I refer to “Higher CPF housing grant: No big increase in resale market prices, say analysts”. CNA This is another instance of propaganda at its best.
From potential resale flat buyers to property analysts, everyone is applauding PAP without understanding PAP’s real motive,ie support high public housing prices. Is this really not obvious?
1 That grants need to be perpetually increased means only one thing – resale flats are still unaffordable. What is there to cheer about when $30,000 grant was sufficient previously but one needs a $50,000 grant today?
2 Anything that’s unaffordable cannot become more affordable simply because a relatively small amount of grant has been given. Example: A BMW 7-series is unaffordable to Singaporeans who earn ordinary wages. Even if a discount (grant) of $100,000 is given, it only becomes less unaffordable because the ordinary Singaporean still cannot afford to buy it. MSM is merely playing with words by substituting “less unaffordable” with the “more affordable” half truth.
3 In order for HDB flats to become affordable, prices have to fall.
4 Alternatively, PAP could also remove/reduce the land cost component which could amount to more than 50% of the price of bigger new flats – flats which we don’t own.
5 That potential flat buyers have slim chances in a ballot confirms the government keeping supply in check to maintain high demand and prices.
6 In reality, PAP cannot allow public housing prices to drop to an affordable level. This is because it will have knock-on effects on banks, developers who bought land at high prices, real estate companies and incomes of their agents, etc. Lower property prices will also impact government revenue, ie lower land sales revenue, lower corporate and income tax, lower GST as well as lower prices of new flats (prices discounted from resale flats).
7 In Singapore, high GDP correlates with high property prices. Should property prices drop to more affordable levels, say by 20%, the impact on our GDP will confirm PAP using the population growth shortcut to grow the economy. This will also mean their high salaries are not justified.
8 Another objective of maintaining high public housing prices is to lend support to private housing prices.
By supporting the prices of resale flats with increased housing grants, PAP is able to price a larger number of new flats at higher prices and therefore stands to gain more from ‘helping’ resale flat buyers.
High housing prices also ensure other sources of government revenue such as land sales, GST, income and corporate taxes, etc are not reduced. These could easily amount to billions of dollars. The increased grants amount to ‘peanuts’.
In other countries, citizens and lawmakers would have demanded a fall in public housing prices to affordable levels. In Singapore, our supposedly well-educated public applauds the scheming government for a scheme which maintains high prices.
PAP has killed many birds with one housing-grant stone and high housing prices will never fall to affordable level. The real losers – most who somehow still believe they are winners – are HDB flat buyers.