Daily Lessons from Life 11 March 2014 - COV figures no longer part of negotiating process for HDB resale transactions

MH370 Updates: STILL NO news on locating the airplane. So, STILL clinging to HOPE that a miracle had happened and that the plane and the passengers and crew are safe somewhere somehow!

"COV figures no longer part of negotiating process for HDB resale transactions - AsiaOne Monday, Mar 10, 2014

SINGAPORE - To reduce the focus of cash-over-valuation (COV) in negotiation, buyers and sellers will now have to agree upon a price first before getting an official valuation. The change took effect from 5pm on Monday."

It is hard to comment about the boring routine things like HDB resales price in the middle of an unsolved mysterious disappearance of MH370 with 200+ people on board.

Yet, life must go on. So, here I am commenting on this latest policy by the government to 'curb' or 'slow' or 'push back' the price of HDB resales flats.

Lessons for me are:

1. what is the purpose of HDB flats? To provide a roof over young Singaporean couples starting a 3-kid family without too much financial stress or for ordinary Singaporeans who can only afford HDB flat without toiling their whole life just to pay for a 99-year leased property! IF this is the purpose, the government would not have created this monster that refused to go away or listen to the creator!;

2. HDB flats bought in the early days have appreciate in prices by at year 5x to 10x. Many of the owners are older Singaporeans and some 'smart opportunistic PRs' who bought resales HDB and see their values go up by 40-50%. Not bad though not 5x to 10x like those original HDB flat owners who hang on to their properties! The PROBLEM or CHALLENGE now is for the latest resales HDB flat price to fall 10-20% will mean a lot of those 'opportunists' or the 'genuine innocent I-got-sucked-in' owners crying bloody murder! If HDB wanted to please EVERYONE, it will be a definite futile cause!;

3. NOW that the NEW HDB flat prices are DECOUPLED from the resales HDB prices, the challenge of providing for the NEW HDB owners are partially resolved. That leaves the many EXISTING HDB flat owners who are BANGING on the 'windfall' for their retirement or 'upgrade' to the life-long aspiration of owning a 99-year leased private property in a lure or tangle. Even if the resales HDB prices dropped by 50%, the early owners are STILL up by 5x -10x minus 50% from the top prices. Still not bad. Still UP on the money. However, for those bought at RECENT highs, even a 20% drop will probably KILL them, not literally. BUT then again, WHY should they be protected? Why should the government care? or should government care if they are the majority and can swing a decent amount of votes? When consideration enters this stage, when it is a political consideration, things will NOT be resolved on rationality. The most appropriate solution WILL NOT be found. Compromise will be needed.

Maybe it is time to crunch the BIG DATA machine to calculate and analyse how many are voters, how many will be adversely impacted vs. how many will benefits? When the number that benefit FAR OUTSTRIPPED the number that get impacted negative, go with THAT CHOICE. If not, go the other way. How easy it is to decide! What is mess we get ourselves into...