The PAP government has created the mother of all property bubbles by pouring billions in CPF retirement savings into HDB flats.
Through SERS, the majority of HDB lessees became convinced that every old flat will be returned to the government in exchange for a new flat in a choice location. The PAP was aware of this perception on the ground but so long as our ‘assets’ were being enhanced, they allowed HDB lessees to party on.
To support bubbly prices, LKY, Lau Goh and PM Lee had resorted to asset enhancement propaganda.
PAP’s hand in the ‘asset enhancement’ scam cannot be more evident – as housing prices headed into the stratosphere, billions in tax dollars were thrown at increasing CPF grants to prevent an inevitable collapse.
While HDB flats were relatively new, PAP was happy to be the biggest developer, banker and estate manager. It dictated everything from who gets what contract to conveniently pegging public housing mortgage rate to a fraction above the CPF interest rate. And of course it hired its own kaki as estate managers (EM Services and CPG Facilities Management are both PAP-affiliated companies).
PAP may have belatedly realized that the party has gone on for too long as an awful lot of flats are hitting ‘pioneer generation’ status sooner than expected.
Recently, MND Minister Lawrence Wong and MSM have advised buyers to go for resale flats between 10 and 20 years old as they could be monetized. But what about the majority of older flats?
By 2035, almost 1 million flats will be at least 20 years old and 854,000 flats 30 years old. Since it’s hard to monetize such ‘elderly’ flats in future, what will happen to their value? Will the value of HDB flats continue to defy gravity when Lau Goh’s ‘asset enhancement’ is as good as dead?
By 2035, there will be more than 600,000 flats above 40 years old. Since demand for old flats will soon fall off the cliff after MND Lawrence Wong advised buyers not to anyhow assume all flats will be SERSed, will HDB flat prices collapse?
Without PAP constantly propping up prices of HDB flats, private property will be out of reach to HDB upgraders. With low demand of old resale flats trickling down the entire public housing market, will this not eventually lead to a collapse in the Singapore property market?
The clock has been ticking and HDB lessees don’t need any more “HDB flats a good store of value” lecture.
PAP created the mother of all property bubbles and it had better not continue sitting on a ‘time bomb’.