Distortion in residential property market

The govt offers a grant for a citizen to buy a new or resale HDB flat. This grant is very attractive, as the buyer can realize it when he sells the flat after 5 years.

There is no such subsidy when the family rents a flat.

Furthermore, the high contribution rate forces citizens to buy a HDB flat, because they cannot use the contribution to pay the rental.

This distorts the market. It forces people to buy a HDB flat or property when it is more sensible for them to rent a flat. It is a reason for the price of property to go up so high. It distorts the market.

High property prices is bad for the long term health of the economy or the living standard of the people.

This policy has to be changed. Here are the changes that I suggest.

a) The same subsidy should be given for purchase and rental of flats. If the subsidy is 10% of 20% of the purchase price, the rental rate should also be subsidized by 20%

b) Tenants should be allowed to use CPF to pay the rent. Alternatively, they should be allowed to opt out from contributing their 20% to CPF. They can use the money to pay rent.

 

Tan Kin Lian

 

 

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24 Responses to “Distortion in residential property market”

  • LIONS:

    * Subsidy * is a mirage.
    The G pushes up prices 30 pct n say they sudsidise you 20 pct?
    Its like *SALES*.
    Retailers tell you 20 pct discount but the price may have been pushed up 30 pct?

    Stop letting NON-CITIZENS BUY HDB.
    They can only rent.
    If they can afford,they can only buy private.
    On the contrary, many non-sgs RENT OUT THEIR HDBs,is this right???

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  • Pull prices up:

    This government is an expert on pulling prices up.
    And then, to gain votes, it gives various subsidies to make the new higher prices more “affordable” to those who cannot afford the higher prices.

    So the government gains a few millions more and gives a few thousands as kind caring subsidy. What a great scheme!

    They do this to everything: HDB prices, transport prices, clinic prices, training prices, rental prices, hawker food, rice, water, electricity, air, everything.

    That’s why Singapore is the most expensive city in the world.

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  • Don't (Try To) Con Us - Again!:

    It’s a grant that has to be be repaid with interest – yes, CPF members paying themselves interest on their funds for taking out those funds! – “otherwise accruable to such funds amount if not withdrawn from the Account, you stupid Lian, it’s not a monetary gift.

    Stop continuing to help your former masters mislead an already- and long-misled clueless people and go back into your cage like a good parrot.

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  • Is TKL from the PAP?:

    Goat hair comes from the Goat. The grant comes from your own pocket. The price is jet-up to include the grant. Don’t need to remind you about the previous Polyclinic consultation fees, same trick.

    The price is already F*ucking expensive. Over $300K for a 4 rooms flat. KNN more expensive than Free hold landed private property prorated to 99 years. You paid for the land but still become $ZERO sum after 99 years. After that another ass-hold pay for the same piece of land again.

    Kong Kum TKL, you sleep on the road side after 5 years selling your flat?

    Seriously, Is TKL from the PAP?

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  • MarBowling:

    Tan KL,

    IF and NOT WHEN, The PAPIGS have BETTER ideas and schemes than yours to cater and look after the HOUSING NEEDS(and also other NEED like Healthcare, Retirement, etc)of ALL Sinkaporean, period! It’s just that their CURRENT IDEAS aka the Mother of all PONZI schemes SUIT them BEST which is to FEED the HUNGRY APPETITE OF BOTH INDIAN CHIEFS OF GIC AND TOMBMASEK HOLDINGS! Only through this PONZI scheme can Mai Hum and Gang are able to tie a NOOSE around the NOSTRILS of most Sinkaporean to FORCE and BURDEN them to pay LOONG term mortgage loans for their artificially highly inflated HDB flats, EC, Condo and private property! They ask you to GO LEFT, YOU GO LEFT, MAKE U-TURN, YOU MAKE U-TURN! This way, most Sinkaporean DARE NOT to ROCK the boat. When STUFF like POFMA, World Highest pay for the PEEM and Gang, etc, Sinkaporean just kpkb for a while, THEN Kuai Kuai swallow all the STUFF WILLINGLY! Adopting your GREAT idea is a SURE SUICIDE for them. Dream ON!

