HK unrest shows why Singapore must guard against class divisions and curb rising private-property prices
A key factor in the recent unrest in Hong Kong has been unaffordable housing for the younger generation. In Singapore, we are fortunate to have the Housing and Development Board (HDB), but this alone may be insufficient for social harmony.
A key factor in the recent unrest in Hong Kong has been unaffordable housing for the younger generation.
In Singapore, we are fortunate to have the Housing and Development Board (HDB), but this alone may be insufficient for social harmony. Measures must be taken to ensure continued social mobility and prevent inequality from giving rise to a two-class society causing social division.
The 2017 Institute of Policy Studies (IPS) study on social capital in Singapore showed that the sharpest social divisions were based on class instead of race or religion.
Housing emerged as a key dimension, with private-home dwellers having more ties with others who live in private homes and Singaporeans living in public housing having fewer than one friend who lived in private housing.
The latest IPS study released recently saw almost two-thirds of respondents saying that they perceive downward or negligible financial mobility in the next decade. To prevent social stratification and preserve social mobility, it must continue to be possible for HDB dwellers to move to private property.
Yet the inexorable rise in private-property prices has made this increasingly difficult. Over the 10-year period from Q2 2009 to Q2 2019, the Private Residential Property Price Index rose from 95.3 to 150.8, an increase of 58 per cent.
This is double the 29 per cent rise in the HDB Resale Price Index, which increased from 101.4 to 130.8 over the same period.
This gap has widened substantially in the last two years with private-property prices surging 11 per cent versus a 1.4 per cent decline in HDB resale prices.
Q3 private-property prices have risen to the highest in more than five years, and according to a 2019 CBRE report, Singapore has the second-highest private-property prices in the world after Hong Kong.
While recent HDB policy changes will help support HDB prices, more must be done to rein in private-property prices.
First, with the number of foreign buyers purchasing new developments jumping by 77 per cent from Q2 to Q3 2019, the Additional Buyer’s Stamp Duty for foreign purchases should be increased to reduce the influx of "hot" money.
Second, the Government must signal that it will stand firm on cooling measures even in the face of an economic downturn or supply glut so as to encourage developers to lower prices.
Third, a vacancy tax for non-owner-occupied properties should be introduced to ensure productive use of housing and reduce speculation.
Developers may object to these measures on the basis that some bought land at relatively high prices. Profit is, however, not guaranteed in business and they should lie in the bed they made.
The result of allowing developers the untrammelled ability to drive up private-property prices is clearly illustrated in Hong Kong.
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