http://www.moneysmart.sg/money-talks/hdb-loses-1-billion-a-year-and-why-you-shouldnt-care/
Been seeing this article doing the rounds on cyberspace and needed to debunk it.
This blogger argues that HDB makes a loss because it buys land from SLA at market rates and it does not matter since it is from one government account to another.
The alternative to buying land from SLA at market rates is NOT buying land at market rates. Some have even argued that land costs should not be included in HDB prices.
This is fine if we are starting to build HDB flats all from new.
The challenge is that there are many existing HDB flat owners, especially from the baby-boomer generation who have benefited tremendously from their HDBs increasing in price. This asset price includes land price which has become increasing valuable as Singapore developed.
If we take away land costs or if HDB buys HDB flats at a discounted rate from SLA, the new HDB flats will cost a lot cheaper than existing HDB flats, whose prices include land cost.
This will also cost existing HDB flat prices to deflate leaving current HDB owners with massively devalued property.
Young people are understandably upset that HDB prices are spiralling upwards.
But those who clamour for massive deflation of HDB prices selfishly forget that this will be at the expense of the older generation who already own HDBs and whose savings and nest eggs are locked in their property, which can be unlocked when needed.
The government needs to balance the needs of people who have yet to buy homes who need them to be affordable, and those who already own homes who do not want to see their assets deflate in value.
People who argue that it shouldn't matter that HDB loses 1 billion a year are extremely short sighted.
If HDB has to lose so much money buying land at market rates to build affordable homes , it means that it is increasingly difficult to balance the needs of the young generation with the older generation.
We shouldn't care? On the contrary - we should be extremely concerned.
Been seeing this article doing the rounds on cyberspace and needed to debunk it.
This blogger argues that HDB makes a loss because it buys land from SLA at market rates and it does not matter since it is from one government account to another.
The alternative to buying land from SLA at market rates is NOT buying land at market rates. Some have even argued that land costs should not be included in HDB prices.
This is fine if we are starting to build HDB flats all from new.
The challenge is that there are many existing HDB flat owners, especially from the baby-boomer generation who have benefited tremendously from their HDBs increasing in price. This asset price includes land price which has become increasing valuable as Singapore developed.
If we take away land costs or if HDB buys HDB flats at a discounted rate from SLA, the new HDB flats will cost a lot cheaper than existing HDB flats, whose prices include land cost.
This will also cost existing HDB flat prices to deflate leaving current HDB owners with massively devalued property.
Young people are understandably upset that HDB prices are spiralling upwards.
But those who clamour for massive deflation of HDB prices selfishly forget that this will be at the expense of the older generation who already own HDBs and whose savings and nest eggs are locked in their property, which can be unlocked when needed.
The government needs to balance the needs of people who have yet to buy homes who need them to be affordable, and those who already own homes who do not want to see their assets deflate in value.
People who argue that it shouldn't matter that HDB loses 1 billion a year are extremely short sighted.
If HDB has to lose so much money buying land at market rates to build affordable homes , it means that it is increasingly difficult to balance the needs of the young generation with the older generation.
We shouldn't care? On the contrary - we should be extremely concerned.
You clearly missed the point of that article. Khaw Boon Wan tried to make HDB out to be the victim. Which obviously isn't true because HDB didn't really "lose" any money. Whatever HDB lost was exactly gained by another government department (SLA). It's like saying I lost money because I transferred money to my spouse. It is a dishonest and emotive attempt to play the victim. That article you cited aptly points it out.
ReplyDeleteThat bit you said about deflating current owners' asset is irrelevant. Those are your own speculations about policy outcomes.
What remains true is that the billion dollar loss in HDB is a hat-trick on paper that is essentially meaningless.
You are right. The PAP government has allowed the problem to fester for so long that any action now will surely negatively impact a lot of people.
ReplyDeleteThe PAP government must tread carefully. They must balance the needs of the younger generation without rocking the boat too severely for those who are already on board.
It was not a 'problem' to begin with. The aim for initial generations was for HDB prices to appreciate, together with land price, as Singapore developed as a country. This objective was achieved.
DeleteThe problem is what was good for the first generation is now bad for the next. But we see this in most developed cities. Older generations in London, NYC own what is not prime city-centre property which they refuse to sell unless at exorbitant prices. Younger people are pushed out to the suburbs.
I completely agree. Timing is everything in investment. I currently have 5 private properties (sold two last year), acquired between 2000-2009. Together they are generating very good passive income for me. I don't even have to work anymore as my pay was peanuts compared to my rental incomes.