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  • Perspective:

    Why would anyone rent if they think they can “own” a HDB flat without having to cough out any monthly cash, which makes it so attractive to young couples. They reason that if they cannot touch or see their CPF, they might as well use it to buy a flat, and hopefully make a profit by selling it off after 5 years. Even if the CPF contribution is lowered, they will still do the same and use the excess cash to improve their lifestyle (e.g. car, holiday, education, contingency savings, etc). If the govt disallow the use of CPF for housing, then perhaps many will be forced to rent. But I have never heard of govt subsidizing renters except in welfare cases or during a national disaster.

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  • OPPO alliance:

    Why continue to talk of pap as if it is a going concern?

    Why not talk about pap being toppled, what to do when pap is toppled, how to cement OPPO alliance to form New Government even if it is a loose bag of sand, who to appoint as chief in agc cpib bank negara spf as soon as pap is toppled in order to nab every pap culprit trying to run road with their S$m, and such?

    self fulfilling prophecy works. talking all the time every time about pap toppled and pap S$m clan members indicted shall come true. talking about pap as a going concern shall come true too. Which is better for the future of Singapore? pap as a going concern or New Government to right all the current pap wrongs and to indict every pap S$m clan member who is indictable?

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  • oxygen:

    @ Tan Kin Lian

    YOUR OPENING PARAGRAPH IS INCORRECT of details. You must be either unaware or have forgotten about the resale levy if the buyer of a HDB sold out and buy another NEW HDB. That takes back all the grant given to the first time Sinkie citizen for his/her first HDB home purchase.

    But of course, if he/she bought a condo after getting the grant and sold his HDB after 5 years, YOUR POSITIONAL STANCE IS CORRECT although I am uncertain if this buyer ever downgrade from condo back to another NEW HDB (such as the two-room SEXY for retirees etc).

    TKL:The govt offers a grant for a citizen to buy a new or resale HDB flat. This grant is very attractive, as the buyer can realize it when he sells the flat after 5 years.

    To the best of my informed knowledge, you cannot buy a so-called “subsidized” new HDB flat twice without being penalised by way of a resale levy.

    That is why I believe this definition of subsidy is correct in PAPpynomics – it is simply moving its tongue and lips painlessly and padding up its banking account with over-priced sale – the entrapment comes later in resale levy in the case of public housing.

    Do your own research of fact check.

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  • HDB flat worth ZERO @ 99:

    Not to worry. Singaporeans now realize that putting their CPF in the HDB flat is a big mistake because the flat is basically a depreciating asset. It will be worth ZERO at the end of the 99-year lease despite Asset Enhancement Schemes like HIP1 and HIP2. The Lease Buyback Scheme of HDB proves HDB is a depreciating asset since it values flats based mainly of the remaining lease.

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  • Bobo:

    Do you think our gov. has any plan to forgo the fishes they caught out of mercy? The poor and middle class are suffering, but they create more and more bad policies to squeeze us. How many suicide cases already? Obviously, their policies benefit themselves and the rich only.

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  • C’est la vie:

    *****
    It’s a total hodgepodge when “public housing” becomes an integral part of any country’s “property market” statistics !!!

    Poreans need to go back to “school” and relearn what public housing and leaseholds are !!!
    ***
    *****

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  • Harder Truths:

    $G citizens never buy property from the government.
    Buying means ownership. As all land belongs tot he government how can citizens own anything built on someone else’s land?

    Citizens never own anything. It is a lease – that is all.
    At the end of the lease the property reverts to the true owner.
    Else it becomes worthless.

    The changes you propose don’t change that fundamental problem.

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  • I like lyCHEE, hate LOONGan:

    How is renting helpful to citizens if they’ll be living in sg permanently ?

    I thought it’s allowing PRs to buy resale flats that is driving our property prices sky high.

