There’s been too much attention diverted to Hong Kong. Heck, it’s been weeks since Singaporeans have accused each other of questionable parentage over each other’s opinion on CPF, GST, housing, etc. But with the Greater Southern Waterfront (GSW) now underway, Singaporeans can once again fight the great FB comment wars:
The “lottery effect” and GSW Public Housing
HDB balloting exercises are like a lottery, except the first prize is 25 years of mortgage payments and not having enough room. Singaporeans get pretty cranky about it, so it gets worse when there’s perceived unfairness.
This first surfaced with The [email protected] – this HDB development (it’s not a DBSS by the way) had a launch price of about $345,000 to $439,000, back in 2004 (for five-room units). Today, the average price of the five-room flats here is in the range of $943,000; some units have also transacted above the million dollar mark.
This started the conversation about “the lottery effect”. Singaporeans who manage to get public housing in highly desirable areas are getting a big financial advantage, over those who don’t.
The next lot of private housing with this issue will be the ones situated in the Great Southern Waterfront (GSW). This is a 30 kilometer strip of seafront housing, that includes prime real estate for private and public housing. It starts on the site of the current Keppel Golf Club – when the club’s lease expires in December 2021, the land will hold about 9,000 residential units.
Why are we going to fight about this?
On a basic level, it runs contrary to the “meritocracy” argument we love so much. If someone makes a ton of cash because they balloted and got a flat on the Keppel Club site, they wouldn’t have contributed anything for their fortune – they’ll get money from that flat, not from starting a business that provided employment, innovating and building a great product, etc.
It doesn’t help that they would have bought the flat with subsidies. And since we have no capital gains or inheritance tax, they’re not going to give back much, when they sell their million-dollar flat.
Also, HDB properties are meant to provide affordable housing, not be investment vehicles. But it’s kind of hard to maintain that claim, if some flat owners can sell for a bigger profit margin than even a private property investor can get. Many supposed “genuine home buyers” will make a grab for the flats not because they want the area as a home, but because it’s a free upgrade to a condo after the MOP.
What can we do about it?
A number of solutions have been proposed from many quarters; we’ve heard the following from analysts, real estate agents, long time investors, etc:
- Limit the lease on these flats, such as a 60-year lease instead of a 99-year lease
- Don’t allow these flats to be sold on the open market (they can only be sold back to the government at a controlled price)
- Raise resale levies for these flats
- A longer MOP should apply to new flats in prime locations
But if we do this, we need to be careful to avoid another effect: the slippery slope. If we start imposing such conditions on flats along the desirable Greater Southern Waterfront, what will become of BTO launches?
What if we have a launch with units in, say, Tampines and Tengah? That isn’t “fair” either, as Tampines is more developed and likely to see higher value sooner.
All it takes is for one voice to scream “We have special rules on Greater Southern Waterfront flats because they’re better, we should have them on Tampines / Tanjong Pagar / Marine Parade BTO flats too!”
Once we start down that road, every conversation mostly degenerates into someone being called an IB.
What we should do about it:
Whatever solution the government devises, we’re going to have to do the unthinkable – we’re going to have to let go of the obsession over “fairness”, which we frankly take to irrational extremes.
We’re just going to have to live with the fact that, when it comes to property, nothing is ever fair. That’s why your neighbour’s flat can sell for $1.2 million, while you may end up struggling to get offers over $600,000. It happens.
We should swing our attention more to what we can do, if we lose the lottery. Which is to swear, bathe in flower water, and focus on making the most financially correct decision among available choices.
What are your thoughts on the Greater Southern Watefront? Voice your thoughts in our comments section or on our Facebook community page.
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