We refer to the interview of Minister Mah Bow Tan entitled “Mah Bow Tan on the frontline talking about HDB prices, COV and Elections” published in Lianhe Zaobao on 8th May 2010. On behalf of National Solidarity Party, I would like to make the following response:
We wish to remind Minister Mah Bow Tan that the success of HDB House Ownership scheme is built upon the sacrifices of our forefathers. Without the Land Acquisition Act which empowers and allows the ruling party to acquire almost 80% of land from our forefathers, Singapore would not be able to develop so rapidly and HDB would not be able to execute the House Ownership smoothly.
This is one of the most important land reforms since independence. We could only examine the role of HDB and the pricing mechanism for new HDB flats properly under this context. In its first 20 years, HDB has fulfilled its role under this land reform plan, i.e. utilize the acquired land to build HDB flats and sell them at cheap prices or even under cost to the people, in doing so, redistribute land to the people. This is the fundamental role of HDB. Most people who had their land forcefully acquired did not protest because they knew that they were making sacrifices for the people and the Nation. This is the social contract between the people and the ruling party. The HDB flats has only a 99-year lease and it provides stability to the whole system. It ensures future generations of Singaporeans will have a roof over their heads throughout their life span. This is the basic concept of land reform, distribution and public housing policy.
But now Minister Mah says, “The government cannot sell the new HDB flats at cost because this would mean that flat owners will not be able to sell it at market prices in future.” We do not understand on what basis does Minister Mah make such an assertion. Prior to 1990s, our father’s generation bought their HDB flats at cost or even under cost and now they can still sell their flats in the resale market at market prices. Isn’t this PAP’s policy? The government selling new HDB flats to Singaporeans at cost price has absolutely nothing to do with whether Singaporeans could sell off their flats in the open resale market or not.
Minister Mah also says, “The House Ownership Scheme is most beneficial to Singapore because it could ultimately allow house owners to sell their flats for a profit and use it for retirement. Selling flats at cost price would not achieve such aim.”
First of all, a HOME is not an “investment”. People only use properties as investment when they do not use it as a HOME. It is only when people have their second house then they could consider it as a “tool” for investment!
Secondly, if Singaporeans do not need to suffer from high HDB prices and use their CPF to pay for a 30-year mortgage, they will not need to “sell flats for retirement”! Minister Mah is simply putting the cart before the horse.
Thirdly, we can hardly imagine any first world country or world-class government asking their people to “sell house for retirement”!
Fourthly, can Minister Mah guarantee that each and every generation of Singaporeans can sell their flats at good prices when they retire? Can such scheme work in a rapidly aging society? From the economic perspective, it is totally unsound. In a rapidly aging society, there will be more elderly people than youngsters for the next 20 to 30 years, meaning more sellers of HDB flats than buyers! How can prices be good in such a market situation?
The root of the problem lies with the fact that prices of new HDB flats have outstripped income growth for the past 30 years. Our last generation paid only a 10 or 15-year mortgage for their HDB flats but now, our present and future generations will have to pay a 30-year mortgage for their new HDB flats! If they are married at 30 years old, they can only finish paying up their mortgage by 60 years old. By then, there will be little money left in their CPF. This is why they need to “sell flats for retirement”!
We call upon Minister Mah and PAP to take their responsibilities as embedded in the social contract of land reform seriously and fulfill them, instead of trying to shrug it off by using all sorts of flawed reasoning and excuses. We do not expect the ruling party to meddle with the resale market but we hope that HDB could resume its original role by publishing the cost of all new HDB flats and selling them at cost price to first time Singaporean buyers.
Goh Meng Seng
Secretary General
National Solidarity Party
We wish to remind Minister Mah Bow Tan that the success of HDB House Ownership scheme is built upon the sacrifices of our forefathers. Without the Land Acquisition Act which empowers and allows the ruling party to acquire almost 80% of land from our forefathers, Singapore would not be able to develop so rapidly and HDB would not be able to execute the House Ownership smoothly.
This is one of the most important land reforms since independence. We could only examine the role of HDB and the pricing mechanism for new HDB flats properly under this context. In its first 20 years, HDB has fulfilled its role under this land reform plan, i.e. utilize the acquired land to build HDB flats and sell them at cheap prices or even under cost to the people, in doing so, redistribute land to the people. This is the fundamental role of HDB. Most people who had their land forcefully acquired did not protest because they knew that they were making sacrifices for the people and the Nation. This is the social contract between the people and the ruling party. The HDB flats has only a 99-year lease and it provides stability to the whole system. It ensures future generations of Singaporeans will have a roof over their heads throughout their life span. This is the basic concept of land reform, distribution and public housing policy.
But now Minister Mah says, “The government cannot sell the new HDB flats at cost because this would mean that flat owners will not be able to sell it at market prices in future.” We do not understand on what basis does Minister Mah make such an assertion. Prior to 1990s, our father’s generation bought their HDB flats at cost or even under cost and now they can still sell their flats in the resale market at market prices. Isn’t this PAP’s policy? The government selling new HDB flats to Singaporeans at cost price has absolutely nothing to do with whether Singaporeans could sell off their flats in the open resale market or not.
Minister Mah also says, “The House Ownership Scheme is most beneficial to Singapore because it could ultimately allow house owners to sell their flats for a profit and use it for retirement. Selling flats at cost price would not achieve such aim.”
First of all, a HOME is not an “investment”. People only use properties as investment when they do not use it as a HOME. It is only when people have their second house then they could consider it as a “tool” for investment!
Secondly, if Singaporeans do not need to suffer from high HDB prices and use their CPF to pay for a 30-year mortgage, they will not need to “sell flats for retirement”! Minister Mah is simply putting the cart before the horse.
Thirdly, we can hardly imagine any first world country or world-class government asking their people to “sell house for retirement”!
Fourthly, can Minister Mah guarantee that each and every generation of Singaporeans can sell their flats at good prices when they retire? Can such scheme work in a rapidly aging society? From the economic perspective, it is totally unsound. In a rapidly aging society, there will be more elderly people than youngsters for the next 20 to 30 years, meaning more sellers of HDB flats than buyers! How can prices be good in such a market situation?
The root of the problem lies with the fact that prices of new HDB flats have outstripped income growth for the past 30 years. Our last generation paid only a 10 or 15-year mortgage for their HDB flats but now, our present and future generations will have to pay a 30-year mortgage for their new HDB flats! If they are married at 30 years old, they can only finish paying up their mortgage by 60 years old. By then, there will be little money left in their CPF. This is why they need to “sell flats for retirement”!
We call upon Minister Mah and PAP to take their responsibilities as embedded in the social contract of land reform seriously and fulfill them, instead of trying to shrug it off by using all sorts of flawed reasoning and excuses. We do not expect the ruling party to meddle with the resale market but we hope that HDB could resume its original role by publishing the cost of all new HDB flats and selling them at cost price to first time Singaporean buyers.
Goh Meng Seng
Secretary General
National Solidarity Party