    I remember vividly when I first started looking out for a 3-rm for my mum in the early 2000s, then the price was mostly between 130k-160k in AMK area. We took a few months monitoring the market. We even viewed quite a few units. But all of sudden in just a couple of months, the prices shot up super fast. Some owners were even starting to ask for 230k-250k. It then started going skyward and never come down. We’re told by property agents that many PRs were very fast in their purchase. They come, they see and they put down deposit. So, eventually my mum and I decided to give up.

    I know from some foreigners, one reason they so eagerly become PRs is so that they can buy our HDB flats on the resale market. It’s not only their temporary home but also a very good investment! During lky time when our good old G was very strict, PRs couldn’t buy resale HDB flats so they’ve to rent. Renting means money ‘go out no come in’. But that’s expected if you’re only a temporary worker in a foreign land. However, now with this greedy G, they’ll do anything that will drive up prices for their benefits without concern for the future.

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  • I like lyCHEE, hate LOONGan:

    How is renting helpful to citizens if they’ll be living in sg permanently ?

    I thought it’s allowing PRs to buy resale flats that is driving our property prices sky high.

    I remember vividly when I first started looking out for a 3-rm for my mum in the early 2000s, then the price was mostly between 130k-160k in AMK area. We took a few months monitoring the market. We even viewed quite a few units. But all of sudden in just a couple of months, the prices shot up super fast. Some owners were even starting to ask for 230k-250k. It then started going skyward and never come down. We’re told by property agents that many PRs were very fast in their purchase. They come, they see and they put down deposit. So, eventually my mum and I decided to give up.

    I know from some foreigners, one reason they so eagerly become PRs is so that they can buy our HDB flats on the resale market. It’s not only their temporary home but also a very good investment! During lky time when our good old G was very strict, PRs couldn’t buy resale HDB flats so they’ve to rent. Renting means money ‘go out no come in’. But that’s expected if you’re only a temporary worker in a foreign land. However, now with this greedy G, they’ll do anything that will drive up prices for their benefits without concern for the future.

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  • LIONS:

    PRICE DI$TORTIONS INDEED.
    COMPARE FREEHOLD LANDED TO HDB N CONDO.
    HDBs can fetch up to $1million while 99-yrsF condos per sq ft basis far exceeds FREEHOLD LANDED,say Terrace, in most districts on average.

    So, by simple logic, PRICE DISTORTIONS caused MAINLY by IRRATIONAL HOUSING POLICIES.

    Look, do you see MERCEDEZ selling for less then Toyota per cubic basis?
    So, either sgs are stupid beyond all hope or the scholar-gahmen are totally daft?!

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  • UniQ:

    Mr Tan,

    Simple statement :

    All will be acceptable if the hardworking taxpayers do not have to pay extra taxes for the whatever subsidy you propose.

    Basically, at the look of your proposal if turn popular, I guess many hardworking Taxpayers will have to foot for more subsidies as more chooses such option and inflation sets in year on year.

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  • vincent tan:

    ah kinLian ah..
    you are daydreaming or plain ignorant
    expect ah loong allow you rob the cpf golden goose.
    Even if this clown allow, his missus gambling chips are cut.
    use cpf monies for rental expenses, haha, where got
    so naive suggestion !
    some more want stingy loong to subsidise the down-the-drain-cannot-recover
    monies.
    dream on, kinLian. dream on

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  • Perspective:

    The levy and the depreciating value of re-sale flat will put a damper on profit for sellers, and dissuade first-time buyers who prefer to take advantage of the “subsidy” from govt. Only those who do not qualify for the subsidy or cannot afford a new flat will buy re-sale flat. Are PRs allowed to buy directly from HDB and enjoy the same “subsidy” as SGs or are they restricted to the re-sale market?

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  • Wooing HDB voters:

    Face it, every HDB owner wants HDB prices to rocket up.
    Any idea by “oppies” to lower HDB prices will get negative vote. All oppies better not come up with any idea to lower HDB prices.