DeleteI agree the younger lot has missed the property boat. But again, timing is everything and there is no rolling back the clock! It may be harsh but that's just the hard reality of investment. I took a big risk in my investments and although it is paying out now, it could also have gone south. Those who were risk averse have only themselves to blame.
I have written many times to Mr Khaw Boon Wan warning that many people will be sunk into negative equity and even bankruptcy if the property market deflates too rapidly. He has replied and he too has voiced that I'm not alone with this concern. I'm satisfied that he is control of the situation.
Good post Calvin.
PLease do not put words in people's mouth. Did the people ask for appreciation of HDB flats? Or did the bright idea come from Goh Chok Tong?
Delete@ Anon at 2311. So you don't want your HDB flats to appreciate in value? Didn't know there are people out there who buys assets and hopes they depreciate in value. Amazing
DeleteYah, we all hope that our assets appreciate sky high. So the PAP acceded to our request. Amazing
Deleteanything which is leasehold IS a depreciating asset. wake up mr nmp.
DeleteGreat theory. So anybody selling HDB for a profit did a con-job on someone? 99 yrs is 2 generations. It's enough to still sell the asset for a gain.
Deletewhat happens after the 2nd generation when the lease is up then? what happens to the $700k or $800k the 2nd generation paid when the lease is up then?? can they get this sum of money back then? please advice.
DeleteI really doubt any HDB apartment will last its full 99 years. What is more likely to happen is the government buying the old apartment en bloc and allowing all the occupants to purchase a new HDB nearby at a preferred rate. This is what HDB has been doing with old HDB flats too old to upgrade.
Deletei am not asking if the flat will last its full 99yrs or what will the govt do.
Deletewe are arguing whether a 99yr leasehold is a depreciating asset or not. which in your opinion is a not a depreciating asset.
how abt a litmus test: go look for a 59yr remaining leasehold ppty and ask for a 80% loan, telling the bank that your ppty will appreciate and is an appreciating asset.. see wat the bank say..
even if the govt takes it back and allow the owner to buy an alternative nearly, the fundamental qn atill applies: can the owner take back his 700 or 800k?? you havent answered the qn..
futhermore, such actions raises another issue called transfer pricing. how do you factor this in? or is it another pluck-a-number-out-from-the-air exercise by hdb??
your answer only tells me the owner who paid 700k or 800k will have to PAY MORE to transfer to another hdb flat.. it doesnt address how is the person going to get back his 700k or 800k and the additional $$ he has to pay.
DeleteThe question is whether in reality people have sold their HDBs for huge profits including 30 year old apartments which are 'depreciating assets'.
DeleteNIce theories you are putting forth. Question is in reality yes, people have cashed out. Yes, they have taken even a million dollars and up in cash - the complaints about re-sale prices of a million dollars for a HDB flat means someone has sold it for a million dollars.
Please leave your theories in the classroom. If , if , if....
Please go talk to a real person who really sold his flat for 700k and whether he paid more to transfer to another HDB flat. Most of them will tell you a) either he moved to a smaller flat for retirement which costs much less especially studios or b) he CHOSE to upgrade to a condo with profits
DeleteAnon@ 06:38. No - You missed the point. Current HDB prices (existing HDB flats not new flats) include land cost. This cost is imputed in the price of re-sale HDBs which have enriched many Singaporeans. When HDB buys land from SLA it HAS to buy it at market price, since land market price is already imputed in existing HDB prices. If it does not, HDB prices will collapse.
ReplyDeleteTherefore HDB runs at a real loss. There is no way that SLA can or should sell land to HDB at anything less than market price. It doesn't matter if SLA 'gains' the money since it will 'gain' the money even if the buyer of land were a private developer. But the private developer does not have to build things at a loss. HDB does. Therefore the HDB loss is a real one.
What I said about deflating asset prices is not speculation. There is no IF in this. If you halve the prices of new HDB prices, old HDB prices will also spiral downwards.
First we need to accept that HDB should buy from SLA at market price. Say this is 2 billion dollars. HDB buys from SLA at 2 billion but HDB manages to only sell flats at 1 billion, it loses 1 billion. SLA collects 1 billion, HDB loses 1 billion. Government loses 1 billion in total. If SLA sells same land to private developer, SLA makes 2 billion. It doesn't care if private developer makes or loses. Therefore, government makes 2 billion. The loss to HDB and the government is a real one
DeleteSLA sells the land for $2b. HDB sells the flats for $1b. So G made $3b
Delete"SLA collects 1 billion, HDB loses 1 billion. Government loses 1 billion in total."
