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Govt should ensure housing grant does not skew demand

I refer to the report “S$20,000 grant to help families live close to one another” (Aug 25).

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Louis Lau Yi Hang

I refer to the report “S$20,000 grant to help families live close to one another” (Aug 25).

I am heartened that the Government has taken measures over the past few years to ease the burden on many Singaporean families who want their own house, but may encounter difficulty buying one.

The new Proximity Housing Grant is a win-win policy: It lightens their financial burden and also allows families to stay closely knit, strengthening the bonds between generations.

Being closely knit is especially important, since families who live far apart tend to spend less quality time together, given their busy working lives and, for some, the inconvenience of travelling far to see each other.

Given the increase in purchasing power, however, a surge in demand and housing prices is possible, as mentioned in the report.

National Development Minister Khaw Boon Wan said the authorities “have leverage over supply and ... can always adjust the supply, expand and reduce as necessary”. But in view of the price elasticity of housing and given that managing supply may not be viable in the short run, there may be a need to intervene in the demand too.

If so, additional factors might need to be considered before providing the S$20,000 grant, such as the urgencies facing the families or perhaps the distance between the families.

Controlling the demand would, in this case, be a viable short-term solution to maintain housing prices.

The onus is on the Government to keep watch over the relative changes in housing supply and demand so that prices will not be affected to a great extent, which may otherwise defeat the purpose of offering such grants.

I am confident that this should be not much of a difficulty for our Government, given its credibility.

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