New BTOs have remained affordable. The outcry over the unaffordability of HDB flats is mostly over the resale prices.
Say you bought a HDB flat in the early days for $50,000. Today, it is worth much more. What would you do if someone comes up to you and say that you should sell your flat at historical price instead of market value?
You will tell him to go fly a kite.
Most people will understand why this is wrong. If you want to sell your property today, whether it is HDB flat, condo, terrace house, shophouse or office, you will look at what it is worth in the market today and use that as some basis for you to transact, bargain and negotiate, not the historical price.
You will react with aghast if you are required to sell your flat at historical value bought, or cash-over-historical-value when the value of your flat has appreciated over time. It flies in the face of logic. Likewise for land.
Land has value and if the country is doing well, its value appreciates.
When PSP Leong Mun Wai calls for land to be sold at historical cost, he is overturning this fundamental point that land has value, said National Development Minister Desmond Lee in Parliament.
“Given that most Singaporeans own their homes, he is essentially saying that by a stroke of his pen, a significant portion of the asset value should be ignored,” Mr Lee said.
Leong Mun Wai does not make sense
Leong agrees with pricing flats according to location. But what is location but the value of land?
The position and location of the land have a direct influence on its value and the value of the property that sits on it. For example, a remote parcel of land may have limited value because it does not have access to amenities, utilities, transportation or other resources that could make the property useful.
Would Leong propose that land value be removed completely from the equation when homeowners sell their HDB flats?
State Land is part of our National Reserves.
When State Land is sold to HDB, HDB must put back into the Reserves the fair market value of the land. In this way, the Reserves are not worse off or diminished in any way.
“Mr Leong’s proposal for HDB to pay historical price to the Reserves means putting back into the reserves far less than what the State Land is really worth today. This is a raid on the Reserves, plain and simple, and will diminish the resources available for your children and their children,” Minister Desmond Lee said.
How does Mr Leong do this? He does not say it directly. Instead, he uses valuation, affordable and cheap housing to advance his argument.
“He says everything else, but through sleight of hand, he hides from you the plain fact that he is really wanting to raid our Reserves,” Mr Lee said.
“As DPM Lawrence Wong had said previously in the debate on the GST, and on many other occasions, if you want to tap more on the Reserves, diminish it, use more of it for today and leave less for tomorrow, let us just say it cleanly, let Singaporeans see it as it is, and we can have a debate. Come the next round, we talk about housing, about Reserves, about expenditure, about sustainability. Then, we can have a sound, fair basis for discussion. But the point that he has made, the argument he is proposing, the proposition he is making, I think most people recognise that this deal sounds too good to be true,” said Mr Lee.
