Tuesday, October 20, 2009
Limit Supply of HDB Flats Please
It seems that people have been complaining over the lack of flats in Singapore. Many have called on the government to increase the supply of flats so as to reduce the waiting time for flats. Various blogs have also started to give their 2 cents on the matter. While it is easy to give in to populist sentiments, I think that we all should take 2 steps back and look at the issue.
The reason why HDB flats are so popular is this:
1. They are cheap (because of government grants and stuff)
2. They are expected to rise in value over the years and people can sell them at a profit.
These are the two main reasons I can think of on why HDB flats are so popular amongst Singaporeans and Singapore Permanent Residents.
If HDB flats are just affordable but are not expected to rise in value, I for one will not buy them as I will have trouble selling it later should I intend to upgrade to a bigger house.
It is thus very important current supply of HDB flats are not tweaked to cater to populist sentiments.
Instead of increasing the supply of HDB flats, I say that the current status quo should instead remain. 10 interested buyers to 1 flat is a very good ratio I must say.
That means that 9 buyers will have to be looking at the resale market or private property should they wish to purchase their own homes.
This will be good news for people who wish to sell their homes.
Can you imagine that if there is a supply of flats such that every buyer is able to get their flat of choice?
That would mean that there will be less people who will buy resale flats and that means we will all have problems selling our flats in the future! This will make HDB flats alot less attractive and will thus reduce the demand overtime.
Current policy guidelines should remain and the supply of flats should be tightly controlled for the greater good. This will help ensure that HDB resale prices remains high.
Even though it is possible to increase the supply of flats, this should not be done so to tilt the fine balance between supply and demand. Oversupply now will lead to problems further down the road.
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Categories: HDB resale prices
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