DeleteSLA collected 2 billion from HDB, HDB collected 1 billion from citizens. Nett, government collected 1 billion from citizen.
Govt did not lose 1 billion. Instead Govt lose out collecting 1 billion more from citizens.
Agreed. Although in my opinion HDB and SLA should just publish the actual figures so that the loss/profit numbers seem more real. It won't do much harm and won't change anything.
DeleteWe should also explore the alternative which is for HDB to join the land bidding with private developers. That will ensure that HDB land is acquired with real market prices.
Further, I would raise the question of who is paying for HDB's loss? Taxpayers, all of us, that's who. Even folks like myself who has never and will never benefit from HDB subsidies.
DeleteSo how is it fair for people like myself to subsidise those HDB homeowners? Makes absolutely no sense to me.
If I choose to sell a product whose cost is $1 at $10, I would make a profit of $9. If I instead choose to sell it at $8, I would make a profit of $7. The so-called lost of $2 of the latter case compared to the former is merely an opportunity cost. It is not a real lost. I still make a profit of $7 if I opted for the latter pricing. I may choose to forgo additional profit of $2 (note: not loss) because in exchange, I may gain a bigger market share. That is, there are intangible profits in taking a lower dollar profit. KBW in focusing on so-called losses is being disingenuous.
DeleteIf there is a real loss, then tell us what the nett loss is instead of insisting that HDB is running @ a huge deficit because of a substantial housing subsidy when obviously it is not?
DeleteIt seems the Govt is never honest about this nett loss because they never dared to reveal the real land costs charged to HDB by SLA ? So why so secretive then as if there is something to hide ?
I agree. Costs can be more transparent.
DeleteMy post was arguing that HDB has to buy land at market price. So it's not opportunity cost for HDB.
DeleteAnon@ 2308 seems to think that the money that people pay to government is government 'collecting' money from the people. So HDB flats should be free? :) How much taxes do you pay again? :)
Delete@Calvin - KBW has two hats, HDB's and government's. If he is wearing the HDB hat, then there is a loss. If he is wearing the government hat, then there is a net profit. So who is he trying to kid?
DeleteNo. Even if HDB paid SLA 2 billion and ignoring building costs, if it only sells flats for 1 billion, it makes a loss of 1 billion, government as a whole loses 1 billion. I wonder why such simple math is so difficult to understand. And the moneysmart.sg chap isn't very money smart.
Deleteas what anon @2308 said:
Delete"Govt did not lose 1 billion. Instead Govt lose out collecting 1 billion MORE from citizens."
why is it so hard for you to understand?? no wonder u r just an nmp..
whatever SLA collects goes to MOF, whatever MOF collects either goes to the reserves or will be redistributed next yr together with tax revenues as budget. ie: back to MND, HDB etc..
summary:
HDB > SLA+tax revenues > MOF > MND > HDB.. cycle continues. so wat loss are you talking abt??? paper loss?? please lah..
can you understand such simple process??
Your math is faulty. Assuming MOF (reserves) has 5 billion. Of this 2 billion is land. Sla sells HDB for 2 billion. HDB sells citizens for 1 billion. HDB loses 1 billion. Which means government as a whole has lost 1 billion.. If SLA sells HDB at 1 billion discount, this is equivalent ro raiding the reserves.
DeleteTo cut all the myth and stop arguing, the best for HDB to do is show more breakdown informations. They can say all they want but nothing beat the evidence.
ReplyDeleteI agree
ReplyDeleteAnon@01:10 "If I choose to sell a product whose cost is $1 at $10, I would make a profit of $9."
ReplyDeleteThe product costs $10. Land is not free. Unless you are only buying the bricks and mortar to put in your own land then yes, the product cost is $1.
land is not free but it can be cheaper lah.. especially so if singaporeans are benfitting from it.
Deletethe proceeds from "sale" of state land all goes to the state reserves. so if you collect less, lesser goes to the reseves but singaporeans benefit from cheaper land costs.
Okat this ANON got it. Not the anon above with faulty math. Yes, less will go to reserves. But I think a better way is give more subsidies. Less likely to cause collapse in prices.
DeleteThis comment has been removed by a blog administrator.
Deletei just assumed MOF = reserves (past and present) for simplicity... which is not totally wrong (although technically)..
Deletethe problem with subsidies is it is a lagging indicator.. look how long it took for the govt to even tweak the income ceiling.. ridiculous.
