The coming S$270 billion bailout

The following is an excerpt from Yawning Bread

Alex Au/

Public housing in Singapore is also governed by its own kind of “COE”, though we call them title deeds. They have a life of 99 years. The oldest flats, built in the 1960s, are now approaching 50 years in age.

However, Singaporeans have totally different expectations about value. We expect it to go up as the termination of the lease approaches. Cabinet minister Lim Swee Say assured Singaporeans that this is in fact government policy as well, in a Chinese-language debate with other political parties televised on 3 April 2011. Using a translation provided by Donaldson Tan of the NewAsiaRepublic website, this is what he said:

The PAP’s view and approach on housing policy consist of 3 points. The first point is that home ownership is the cornerstone of the housing policy.

The second point is there must be gradual appreciation in property prices. Why is this important for HDB price to appreciate gradually over time? Consider the hypothetical situation of a Singaporean who bought a HDB flat for $200,000. In 20 years time, would he benefit if the selling price is less than the price he bought today? If the Opposition thinks depreciation of HDB price is good, it can use this point as a platform to fight for more votes.

— Lim Swee Say, as translated by Donaldson Tan. Source link.

It is inconceivable for this government to allow the values of public (“HDB”) flats to decline, when through law people are forced to set aside a big part of their incomes in the Central Provident Fund (CPF) and then encouraged to commit a huge part of their existing and future CPF savings to pay for a flat. The flat effectively becomes the primary form of saving for retirement. Yet, the asset is a declining lease.

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