    New HDB buyers are very few compared to the existing HDB owners.

    As real politicians, true oppies must come up with ideas to raise HDB prices. How else are you going to get voted into Parliament?

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  • Wooing HDB voters II:

    This is a serious suggestion to woo HDB owners.

    If elected, XXX party government will provide a permanent government guarantee to first time HDB buyers of new flat that their flat will not drop below their purchase price.

    If the owner sells below the purchase price, the loss is calculated based on the prevailing market price /sales price and the purchase price, and the government will pay 3% of the calculated loss annually to his CPF.

    If at any later time, the market price is more than the purchase price, the loss is considered recovered and all the CPF payment will be clawed back. The owner made a loss because of his poor timing to sell at a loss.

    This guarantee applies only to the original buyer. If someone wants to pay $10 million for a resale flat, there is no reason for XXX Party government to support him.

    If the owner survives till his flat is 99 years old, the original purchase price will be returned to him.

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  • oxygen:

    @ Wooing HDB Voters

    HOW ARE YOUR CHILDREN going to pay for their flat on FALLING DEPRESSED WAGES? Moonlighting in red-light business?

    If peasants Ah Sengs and Ah Huays are THAT STUPID of wanting HDB prices to rise, they deserved to be COMPLETELY DISPLACED by foreigners looking for cheaper housing and getting cheaper pay as well.

    LEE-jiapore WILL EXTINCT faster than your eye can blink.

    Wooing HDB voters: Face it, every HDB owner wants HDB prices to rocket up.
    Any idea by “oppies” to lower HDB prices will get negative vote. All oppies better not come up with any idea to lower HDB prices.

    New HDB buyers are very few compared to the existing HDB owners.

    As real politicians, true oppies must come up with ideas to raise HDB prices. How else are you going to get voted into Parliament?

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  • oxygen:

    ON THIS PARTICULAR POINT, I COMPLETELY CONCUR with @ Tan Kin Lian but that is also exactly where the END of my agreement with him in this article writing.

    TKL :High property prices is bad for the long term health of the economy or the living standard of the people.

    This policy has to be changed.

    Just look at Japan, how much damage of asset bubble damage to its economy after it burst, and Japanese are trapped with “lost decades” of under employment, deflationary prices and a generations (till unknown) trapped in poverty. Baby boomers who once enjoyed the hallucination of super high ever rising property prices now deliberately resort to shoplifting to get arrested for crime of theft so that they van get free food and shelter in prison – THEIR CHILDREN CAN’T SUPPORT THEMSELVES, HOW TO SUPPORT THIS BABY BOOMERS PARENT?

    Read these-

    Elderly people in Japan are getting arrested on purpose because they want to go to prison.

    https://www.businessinsider.sg/japan-aging-prison-2018-3/?r=US&IR=T

    and

    Granny prostitutes reflect South Korea’s problem of elderly poverty

    https://www.channelnewsasia.com/news/asia/granny-prostitutes-reflect-south-korea-s-problem-of-elderly-pove-7562324

    Asset enhancement politics scam is DAMNED FIACKING STUPID ECONOMICS deception of peasants stupidity.

    STUPID SINKIES BETTER WAKE UP NOW!!

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  • oxygen:

    AUSTRALIA IS GOING INTO ELECTION TODAY, property prices have skyrocketed under the Liberal-led coalition in the last 3 years – MY PREDICTION IS THAT THEY ARE GOING TO GET THE FARKING SACK because the young can no longer entry into their first home purchase EVEN WITH PARENTS CHIPPING in to fund their initial deposit for mortgage loan.

    Runaway property prices is the cancer scourge of mismanaged economy.

    IF WE ARE NOT THERE YET, it is getting close very fast of this extinction pathway.

    @ Tan Kin Lian is right of this

    TKL: High property prices is bad for the long term health of the economy or the living standard of the people.

    This policy has to be changed

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  • rukidding:

    P.a.p. Mp will now say this is fake news !!!!

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