DeleteCalvin Cheng, you've misread the article. It is saying that there is no net loss to the government or taxpayer.
ReplyDeleteNo. The article clearly says there is no nett loss to the Government only.
Deletethe govt doesnt care whether there is a nett loss to the raxpayer or not. fact.
DeleteCalvin, what you have left out is how much of SLA land bank was acquired at very low cost in the past. A huge proportion of the land bank was acquired in the early years at dirt cheap prices. I know because our house was acquired for $7,000. It was only when the bulk of the land had been acquired that the govt moved to pegged the acquisition at market prices (some time in the 1980s?). Before that many govt agencies had the power to acquire land. So, it is not a matter of selling to HDB or private sector. The govt gained by acquiring at low cost (in the past) and selling it at market prices.
ReplyDeleteHi. When SLA acquired the land in the early years at low prices, HDB's were also sold at very low prices. My parents' HDB flat 30 years ago was only 30,000 Sing dollars. 30 years later, they cannot possibly be selling the land at the same prices for the reasons already mentioned. That is, if they sold the HDB flats at land prices 30 years ago, my parents' flats may be worth 30,000 again. Not he 500,000 it is worth now.
Deletenot true. if demand is high enough (ie: 6.9mil), and supply is tight. the 30,000 land price of ur parents flat can still be sold at 500k. sale price is pegged to market not cost.
Deletewho are you trying to hoodwink??
when u buy property and do your homework, do find out the current market prices of what is being asked before you make an offer or do you find out from the seller what is his purchase price when he bought it before you make your offer???
So between a 500k resale flat and 250k brand new flat which would you choose, even if demand is tight? Faulty economics.
Deleteeven if the resale price is sold at 250k, the profit on the 30k flat will still be 220k no?? not enough?? hawker, foodcourt or restaurant, mr nmp??
DeleteDon't ask me. Go ask the HDB home owners. Better yet, why don't you run for Minister for National Development on the platform that you will half the value of their homes if they vote you in? lol!
DeleteNo, it wasn't acquired at market price then. Some of those land acquired are still sitting fallow. The whole Simei town was acquired for a song - ask Ivy Singh Lim and she would give you a mouthful and earful.
ReplyDeletePoint to note - only when the bulk of the land were acquired then they moved to compensate at market rate. Some of those land are still undeveloped.
Hi. I don't think you got me. When they acquired dirt cheap 3 decades ago, the land price they then sold it on to HDB was also cheap (maybe not as cheap as they bought it) and HDBs then were 20k, 30k etc. Some they did not develop but in meantime, land price all around has risen. They can't possibly be pricing land as it was 30 years ago when the first bought it!
DeleteI don't think you get me either. Those acquired in the past were not acquired at market rate, but at nominal rate. For example, ours your acquired by govt for $7,000. Just across the road, the same type of houses were acquired by private developer at more than $100,000. Yes land was relatively cheap, but not at token sums. Again, ask Ivy Singh Lim how much the family were paid for their acres upon acres of land acquired for what is now Simei estate.
DeleteSo, price land at 30 years ago, and not a nominal sum.
Let me reiterate again. Whatever the land bank that the govt has now was acquired at dirt cheap (not the prevailing market rate 20, 30, 40 or 50 years ago). Only when it has acquired the bulk of land, then did they start to compensate at market rate.
Say, land is not $300psf, and was $100psf 30 years ago. Are you saying it is fair and equitable for the govt to acquire land at $10psf 30 years ago???
@20:50: "So, price land at 30 years ago, and not a nominal sum."
DeleteWhen people are nostalgic about policies that are 30 years old, I like to remind them that policemen wore shorts then...
The past is history. Better live in the present.
But then again, some native Americans are still crying foul about their land being stolen from them...
Ktan,
Deletein the same way, by the same argument, we can reduce housing prices today and ppl who pay high prices yesterday shld be too nostalgic as i will remind you that policmen wore shorts yesterday too. better live in the present/future.
How is it that Khaw Boon Wan can ramp up the building of HDB flats by mutliples compared to Mah Bow Tan and dish out more subsidies to "delink" new flat prices from the market in a higher inflaftion environment (meaning costs higher) and yet incur a lower deficit (few hundred millions) than Mah ($2 billion)? Anyone can explain the math? Yes we must be concerned how HDB is allegedly losing money,
ReplyDeleteIMO the likely explanation is that Khaw's "delinking" involves a substantial land discount from SLA. That is, the additional subsidy comes from SLA and not HDB, hence the lower deficit at HDB. Unfortunately, without the actual numbers, we may never know.
