Goh Meng Seng's myopic logic...

[Thick Face Black Heart]

Lofty aspirations must be moderated with realistic perspective. PAP has done a "great job" in hoodwinking people into thinking that they can afford high price HDB flats by extending the loan period and reduction of down payment quantum. Yes, you are happy at the moment but look, there are actually a lot of Singaporeans who are forced to sell out at heavy cost when they finally realized that they couldn't afford the mortgage payment at all!

Goh Meng Seng

GMS, you are still mixing up all the issues. The problem is created by HDB with the poor demand/supply control, it has NOTHING to do with the grant! Extending the loan period is also part of the problem - again, the grant is not involved because they can just extend to 30 years no matter whether there is a grant, and it would still appear affordable.

 

[Thick Face Black Heart]

GMS does not understand two points:

(a) Grants did not contribute to the current bubble. Therefore, removing grants will not solve the current bubble.

(b) Elasticity of demand/supply will remain similar with or without the grant. Therefore, 1st time home buyers will actually be hurt if you remove the grant. (Refer to your example quoted below)

I bet no one in this thread has a degree in econs but still make more sense than GMS who has a degree in econs. This is a bit shameful.

let's say
buyers paying $160k
sellers selling $200k
grant for each transaction $40k

so, transacted price = $200k

if you remove grant, the true market value will be between $160k to $200k..
if elasticity of demand and supply are similar, the true market value may be around $180k ie halfway mark.. buyers pay $20k more, sellers receive $20k less

therefore, to help buyers by removing grant, is not logical..

 

[Watchman]

Grants are time and resource wasting red tape .

People who are running your life might have a Econ PHD.

 

[GoldenDragon]

I bet no one in this thread has a degree in econs but still make more sense than GMS who has a degree in econs. This is a bit shameful.

How did he graduate from NUS then? No wonder standards in NUS always dropping.

 

[Dreamer1]

GMS does not understand two points:

(a) Grants did not contribute to the current bubble. Therefore, removing grants will not solve the current bubble.

(b) Elasticity of demand/supply will remain similar with or without the grant. Therefore, 1st time home buyers will actually be hurt if you remove the grant. (Refer to your example quoted below)

I bet no one in this thread has a degree in econs but still make more sense than GMS who has a degree in econs. This is a bit shameful.

GMS CMI lah,if he is smart,he would not talk so much,but then smart is very remote fr Mr GMS.

Whateve,I will support him and his party even he CMI.This is the brutal truth in Sinkapore!

 

[Watchman]

 

[LonewolfAlfa]

if grants pushes the prices up, then the 5% only down payment for hdb loans must also be pushing the prices up.

if u say remove the grants, then u must also remove hdb loans or increase it to 20% downpayment, since the 5%, like grants, entices the buyer thereby pushing them into more debt.

 

[longbow]

If he uses that grants ideas he will be crucified.

Majority of voters at housing estates already own their flats and all want flats to appreciate and want gov to give grant so that they kids can buy flat. Very simple concept. No idea why GMS cannot see that. The neighborhood ah pek can understand that. NOBODY WANTS THEY ASSETS TO DEPRECIATE, especially since most of their cpf is vesting in the flat!

They do not like influx of FT, many of whom are from 3rd world nation and with habits that we are not used to, do not like workers being housed in HDB flats, littering that type of issue.

Agree.

The grant is a starting point to help couples own their first HDB flat. Not that HDB flat is a very big deal - its just a pigeonhole with a 99 year rental paid upfront. But its where many people start.

Property prices tend to keep pace or even exceed inflation, so it is also a form of wealth preservation. Of course the current state of having a bubble is bad but that's due to poor demand/supply control by HDB that has nothing to do with the housing grant.

GMS is looking at the wrong thing with the wrong logic. Degree in economics? My friend at philip securities doesn't have a degree in econs but he's a millionaire remisier and he says GMS removal of grant is 100% pure crap.

 

[ManBearPig62]

GMS, you are still mixing up all the issues. The problem is created by HDB with the poor demand/supply control, it has NOTHING to do with the grant!

He's not mixing up the issues, just that there are many issues. The poor demand/supply control is just one aspect of the problem.

Extending the loan period is also part of the problem - again, the grant is not involved because they can just extend to 30 years no matter whether there is a grant, and it would still appear affordable.

Think about it this way. There are two main criteria banks look at when they approve loans : deposit and servicability. As you mentioned govt can screw with serviceability by just extending loan to 30+ years.

The grant is how they screw with the requirement for a deposit.

If there is no grant today, would some people even be able to get a loan in the first place? In other countries, these guys would drop out of the market and become renters.

It's hard to accept this concept because it has been drilled into us that everyone must own a flat, and there are no renters.

With the old cost-based pricing, grants were GOOD because in those scenarios, grant = discount. What you see is what you get. With the new market-based pricing where prices are affected by supply and demand, the combination of grants + credit availability can distort demand and this can be BAD as it may result in a higher total price.

Grants are a method of creating demand by allowing people who normally would not be able to get a loan, to buy the flat. They also help keep prices high by artificially sustaining demand.

For example, let's say HDB prices increase to 1 million but salaries remain the same. No problem, increase the grant to 100K or 10%, then drag out the loan tenure so the monthly payment is bearable, and ta-da, HDBs are now affordable to all.

Actually, talk so much, all this rubbish came about because of the move to market-based pricing. There can be no lasting solution as long as that's not addressed.

 

[ManBearPig62]

If he uses that grants ideas he will be crucified.

Agreed. I don't think many people will buy into the idea that in a free market grants are bad, because it distorts demand and ultimately may lead to higher prices.

Most people just see, grant = i pay less, good good good.

The main thing to remember is that the HDB market is being manipulated. Supply is controlled, government throws cheap credit to every tom dick and harry etc. As long as that doesn't change, the problem won't be resolved.