Continuation of our May 2011 trip photographs (finally).

(Above : World’s Fluffiest Chickens !)

On the way to work today the deejays on Class 95 were discussing public housing policy (I make it sound so intellectual).  By the time I reached the office at about 8.45 am, the deejays had appeared to have concluded that because public housing should be kept public, the Government should buy back HDB apartments instead of allowing them to be resold in the open market at market prices.

In principle I cannot disagree with the above.  But perhaps due to my lack of imagination, and because I’m lousy at math, I am unable to see how the above may be implemented practically.

Suppose you purchase a HDB apartment at S$200,000, and you live in it for 10 years (out of the leasehold period of 99 years).  At what price should the Government buy this back from you ?

(1)  Since there are only 89 out of the 99 years left to the leasehold, assuming a straightline depreciation in the value of the apartment, should the price be S$180,000 or 90% of its original value?  Now, would you be happy with having lost S$20,000 on the value of the apartment, plus the interest which you’ve paid on the mortgage (assume another S$40,000 or S$4,000 x 10 years) which you took in order to buy the apartment, and whatever costs you’ve incurred in renovating the apartment?  (Actually it may not be that bad a deal if you read my comment at (2) below).

(2)  Should this price be the original value of the apartment, ie. S$200,000?  Your "loss" in this case would be the interest which you’ve paid on the mortgage which, at (1) above, I’ve assumed to be S$40,000 or S$4,000 x 10 years.  You would effectively have been charged nominal rent of S$4,000 a year for the apartment. 
However, if such prices or "low rental rates" for HDB apartments were the case, the private property market as it currently exists in Singapore, would probably cease to exist.  Why should I pay $800,000 to live in a tiny three-room private apartment, when I can live in a significantly larger HDB apartment, for just $4,000 a year?  Or maybe the private property market won’t crash —
what we’d have instead is a significant number of (irrational) cash rich middle income families who have paid up their HDB mortgage, dump their HDB apartment and buy a private property with their savings.  So if the former materialises, we’d have a depressed property market.  If the latter materialises, we’d continue to struggle with the current problem of asset rich, but cash poor, Singaporeans at retirement.

(3)  Should this price be the original value of the apartment, plus reasonable interest ?  Or the original value of the apartment, plus reasonable interest, less depreciation ?  In which case, you would effectively be paid by the Government to stay in a HDB apartment
(unless, in the case of the latter, the reasonable interest rate falls below the depreciation rate of 1% a year).

Another difficult question - in all of the above cases (1) to (3), at what price should the Government sell the second-hand HDB apartment to the next buyer ?

Becoming a father might be traumatic enough for some men, but for a friend who recently became a second time father, he had to deliver his baby at home too!  Not to make light of his situation, but when news of this reached me I couldn’t help but think of the delivery scene from the movie, The Back Up Plan.  (Don’t bother watching it other than for maybe this scene, I think it sucked).

Incidentally, I hear that mum and baby are doing fine.  Not sure about the friend though …