Daily Lessons from Life 19 August 2013 - More housing grants for middle-income

"Singapolitics Sunday, Aug 18, 2013 Middle-income families looking to buy a four-room flat for the first time will be eligible for a housing grant that was previously eligible only for buying two-room or three-room flats, said Prime Minister Lee Hsien Loong on Sunday. Announcing the extension of the Special Housing Grant (SHG), Mr Lee reiterated in his National Day Rally that the Government was committed to making HDB flats more affordable, especially for the less well-off. The SHG started out in 2011 as a special subsidy for households earning $1,500 or less, but the income ceiling was raised. Even then, buyers were limited to two-room or three-room flats. With the extension, these first-time buyers can now opt for a four-room flat, and still qualify for up to $20,000 more in subsidies. "I will make sure that every Singaporean family who is working can afford an HDB flat," said Mr Lee. But he outlined competing concerns that emerged from the Our Singapore Conversation. Though many wanted to make sure their children had affordable housing, they wanted the own properties to appreciate in value as well. To this end, PM Lee said the Government would keep built-to-order (BTO) flat prices stable, while increasing support for lower and middle-income families, he added. Mr Lee also acknowledged that maintaining equity had become harder as Singapore's income gap widens, and said the Government had to intervene more to keep "ours a fair and a just society". In the past two years, the Housing Board had built record number of flats to clear first-timer backlog, de-linked new flat prices from the resale flat prices to stabilise built-to-order flat prices, and raised income ceilings to relieve the "sandwich class" among other measures. He promised that the Government would continue to monitor housing affordability closely, saying that housing "has been and will continue to be an important way to share the fruits of our progress with all Singaporeans, and to level up the poor". But Mr Lee asked that Singaporeans treat their HDB flats as a "home where we sink roots, where we raise families and build ties, friendships, emotional ties with fellow Singaporeans", and not see it as just a roof over their heads or a valuable nest egg." The other KEY issues the government is trying to RESOLVE and I am not sure it is getting it right too! Lessons for me are: 1. the MOST significant action by HDB and MND and the government in the last 18-month is DELINKED the NEW HDB flat prices FROM the HDB Resales Prices. Bar NONE! YET, the 'strategy of "housing has been and will continue to be an important way to share the fruits of our progress with all Singaporeans, and to level up the poor"' is CONTRADICTORY to delinking the new HDB flat prices from the HDB flat Resales prices. It is a DANGEROUS line to take as it is UNSUSTAINABLE given that the NORMAL property market goes through the cycle of UPs and DOWNs, UNLESS the government is guaranteeing such price appreciation. It will be the END of us if it is taken to that extreme. It is financially unsustainable! 2. the so-called dilemma of 'existing HDB flat owners wanting high and appreciating prices' vs. 'new potential HDB flat buyers wanting 'affordable' prices' CAN be SOLVED IF the 'existing HDB Flat owners who owned the flats about 20-30 years ago is WILLING to forgo the 3-5x capital gain and take a 1-2x capital gain for their grown up children who want to start a 3-kids family sake! As for those WHO BOUGHT resales HDB flats at a recent MARKET Prices, TOO BAD, when younger Singaporeans have NO way to own a first time affordable HDB flats, there will be NO market to talk about!! Notes: this means the HDB resales market may need to be closed to PR too unless their convert to Singapore citizenship immediately, assuming they are 'qualified and real FTs'! Of course, data analytic may be called in to analyse, HOW many % of which type of HDB flat owners form a BIGGER portion of VOTERS in GE2016 if we want to measure 'payback'! LOL!!; 3. as we debate the NEW shift of Nation Building, it is so critical that we get CLEAR FUNDAMENTAL VALUES. e.g. for MOST Singaporeans, a HDB flat is JUST a place to live in and raise the 3-kid family, it is NOT an investment. Even if the resale prices are very high, can they find another place to buy that is NOT similarly or even higher prices? Unless you are looking at down-grading or renting for a period of 5-10 years with the capital gain hoping for the DOWN cycle to come/hit? Since SO MUCH has been MADE of the HDB flat as an appreciating asset, HOW can it POSSIBLY help Singaporeans NOT to think of it as SUCH? In the last para of the quoted PM's intention WILL NOT be realised seriously. That is the confusing part for me on the 2013 NDR Speech on Housing.