Friday, May 31, 2013

OSC on our housing conundrum

I was working through this problem as one in the distant future in the first few years of my working life. Wifey and I decided that we cannot count on selling our house to fund our retirement. Fast forward to the present, the conundrum is now upon us. An easy solution is available. In fact it was a solution which is able to solve a myriad of problems - The Population White Paper. Regrettably for the PAP, they could be voted out pushing that.

I am sure this government do not have a solution. They will put in all their effort to resell that White Paper later. The hard selling will only come after they have overcome the present bugbears. Didn't the North-South rail sprung another crack? All such problems must be history first. Meanwhile the OSC on housing is a soft sell to the people to understand rationally and also EMOTIONALLY our conundrum. So go and chit chat, have a coffee or tea, shiok shiok but go home with no solutions; only a better and more intimate appreciation of the problem.

By the way all advanced governments all over the world will resort to buying time when they have no solutions. Ours is no different.

The next generation after seeing this one experience a narrow escape will have another twenty to thirty years to solve the problem differently. Population: at least 6.9 million as the defunct White Paper will rise again.

Remember Niall Ferguson had eloquently argued in 'The Ascent of Money' why 'safe as houses' is a bankrupt idea.

Update: June 1 6:30am

Article link at ST Property

When property prices outpace GDP growth by a large margin over a prolonged period, when the share of wages of GDP is shrinking, this government has a big problem. However they failed to see the obvious and so they suffered a big hit in the last GE.

The political survival of the PAP means that the property market must eventually become disconnected from the market. What we have now is the outcome of market led massive liquidity. If you leave it to the market eventually this liquidity must ebb and prices will fall far more than you wish to see. You boom, you will bust so that prices can revert to the mean over the long term. Feast and famine is the fare from the goddess of the Market. Therefore Khaw can only keep his promises by being the biggest and dominant player the market. HDB becomes the market for public housing once more. How tenable is this? What if during a bust when liquidity dries up and you have private properties starting to become cheaper than HDB flats? In the life of the markets, you never say never. Khaw's words have limited credibility. What options can you buy to hedge against this? Nothing that can be got from the usual that is available to the ordinary citizen. LOL, you think the government will sell such options, even create this product to list on the exchange? Most people will get killed as a few get rich through this.

Your HDB as an asset? It was true for a while until it is not. Now for a growing number it is more like the ultimate disaster in your financial planning. Actually you didn't plan at all. You believed the government.

If you want a hard truth in price taking, this is a good one. Ignorance is deadly.

1 comment:

  1. The housing policy is the primary cause for Singaporeans not being able to retire.Thanks to the shortie