Correction of Property Prices

Minister Khaw Boon Wan is taking bold steps to increase the supply of HDB flats (for sale and rental). I believe that the measures have the endorsement of PM Lee. I support this strategy.

Many people have expressed the view that these measures will result in a correction of property prices and that existing property owners (especially those who have bought the properties at the high prices) will be unhappy.

I wish to give the following views on why a correction in property prices will be for the long term benefit of Singaporeans.

a) Existing property owners can upgrade their homes at a lower cost
b) First time buyers (especially the young) will pay lower prices for their HDB flats
c) The correction does not affect existing property owners who have bought a single property for long term occupation
d) The property prices will eventually increase due to inflation and demand, but at a moderate rate (excluding the speculative factor)

The only negative factor is that a property owner may be unable to meet the mortgage payment (e.g. on loss of employment), resulting in a force sale of the property. In that situation, the property owner can switch to a new mortgage where the bank takes higher priority over the CPF savings. This will allow the bank to allow a temporary suspension of the mortgage payments, instead of making a false sale.

I have seen the price of my property fell by more than 30% during economic recessions or financial crisis. It did not last long. After a few years, the property prices recovered.

I believe that a correction of the property prices will be in the interest of Singaporeans in the long run. I want to encourage property owners to look at the prospect in a positive way. I also want to advise young Singaporeans not to pay high prices for your HDB flats or private properties now, as the prices are likely to  be lower in a few years time.

Tan Kin Lian