or more of the total housing units in Singapore.

Table 1

Table 2

Table 3

Suggested rental scheme outlined above (tables 1 – 3) should be implemented with subsidy system as detailed in BLUTA on Housing, Part 3.

  • No Permanent Resident allowed to purchase public housing
  • No subletting of whole non-resale units
  • No other property ownership, for owners of any public housing units
  • Executive Condominiums (EC) still available, with a few tweaks to prevent abuse
  • Up to a third of all HDB units still available for resale market

 

The last two categories will serve as a jumping point for those who wish to participate in the property market. Such units will be subject to market forces, and thus will likely be much more expensive than non-resale units. Owners of these units won’t be able to take advantage of much cheaper public housing, only slightly discounted market rate BTO like the present ones, or the usual HDB grants.

The objective is to differentiate HDB public housing from the speculative private market (this market includes the HDBs available for resale and ECs), as we outlined in BLUTA on Housing, Part 2.

This end game cannot be implemented overnight, however. The plan must be fleshed out in more detail, and is definitely not a quick fix. Time will be needed to plan the unwinding of the decades of mistakes, and even more time will be needed to implement it.

Think of it this way. The current property situation is like the government, banks and HDB lessees (owners), all sitting on a bomb. There is no bomb squad in the world that defuses bombs by just snipping all the wires or using a hammer to smash it. (At least not one that is still alive today.) Precision and finesse are required.

Just as handling a bomb without due care will lead to catastrophic results, instant, haphazard fixes may trigger a market crash. Owners will default on loans (they’ll go into negative equity and be unable to pay), and banks cannot settle their debt. This will affect the Singapore economy and Singaporeans as a whole, resulting in the bubble bursting catastrophically instead of deflating gradually. Instead of ripples, the tsunami will be felt across all strata of society, not just the rich landowners. We believe that the results of such careless action will be even worse than our current situation.

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