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Thursday, November 15, 2007

HDB - First home. Be Sensible

First home: Be sensible - Editorial Nov 15

NO HOUSING minister should treat lightly the home-owning ambitions of young marrieds and those intending marriage. It is by now a verifiable Singaporean urban legend that a young man's mention to his partner of booking an HDB flat is acceptable as a marriage proposal, if a rather unromantic one. The Government as a matter of demographic need is encouraging marriage. Better still, if couples start families early. Even with this considerable cultural tailwind, the raising in Parliament this week of newlyweds' housing laments ought to be seen in the cold light of market conditions. Two PAP MPs, Ms Cynthia Phua and Mr Yeo Guat Kwang, implied by their questions posed to National Development Minister Mah Bow Tan that more young couples were having problems buying their first homes, owing to assumed tight supply and the creeping price inflation reaching public housing. Mr Mah pointed to the adequate stock, both standing stock in new estates and 4,000 built-to-order flats that will appear in a few years. For a fallback, he referred young marrieds to resale flats in older estates, if handy amenities are important to them. He would not be rushed into starting new construction just to meet this niche segment if it produced an over-supply in a matter of years.

The minister is right. The HDB price differential is more froth than a true market condition, as there is no lack of HDB flats available. A line should be drawn at young people's choosiness over location. If they want to live in established towns, they must be prepared to pay the asking resale prices. It is a stretch to link higher resale prices to a perceived shortage of flats. This probably is the sum of grassroots lamentations reaching MPs' ears. Prices have to moderate, sooner or later. They may have reached their peak. Note how quiescent the market has been, with the global banking system's losses from the United States mortgage gamble now exposed as humongous. These are affecting rock-solid marques in America, in Europe and here in Singapore. The worst is not over. When the full extent of book writedowns is revealed, there is no telling how it might affect real estate sentiment here.

Young married couples need also to look at global relativities. Nowhere else among rich nations, except in Singapore, can couples become home-owners straight off the marriage registry. Young careerists in Western countries are taking longer to buy their first homes. They are being buffeted by the rising real estate index, with few or no government incentives to stimulate home ownership. Here, a 20-something couple can still choose between Sengkang and Telok Blangah.

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