DeleteCalvin, what do you think?
DeleteI think without actual cost numbers we cannot be sure.
DeleteSo, either HDB or SLA is raiding from the reserves
DeleteSo, you saying SLA giving HDB market subsidies? or HDB raiding from reserves? Or costs had been artificially inflated so it's only a paper adjustment?
DeleteThere will be no raiding from reserves if SLA sells land at market price. And there will be no loss to Singapore's reserves if HDB does not make a loss (it has to)
DeleteIF.
DeleteIF the ministers of national development disclose the costs that go into the building of a HDB flat, then ghosts can be put to rest.
1) since, as you mentioned, older generation purchased hdb at cheap prices, then what is the problem with a 30-40% price correction?? (they still make profit at their low cost, no?)
ReplyDelete2) if you say a sharp price correction will affect older generation's nesting egg, then may i ask mr nmp what is the purpose of cpf?? or are u suggesting that the cpf scheme has failed all of us?? if the old ppl sell the housing to "unlock" nest egg, then where are they going to live?? east coast park??
3) negative equity on loans - u suggest that is is bad. if majority of housing loans is from hdb loan. and hdb as a social entity doesnt ask for top-up or repossess as long as the borrower can service the mortgage, then is there a problem??
even if a private loan, the private bank doesnt ask for top-up or repossess as long as the borrowwe can service the mortgage, then is there a problem?? (albeit this may happen only if the govt pledge to underwrite these loans when they truely go bad. they are profit makeing corporate banks after all, not social govt entities)
pls dont forget, negative equity has happened in sg before. ppl who bought hdb /ppty in the 1995/1996/1997 era suffered many years of negative equity until the late 2000s (before lehman bros). but as long as they could service the loan, there was no problem at all.
i'm not going to talk abt private ppties and ppl with multiple ppties since the govt and we should not be obliged to help them make $$ by being reckless in their purchase price and market timing and expect asset values to go up forever and buy up the price of the market. if they suffer loss, so be it. all profits comes with risks. we shld only focus on owner-occupied ppties.
1) Maybe you should ask the older generation whether they will accept the prices of their houses going down 30 to 40%.
Delete2) There are 2 ways to unlock nest egg. a) Sell and move to a small apartment which costs less especially the heavily subsidised studios b) Lease buyback scheme - gov buys back tail end of lease gives you cash i.e. reverse mortgage
3) I agree that we should reduce the speculation in HDB.
What I am concerned about is the older generation.
Negative equity - so we screw up the whole banking system and underwrite a whole lot of bad loans so young people can afford to buy houses? Genius!
Calvin,
DeleteIn my experience, the majority of owner-occupied units are not affected by price fluctuations. Just as they don't sell when prices shoot up, they likely won't do anything when prices fall.
In theory, yes, they can downsize and cash out but generally, it is a big hassle to move house esp when you are old and already rooted in your neighbourhood. More importantly, if you sell high, you have to buy high too, and the PSF for smaller units tend to be much higher, not to mention the location of the new unit tend to be less ideal.
For HDB flats, reverse mortgage is possible but the monthly drawdown is pathetic (like $500 per month for a 5-rm flat). Usually, those who consider reverse mortgage are those who are desperate for cash and have no other options (esp. too old, no support from children, and not eligible to take up another loan).
Negative equity is a danger only for those who have over-committed themselves in recent years. Purchases prior to the current property upswing (since 2010) should be in no risk of negative equity unless the market correction is greater than 3-4 years worth of mortgage payment (in which case, the market has crashed). So, in my opinion, negative equity is not a big concern. Besides, the new Loan-to-Value limits has also drastically reduced the risk of negative equity.
So, all things considered, the tangible and intangible benefits of cashing out just isn't there.
Therefore, the practical question (from HDB's perspective) is this: Do you wish the existing homeowners to have an inflated property price on paper, or do you wish to give the younger generation a chance to afford a home and start a family?
Anon@04:16, "i'm not going to talk abt private ppties and ppl with multiple ppties since the govt and we should not be obliged to help them make $$..."
DeleteActually, multi-property owners form an important group because:
(1) Many families derive their sole income from renting out their HDB flat. Mr Khaw himself acknowledged this fact recently and cautioned that we should not sideline them.
