I refer to the report “Link between ageing population and taxes debated” (March 5).

It was suggested by an economist that the impact of the old-age support ratio on working adults in Singapore is different in countries like the United States, which have a “pay-as-you-go” social security system where current receipts are used to pay for current benefits for retirees.

However, much of our Central Provident Fund savings go towards buying a house, with the balance unlikely to be sufficient to fully meet retirement needs. If there is a need to sell, downgrade or rent out the house to fund retirement, the likely buyers/lessees would be those who are young and working. Hence, the old-age support ratio is still relevant in Singapore’s case.

For those who need to sell or downgrade their house to fund their retirement, the ratio to watch would be those between the ages of 25 and 49 (potential buyers/upgraders) versus those above 60 (potential sellers/downgraders). As the population ages, this ratio would fall — meaning there are fewer buyers for every seller, bringing down property values.

Even the middle-aged population which is not planning to buy or sell their houses in the next decade may be affected. If property values decline faster than loan repayments, loan-to-value ratios would rise and might trigger margin calls from the banks, potentially trapping home owners with “negative equity”.

Meanwhile, property taxes have become more progressive. Private house owners will pay more tax and receive less benefits compared to those staying in public housing.

This would not be a problem when the owners are still working and/or receiving rental income. But when this group starts to retire, there will be a growing dilemma as to whether they should be taxed more.

The housing challenges in the short-term and long-term are very different. To navigate these challenges successfully, we need to recognise that we are all in the same boat together and cannot row in different directions.