Adopt a neutral approach towards home ownership

For more than five decades, home ownership is taken for granted as being a desirable government policy. It has certainly worked very well during the first few decades of our nation building.

With the large increase in property prices since the mid 1980s, home ownership became a financial burden. Many young families could not afford to buy a HDB flat. They delayed their marriage.

To support home ownership, the CPF contribution rates were kept at a high level. This caused problem for local workers in competing for jobs against foreign workers who are not required to contribute to CPF.

The CPF scheme also became quite complicated. Many complicated rules were introduced to regulate how CPF could or could not be used for property purchase and for the CPF savings to be refunded on the sale of the property. Many people found the rules to be very complicated.

The home owners now learn that the value of the HDB flat will be totally depleted at the end of the 99 year lease. It is no longer a good idea to invest in a leasehold property as it is a depleting asset.

Given all of these complications, it is time to review the home ownership policy. Is it a good idea to encourage the workers to buy their home? Should they be required to pay a high price for a place to stay in, when it is no longer an attractive long term investment?

There is one big disadvantage of home ownership that many people are not aware of. When a worker owns a home, he stays in his home for many years and commutes to work. In many cases, the commute distance and time is long.

If the worker rents his place, he will find it practical to change his home to a place near his work on the expiry of the lease. This will reduce the commute time and the strain on the public transport system.

Some countries, e.g. Germany and Switzerland, do not give financial incentive for home ownership. A high proportion, perhaps 70% of citizens, in Switzerland rent their home. They are more mobile and are more likely to rent a home close to their workplace.

Here are some advantages of adopting a new policy to allow more people to rent their homes.

a) We can allow workers to reduce their contribution to CPF and use the income to pay rental.
b) The cost of living will fall as families do not have to set aside a high proportion of their income to pay mortgages.
c) Young people can afford to get married earlier, as they do not have to save for the down payment to buy a home.
d) Workers can move their residences closer to their place of work.
e) A property is no longer a good form of investment, due to the depleting leasehold.

I am not suggesting that everyone should now rent their homes. Instead, I am suggesting a neutral approach towards home ownership.

It may be suitable for families to own their homes after they have settled down in their career and wish to have a more permanent place to stay.

However, a neutral approach allows the families to make the best choice to suit their situation at the different stages of their family life.

 

Tan Kin Lian

 

 

 

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15 Responses to “Adopt a neutral approach towards home ownership”

  • oxygen:

    THE CPF/HOUSING NEXUS is like an unnatural sex jaunt in Geylang, it meets all tastes, affordability but full of health risks, even deadly of outcome.

    ENTER AT YOUR OWN RISKS.

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  • oxygen:

    IF YOU NEED CPF AS PART DOWNPAYMENT, it means your housing affordability is NEGATIVE.

    No other country in the world allows that.

    Asset enhancement politics is a scam.

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  • MikB:

    When our politicians become rich with million dollar salaries, their aim will be to invest in properties hence the prices we have to pay for HDB increases.

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  • oxygen:

    PEASANTS ARE AH SENGs & property gambling speculators of LOW QUALITY mentality, the AH KONGs are sly cunning scam aristocratic merchants who habitually fed Ah Sengs with 1% truth, 99% lies, fantasy and propaganda.

    In the investment world dictum, A SUCKER IS BORN EVERY MINUTE. Not wrong of truth and reality.

    If brick-and-mortar is wealth creation and accumulation, why bother to slave your a*se at work or take risks in entrepreneurial adventure?

    AH SENGS SO STUPID!

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  • Why am i a singaporean:

    Lee kayu is not my ah gong like dpm said he is just familee i so disappoint with 70% sgporean we are truly suffering!!!i think migrate is the last key and must use it

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  • C’est la vie:

    ******
    , …… but HDB is never “home ownership”, not in a month of Sunday’s !!!

    Gotta stop, once and for all, referring to HDB lessees as “homeowners” and/or “home ownership”.

    Get real, …… please !!!

    Do not perpetuate the lie, …… that’s the Govt’s job !!!
    ***
    ******

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  • TKL talkin Cock again:

    Tan Kin Lian talking cock again. Let’s say rental 3-rm flat for $1500/mth. 1500x12x40yrs= $720,000. Buy or rent?

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  • Harder Truths:

    All your earnings go to government with no ownership of rental property and the long-term value of rental $0.00

    Basically using $G citizens as serfs / slaves (i.e. to owe them wealth until we die with nothing).

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  • LIONS:

    The point is to READDRESS what is PUBLIC HOUSING N WHAT IS PRIVTE HOUSING.

    PUBLIC HOUSING should remain not only affordable but very affordable like in the past so that every sg n his/her family can have their own home.

    Only CITIZENS SHOULD BE ENTITLED TO PURCHASE HDB.
    NON-CITIZENS CAN RENT HDB IF THEY CANNOT AFFORD TO BUY PRIVATE.
    WHY SHUD GOVT OF SG HELP NON-CITIZENS TO BUY PUBLIC HOUSING in the first place?
    Woese,NON-CITIZEN HDB-OWNERS RENT OUT THEIR HDB TO EVEN HOMELESS sgs?
    Is this a PAP JOKE?

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  • opposition dude:

    Renting flats won’t solve the issue as long as PAP is in charge because we all know PAP’s money seeking behaviour.

    Before you know it your rent will increase every other year just like transport fares. It will be raised gradually to the point of you paying whatever you are now paying using your CPF, the difference is that renting is for life!

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  • land price drove up inflation:

    over the years the land pricing by clown pap caused Spore to become one of the top few most expensive places to live.

    but remember. median wage is not ever S$3,500 pm GROSS.

    also remember. in the 1980s, a fresh engineering U grad was S$2k per month and 5 room was less than S$100k net. today same fresh engineering U grad hard put to be S$5k per month yet that much smaller 5 room is S$500k or more.

    when pap clown in nation day really BS’ed capital gain by some amk resident, he conveniently forgot to mention only that ONE generation benefited. all subsequent sheep who believed in the HDB is asset lie are caught in the lie.

    maybe all sheep strike toto every week. otherwise just cannot believe how sheep can remain sheep.

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  • Why born as a singaporean:

    Sgpore parliment is a joke with these jokers how can worldwide respect us look at big country they talk serious things instead of our parliment is a joke

    Why am i a singaporean

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  • First Thing First:

    Take back the money that was put into the HDB land for retirement.
    The PAP government owes the people the asset value of the HDB and should be given back when the land is resold for profit.

    Any new renting suggestions can talk to new government later.

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  • Costly Cuckoo's nest:

    Must not ignore these factors also:
    Singapore has lowest median wages among first world economies, and no minimum wage legislation. How does that jive with the fact that it has become the world’s most expensive city to live in?

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  • theKindOfGovWeHace:

    this gov aint going to do anything for anyone unless they get something out from it..
    remember that..

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