GMS on his housin policy vs SDP

[aurvandil]

If you think about it, the current PAP system is the one which is truly encouraging Singaporeans to live beyond their means. To buy a HDB from the PAP, young couples have to take up dual income 30 year mortgages. If that is not living beyond your means, what is?

As I said before, good policy should have dedicated policy instruments for dedicated goals. If you are concerned with investments and savings for old age, you should be looking at dedicated instruments for doing this (e.g. reforming the CPF system). You should not be mixing it up with public housing whose primary goal should be to provide a roof over everyone's head as cheaply and efficiently as possible.

Your statement reflects exactly what I fear about a rental flat system.

 

[Goh Meng Seng]

If the govt mismanage the economy, vote them out. That's what a democratic system is all about. You cannot lump everything up and be worry about everything, anything. What we need, really, is to have proper empowerment to our citizens. Empower them with the right attitude and knowledge on financial investment, not speculation.

The worst kind of inflation is actually property. It has been shown that property and stock market have extraordinary inflationary power more than anything else. Commodity or food prices will go according or along pricing mechanism on energy, labour and such. But property and stock market can be "irrational" because it only depends on liquidity of money... or availability of cash, either from the economy itself or foreign inflow of capitals. This is one of the major reasons why property prices are rising faster than income growth in Singapore, due to excess liquidity coming from foreign sources. The key is to keep affordability for the mass, especially the lower income group while not preventing them from capital gains if necessary. But the speculation factor must be kept under control. It is not an easy task but involve public education.

Goh Meng Seng

Sometimes inflation adjusted instruments are better than absolute returns from investment products. Would you be thrilled to know your stocks have appreciated 5% when inflation is at 7%? If the government mismanages the economy, as the PAP government had by allowing inflation to skyrocket through untamed property market, then they should be made to cough out the difference, preferably in their term in office. Inflation adjustment might do the trick.

 

[Kinana]

Never take a person who claims he has encounter with aliens seriously.

Millions all over the world have encountered UFOs. Its very common nowadays you dummy.
BTW they are not aliens.

 

[mojito]

If you think about it, the current PAP system is the one which is truly encouraging Singaporeans to live beyond their means. To buy a HDB from the PAP, young couples have to take up dual income 30 year mortgages. If that is not living beyond your means, what is?

Hear hear.

As I said before, good policy should have dedicated policy instruments for dedicated goals. If you are concerned with investments and savings for old age, you should be looking at dedicated instruments for doing this (e.g. reforming the CPF system). You should not be mixing it up with public housing whose primary goal should be to provide a roof over everyone's head as cheaply and efficiently as possible.

That is true as well. However I spoke about retirement savings in this context - GMS suggested that rental flat owners would have higher discretionary spending power if they were not forced to purchase housing. I argue that renters will always have to pay for rent until such time they purchase private housing.

Not everyone is financially prudent to do so. Some people may never own private property because of their own nature or circumstances made it impossible to do so (eg. a typical condo in Singapore costs ahead of 800k, way beyond the means of ordinary people).

For a person or family to pay rental through retirement may be a difficult burden. The government can take advanced measures to prevent that by allowing renters to prepay their homes, thus putting little to no strain on existing retirement balance.

That is why I asked GMS whether HKers have some sort of mandatory public pension scheme in place. Otherwise old people could be evicted from their rental units on the basis that they cannot continue to pay rent.

Finally like all things, we need to examine the policy costs for implementing the rental flat program (as opposed to current model or SDP's "prepaid flat" model) and its wider impact on the housing market. [Now I sound like the PAP]

 

[Fook Seng]

I always have my reservation regarding some extreme socialist concepts in an environment where there is also at the same time, private enterprise for you to contend with. Such socialist concepts can only exist in an environment where there is little or no private enterprise.

The simple solution is to maintain some amount of open market environment for public housing but with ownership restrictions, transaction restrictions, borrowing restrictions or CPF restrictions to compensate for the "low land cost" to allow for some appreciation, calibrated to move at the same pace as salary and at the same time make sense for others to continue buying private properties.

