The political need to keep prices of HDB flats high

[temasekreview]

Minister for National Development Mr Mah Bow Tan recently confirmed the deep-seated fear of many Singaporeans - that the prices of resale HDB flats have hit a record high and will continue to rise in the near future despite the economic uncertainties ahead.

Mr Mah did not reveal any intention on the part of the government to cool the property market and bring down the prices with a rather unconvincing blanket reassurance that HDB flats will remain “affordable”.

It is actually very easy for the government to reduce the prices. By simply building more new flats in a year, scrapping the astronomically high COVs and limit the number of PRs buying flats in a year, the prices of HDB flats will be brought down immediately to a more affordable and sustainable level.

While a fall in prices will benefit most Singaporeans, it will not serve the political and economic interest of the government which explains their reluctance to take adequate measures swiftly to pre-empt a property bubble from forming.

Read rest of article here:

http://temasekreview.com/?p=13074

 

[Nice-Gook]

I fully agree with this analysis.That HDB prices are deliberately increased to give an illusion that the ONLY asset many owns increases in value.Otherwise the money is better kept in a bank.

The only drawback is it's affordability..In short does one income increases suffciently to buy a resale flat?---it was during GCT time as their policy was to deliberately increase wages than.Now givn the flood of foreigners the wages are artificially suppressed.Therby in time a new entrant cannot afford to buy a resale flat at all..Hence the high value may remain only in papers.Of course one way of getting around this is to increase the repayment terms of the mortgage loan to 50 years or so...which essentially boils down to renting it !

 

[Nice-Gook]

Perhaps there is another political dimension of keeping all new entrants out of HDB resale markets.By keeping HDB as the only supplier to all new entrants--all new buyers by default becomes beholden to HDB.-In short,young couples are targeted.Therefore new voters may not want to upset the PAP regime by gambling their only chance of owning a home.

In future all resale flats are the gambit of foreigners.