Asset enhancement

Since the mid 1980s, the Government implemented market pricing and the asset enhancement policy for public housing, i.e HDB flats. The aim was to allow the heartlanders to have a chance to enjoy the appreciation of their HDB flat, which represents the the key assets for most of them.

This policy has led to a more than 10 fold increase in the price of HDB flats during the past 30 years. For most HDB flat owners, the increase in asset price does not translate into real wealth. They still need a place to live in, as the HDB flat is the only home that they hold. If they sell the flat, they have to buy a private propety at an even higher price.

The only people who can benefit from the appreciation in the HDB flats are those who emigrate from Singapore and the few who are able to downgrade to a smaller flat. Some of these people are permanent residents who are able to cash out on the appreciation to return to their original country.

For the majority of Singaporeans, the increase in price is actually a financial burden, as the monthly installment will represent a larger proportion of their earnings. The high prices hit the future generation harder who now has to pay a much higher price and monthly replayment for a roof over their head.

Too many people are paying too much for a HDB flat. To be comfortable, a person should not spend more than four or at most five years of the combined family income (after deducting the cost of employing a maid) to buy a home. I believe that many people are over-streching to six years or more.

Tan Kin Lian