Tuesday, April 26, 2011

Aim of public housing policy

Straits Times: Mon, Apr 25
BOTH the People's Action Party and Workers' Party have focused their arguments on prices of HDB flats, but failed to address the most fundamental issue of public housing policy, which is to provide housing to all citizens, regardless of marital or financial status.

The income ceiling requirement was introduced decades ago with good reason - to accord priority when public housing was only in its infancy.

Due to economic growth and changing social trends, many couples now marry later. They then became ineligible to buy new HDB flats because their combined incomes exceed the ceiling. Some have resorted to one spouse stopping work just to become eligible to buy new flats. This is detrimental to Singapore's economy.

As for those who gave up and bought private housing, they are saddled with heavier mortgage burdens and became dependent on dual incomes. This in turn has a negative influence on their family-planning decisions. Many couples cite cost of living and lack of time for putting off or not having more children.

Lifting the income ceiling would inevitably dampen the prices of HDB resale flats. However, the public housing policy's primary responsibility is to provide housing for all. Maintaining asset value is secondary to Singaporeans having homes.

The private housing market has shown that a sharp increase in asset value actually deprives owners of their homes, which are sold en bloc to "unlock" their values.

The main fear of HDB owners is not deflation of asset value, but banks demanding cash payment to compensate for the negative equity. This is where the Government should step in to prevent banks from demanding more than the agreed repayment amount.

Chen Junyi

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