I don't think there should be more than one kind of low cost housing sales scheme. It will just complicate the situation. In my opinion, a pure rental scheme, a low cost public sales scheme and a profit-free (for the govt) executive apartment scheme (similar to EC with transaction restrictions e.g.to citizens only?) to bridge the wide pricing gap between low cost public and private housing are all that we need.

As I have expressed elsewhere, any major policy changes such as these must be carried out in phases over several years, taking into account past policies to avoid creating innocent victims to the change.

 

[Goh Meng Seng]

It is NOT a difficult burden when you are paying cheap rental for the rest of your whole life. In fact, it will give you sufficient funds to save or invest for your retirement. That is why I say the key is actually empowerment of the people via financial education on investment, instead of speculation.

Imagine, if the rental is just $100 per month, amounting to $1200 per year, would that be difficult burden? If the construction of the flat is only $70K, with 99 years rental, the government may just lose some interests on the funding it puts up for construction project. Even with $150 or $200 rental, it is still considered as cheap and less of the burden. Cost recovery for the construction can be made.

I really cannot understand why people are so against rental system.

Goh Meng Seng

Hear hear.



That is true as well. However I spoke about retirement savings in this context - GMS suggested that rental flat owners would have higher discretionary spending power if they were not forced to purchase housing. I argue that renters will always have to pay for rent until such time they purchase private housing.

Not everyone is financially prudent to do so. Some people may never own private property because of their own nature or circumstances made it impossible to do so (eg. a typical condo in Singapore costs ahead of 800k, way beyond the means of ordinary people).

For a person or family to pay rental through retirement may be a difficult burden. The government can take advanced measures to prevent that by allowing renters to prepay their homes, thus putting little to no strain on existing retirement balance.

That is why I asked GMS whether HKers have some sort of mandatory public pension scheme in place. Otherwise old people could be evicted from their rental units on the basis that they cannot continue to pay rent.

Finally like all things, we need to examine the policy costs for implementing the rental flat program (as opposed to current model or SDP's "prepaid flat" model) and its wider impact on the housing market. [Now I sound like the PAP]

 

[Glaringly]

Imagine, if the rental is just $100 per month, amounting to $1200 per year, would that be difficult burden? If the construction of the flat is only $70K, with 99 years rental, the government may just lose some interests on the funding it puts up for construction project. Even with $150 or $200 rental, it is still considered as cheap and less of the burden. Cost recovery for the construction can be made.

Is the monthly rental an average of the total life span of the flat over it's construction cost of that particular project or a national moving average that are subjected to annual changes?

 

[Goh Meng Seng]

Even at $100 per month, for the whole lease of 99 years, you will get back $118,800. Present value of construction cost would be taken into consideration.

One would expect rental to be adjusted periodically but it may not necessarily to be so. But there are ways to adjust rental according to interest costing to the government.

There are so many ways to have low rental without causing great losses to the government in the long run without pushing the whole costing to the tenants in terms of pre-paid rental scheme. What SDP has suggested was to have pre-paid rental scheme disguised as "home ownership" that have stringent restrictions that make such ownership meaningless.


Goh Meng Seng

Is the monthly rental an average of the total life span of the flat over it's construction cost of that particular project or a national moving average that are subjected to annual changes?

 

[mojito]

It is NOT a difficult burden when you are paying cheap rental for the rest of your whole life. In fact, it will give you sufficient funds to save or invest for your retirement. That is why I say the key is actually empowerment of the people via financial education on investment, instead of speculation.

$100 a month rental is akin to vote buying. It will not even be enough to pay for construction. Ultimately your wealthy neighbours are subsidizing you to live in your hovel. The SDP's plan is quite balanced. A balanced policy is crucial to getting buy-in from people on both sides of the camp.

 

[mojito]

The simple solution is to maintain some amount of open market environment for public housing but with ownership restrictions, transaction restrictions, borrowing restrictions or CPF restrictions to compensate for the "low land cost" to allow for some appreciation, calibrated to move at the same pace as salary and at the same time make sense for others to continue buying private properties.

I don't think there should be more than one kind of low cost housing sales scheme. It will just complicate the situation. In my opinion, a pure rental scheme, a low cost public sales scheme and a profit-free (for the govt) executive appointment scheme (similar to EC with transaction restrictions e.g.to citizens only?) to bridge the wide pricing gap between low cost public and private housing are all that we need.

