Will the world be envy with the current situation that is brewing?

In the past, the PAP sold the policy that public housing can be used as a form of investment and can be used as a form of retirement income. The government’s narrative about “asset enhancement” and “store of value” as far as HDB is concerned is changing. The early HDBs which were sold at $7,000 quickly become $70,000 within 15 years, and later increased to about $200,000 in the next 15 years.

With the inclusion of land cost and HDB prices reflecting the market rates, the cost of housing increased till a point where it took up much of the savings of the couple when they buy the flat and need up to 25 years to service the loan.

Over the years, there were no statements made about what happened when the 99-year leases expire. Many people do not even think about it and assumed that the prices will only increase. PAP’s policy of increasing the population by importing foreigners did boost and increase the housing prices and demands. There is only one way for the housing prices to go — up!

Recently, the National Development Minister Lawrence Wong reminded the public that older flats must be returned to the state when their 99-year leases expire. Overnight, Singaporeans suddenly woke up to the fact that they were not owners of the HDB flat, but actually lessees. This was shortly followed by a revised guidelines on loans on older flats, and the realizations solidified.

The PAP’s narrative has been that the HDB flat is not just a home but an appreciating asset that would grow with the increasing wealth. The HDB flat can also be a source of retirement income that can make up for the lack of CPF after buying the HDB flat.

Sadly, you cannot have public housing prices appreciating as an investment while keeping housing affordable. Singaporeans do not want the prices of their public housing to go down, but they still want public housing to remain affordable. Despite the government’s effort to try to fix this by introducing cooling measures to reduce prices and speculation, their narrative about public housing as an investment and income after retirement seems to give a different message.

After Minister Lawrence Wong clarified the fact that the 99-year leases are in fact leases, and not a “government will make you rich scheme”, there are a lot of negative sentiments and many old HDB flats in older estates like Toa Payoh and Queenstown which are built in the 60s and 70s are now impossible to sell without incurring a loss. Those who bought them recently can find themselves in a situation where they can outlive their leases and end up losing their CPF as well.

In reality, these HDB flats are simply — overpriced depreciating assets that have zero value at the end of their leases. Singapore indeed has one of the most expensive public housing in the world, and also one of the highest home ownership, but will the situation change once some of these leases expire?

Only time will tell.

— Robin Low