By David See Leong Kit
Note for Readers: My letter below was rejected for publication by TODAY. Likely reason — the paragraph as highlighted in italics.
Your VOICES page (TODAY April 13) featured two letters with opposing perspectives about sky-high HDB flat prices — the euphoric “Let’s talk about property” by Lulu See and the more sensible “How much would I have made?” by Tong Jee Cheng.
Let me now offer this balanced overall summary.
Some homes may seem affordable because of low interest rates now, but this will not remain so during the entire loan period. A sensible home loan period should at most not exceed 20 years.
For a couple with a combined $8,000 monthly income, stretching a HDB loan of $500,000 over 30 years at the concessionary interest of 2.6 per cent will of course make the monthly repayment instalment of $2,000 “instantly affordable”. But at the end of this lengthy period, they would have coughed up some $800,000 in total capital and interest repayments.
In her letter, Lulu See said “My partner and I earn more than $8,000, but we were allowed to buy a unit at The Pinnacle after they reviewed our request”. HDB must now provide a detailed public explanation as to why its income limit requirement has not been strictly and fairly enforced for all new-flat applicants.
What is urgently needed in land-scarce Singapore are effective long-term Government policies to promote an “orderly” property market that is sustainable by economic growth, real demand and especially rising incomes. Such a market with gradual capital appreciation will benefit many Singaporeans from each successive generation.
Whereas a “speculative” property market of sky-high prices is largely driven by speculators out ot make a quick buck by “flipping” a property. But when the property bubble finally bursts, both speculators and genuine home owners will be hurt by rapidly falling property values.
During our 1994 property bull run, prices of both private and HDB properties increased by 30 per cent per annum for three years in a row. But since when has our economy and our salaries grew at such a phenomenal rate?
We will do well to learn the lessons from how the US sub-prime housing bubble turned into the 2008 Global Financial Crisis that has brought recession job losses for many Singaporeans.
A property may generally be an appreciating asset, but it can also end up as a millstone around one’s neck. High property prices can affect the average Singaporean as follows:
- As a home buyer: Is it wise to spend so much of your hard-earned income in a property, with little left for your children’s upbringing and your own retirement and healthcare needs?
- As an employee: If your employer has to pay high office rent out of its operating budget, can it afford to pay you a better salary, increments and bonuses?
- As a consumer: If a supermarket operator has to pay high commercial rent, will it not charge you higher prices for goods and services?