The escalation of HDB prices over the last two decades and especially since the mid-2000s is cause for alarm. High public housing prices affect not only those looking for affordable homes, but also the entire country.$CUT$
First, for those who have already bought their flats, chances are that they have used, or are using, most of their CPF funds to service their housing loans. This means that most Singaporeans will have little or no retirement savings to live on.
The idea of being asset-rich but cash-poor will have grave consequences for Singaporeans who have retired or will retire in the not-too-distant future. Given that the population is ageing quickly, the matter is set to assume crisis proportions.
Second, current owners of HDB flats will be in financial danger if the housing market falters and prices take a steep and severe correction. It is irrational to think that current prices will increase indefinitely, or even maintained at current levels.
Third, expensive HDB flats price out the younger generation looking to start homes of their own.
Fourth, private property owners will be affected too if and when the housing market collapses. Their equity, like HDB homeowners, will be severely hit. Prices for private property cannot be sustained if HDB prices fall.
Fifth, in a housing-market collapse, the entire economy will be hit. Just ask the Japanese and Americans: In the 1980s, Japan’s real estate was climbing seemingly without end. At one point, Tokyo itself was valued more than the entire state of California.
More recently, Americans were buying property like that was no tomorrow, even taking out mortgages on their first home to buy a second one. No one believed that prices could or would come down.
Then the unthinkable happened. When the housing bubble burst, it took with it the entire economy. Japan never recovered from the collapse. The US, four years after the meltdown in 2008, is still having an unemployment rate at 8 percent with no end in sight.
Singaporeans need to watch the housing price development in Singapore very carefully. The SDP will launch our housing policy paper to address this dangerous situation. It is a matter that concerns all Singaporeans.
Join us on Sunday and tell everyone about the event.
Launch: Housing A Nation: Holistic Policies For Affordable Homes
Date: 4 Nov 2012, Sunday
Venue: Diamond Room, Quality Hotel