If I read their motivations correctly, the SDP wishes to eventually implement NOM for all future public housing projects, if not convert all existing public housing to NOM. The key is to get buy-in at this stage before rolling out a full scale conversion to reverse the destructive price appreciation of public housing. We should not allow the PAP to continue robbing the people of their retirement savings by crediting it into the blackhole known as national reserves.

 

[Goh Meng Seng]

Not true at all. As I have shown, by 99 years lease, most likely the government will collect back its construction cost. If there is adjustment of rental along the years to mirror interest cost, the government won't be losing money at all.

The "wealthy neighbours" are just helping you to come up with the initial construction cost as through contribution of taxes for the government to build them. Not really subsidizing anyone, you know.

Goh Meng Seng

$100 a month rental is akin to vote buying. It will not even be enough to pay for construction. Ultimately your wealthy neighbours are subsidizing you to live in your hovel. The SDP's plan is quite balanced. A balanced policy is crucial to getting buy-in from people on both sides of the camp.

 

[mojito]

Not true at all. As I have shown, by 99 years lease, most likely the government will collect back its construction cost. If there is adjustment of rental along the years to mirror interest cost, the government won't be losing money at all.

The "wealthy neighbours" are just helping you to come up with the initial construction cost as through contribution of taxes for the government to build them. Not really subsidizing anyone, you know.

Goh Meng Seng

What about occupancy? How confident are you that demand will always exceed supply?

 

[Goh Meng Seng]

You already cry out loud that it is so cheap... why are you afraid of occupancy?

Goh Meng Seng

What about occupancy? How confident are you that demand will always exceed supply?

 

[Glaringly]

Even at $100 per month, for the whole lease of 99 years, you will get back $118,800. Present value of construction cost would be taken into consideration.

One would expect rental to be adjusted periodically but it may not necessarily to be so. But there are ways to adjust rental according to interest costing to the government.

There are so many ways to have low rental without causing great losses to the government in the long run without pushing the whole costing to the tenants in terms of pre-paid rental scheme. What SDP has suggested was to have pre-paid rental scheme disguised as "home ownership" that have stringent restrictions that make such ownership meaningless.


Goh Meng Seng

Current system is also no "home ownership", no difference. If we take away this argument. What the HK system differ with SDP is the upfront loan and interest payment vis inflationary factor in the HK system. Debatable and not outright advantage.

 

[RamNew]

Millions all over the world have encountered UFOs. Its very common nowadays you dummy.
BTW they are not aliens.

Many Thanks Brother.

 

[Goh Meng Seng]

I disagree but can live with it.

Goh Meng Seng

Current system is also no "home ownership", no difference. If we take away this argument. What the HK system differ with SDP is the upfront loan and interest payment vis inflationary factor in the HK system. Debatable and not outright advantage.

 

[mojito]

You already cry out loud that it is so cheap... why are you afraid of occupancy?

Goh Meng Seng

Eventually the more well-to-do want capital appreciation which can only come about through private ownership. You are certainly not seeing the big picture.

 

[mojito]

Current system is also no "home ownership", no difference. If we take away this argument. What the HK system differ with SDP is the upfront loan and interest payment vis inflationary factor in the HK system. Debatable and not outright advantage.

Current HDB flat owners have two major economic rights:
1) right to sublease, at the approval of HDB
2) right to profits from sale at above purchase

Renters, especially those in HK, I believe they do not have such rights.

 

[Goh Meng Seng]

You still don't get it. What SDP has proposed, has neither of it and it is the worst of both worlds... you pay in advanced to "buy" something that you don't really owned!

Goh Meng Seng

Current HDB flat owners have two major economic rights:
1) right to sublease, at the approval of HDB
2) right to profits from sale at above purchase

Renters, especially those in HK, I believe they do not have such rights.

 

[Goh Meng Seng]

Capital appreciation is meaningless unless you can benefits from it.

I still maintain, a Home should NOT be investment tool.

Goh Meng Seng

Eventually the more well-to-do want capital appreciation which can only come about through private ownership. You are certainly not seeing the big picture.