(2) With a projected population of 6.9 million, there will be roughly 50% foreigner-occupied homes in Singapore. Which means on the *average* each local homeowner will also own another unit rented out to some foreigners. How else can you accommodate a country with 50% foreign homes?
If I had to choose from scratch, definitely home ownership. But now that we have asset owners, we have to tread carefully
Delete@K Tan,
Deleteif i could stretch your argument further, how about extending the govt's hand to help all singaporeans investments in sgx companies and make sure they make $$ from their stocks and dividends? many families also derive their sole income from stock dividends, we should not sideline them.
my point is, if you have 2 ppties, clearly one of them is for investment. if you want to invest, you jolly well take the investment risks as well.
"Negative equity - so we screw up the whole banking system and underwrite a whole lot of bad loans so young people can afford to buy houses? Genius!"
Deletethanks mr nmp. i already know i am i genius. dat is why i will take the trouble today to explain to you how my idea works, which is an alternative solution to the mess our leaders like yourself created but have no idea how to untie the gordian knot.
since hdb as a social entity does not really enforce negative equity or re-possess units as long as the owner can service the mortage, there is no issue here.
the issue lies when private banks loans face negative equity which then triggers the bank and its credit processes to enforce a top-up from the owner. (essentially, it is a technical default and a "bank process" ie: cannot pass bank's credit hurdle (sole purpose is to minimise dafault risk, but note that the borrower has not actually defaulted)
to solve this problem, the govt can say that they will pledge a total of say, $5bil, to underwrite a certain amount of private bank loans for OWNER-OCCUPIED hdb ppties.. however, the condition is that the private banks will not be allowed to "withdraw" or ask for funding to cover these "bad" loans until they have truely gone bad. (ie: borrower failed to service mortage for X no. of consecutive payments - this is the trigger point for the private banks)
if borrower faces negative equity but still can service his mortage payments - no payout. (bank also have assurance from underwriting for the whole life of the loan)
if borrower cannot service loan, bank can now ask for payout, at this stage, the loan will be transferred to hdb to be managed.
in this way, banks have a definitive "exit", which provides assurance and lowers their credit risk which will allow govt room for price corrections. at the same time, minimise the actual payout from the $5bil pledge (due to trigger point being unable to service loan instead of mere negative equity).
the actual payout will also be lower by virtue that only a minority of hdb loans are from private banks(albeit this point has to be verified).
there you go. spoonfed.
You may not be familiar with the term 'moral hazard'. I shan't spoon-feed you so you can go read it up.
DeleteThe effect of the government underwriting bad loans is for banks to undertake increasingly risky debt knowing that they have a 'definitive exit'.
I have never bought an HDB flat so I am not sure what the HDB loan rules are. But since the HDB has to acquire its money to 'loan' out to buyers, I am sure negative equity affects it as well, since the whole money supply system is interlinked. At some point in time, negative equity has to be enforced.
"The effect of the government underwriting bad loans is for banks to undertake increasingly risky debt knowing that they have a 'definitive exit'."
Deleteyou still dont get it. it seems to me you are not too well versed with the concept of negative equity as a credit concept versus an ACTUAL defualt on a loan..
underwriting bad loans can only be made retrospectively. we wont know IF a loan has gone bad until price has fallen, isnt it? and if the underwriting is for loans already made and are going to turn bad by govts deliberate action to deflate prices, how is it going to encourage risky behaviour moving forward, bearing in mind the govt is NOT going to underwrite future/new loans??
moral hazard - if you think that we can unwind this mess without some blood being shed, either you are extremely naive or this whole political thing is way over your head. i suggest u quit before someone calls your bluff, dude..
If a loan is about to default and it doesn't default because the government guarantees it what do you call this situation?!
DeleteHow does one have credibility that it WON'T underwrite future loans if negative equity happens again, given that it has been done once?! How does the market know that the government will not repeat this action again once asset prices go up through th workings of the free market?
Please.
That's the whole meaning of moral hazard.
It is YOU who doesn't get it with your laboratory solution you concocted. Mess? Only in your feeble mind. The HDB policy has enriched an entire generation, which allowed a class of property owners to emerge. Many condo owners now have up-garded after selling their HDBs. This is upward mobility.
thanks for share..
ReplyDeleteWhere did all the government land come from? Compulsory acquisition. For what? To help redevelopment. What is the mission of the HDB? To provide affordable housing.
ReplyDeleteWe should continue to ask questions about the obscure accounting and fundamental assumptions. These questions need answers.
Don't just blindly accept the vetted version of the PAP government, even as we should be careful about the opposition.