Another unpublished letter to The Straits Times Forum

Last Tuesday, the Monetary Authority of Singapore has urged households to be prudent when taking up new debt or committing to property purchase (“Households urged by MAS to stay prudent when taking up debt or buying property”, Channel NewsAsia, December 2, 2020).

As of the third quarter of this year, about 36,000 mortgage relief applications from homeowners who couldn’t service their mortgages have been approved. MAS expects resident unemployment to “remain elevated” next year. The authority also sees credit risk for housing loans to increase further if the economic downturn persists and advised households to consolidate “their existing obligations to enhance resilience against unexpected shocks.”

For prospective buyers of investment properties, MAS warned that should weakness in rental income continue, “borrowers relying on rental income to meet their mortgage instalments on investment properties could face difficulties in repayment.” So they should “factor in the possibility of further weakness in rental income when committing to purchases of investment properties.”

I wonder why this important message from our monetary authority was only covered by two local media (Channel NewsAsia and The New Paper), but none of the main SPH media or property portals. Instead, every week we saw property news articles on the robust sales of new launches and the resale HDB market, with celebratory headlines and euphoric mood.

Coincidentally, I have written to the editor of The Straits Times on the same subject. Unfortunately, it ended up the same fate as my letter to the editor in June and wasn’t publish in ST Forum. Let me share with you the content of the letter.


November 30, 2020

Subject: Beware of reckless HDB upgraders

Dear Editor,

I refer to the article “Help genuine HDB upgrader with ABSD remission: UOL chief” (The Business Times, November 25).

During the launch of its new condominium project, the UOL group chief executive requested the government to help HDB upgraders by:

1) Allowing them to defer payment of 12 percent Additional Buyer’s Stamp Duty (ABSD) originally payable within 14 days after signing the Sales and Purchase Agreement; and

2) Allowing them to sell their HDB flat six months after collecting their key to their new private property, instead of six months after buying the private property.

It is true that our government encourages home ownership. But it shouldn’t be the priority of the government to help HDB homeowners who aspire to upgrade to a condominium to realize their dream, especially at the expense of the country’s tax revenue.

If HDB homeowners were “genuine” about upgrading to a private property, they wouldn’t have any problem selling their flats when the HDB resale market is looking up now. Recently, we read in the news that HDB resale prices have risen for fourth straight month in October, with 13 flats sold over $1 million (“HDB resale prices rise for 4th month in October; 13 million-dollar flats sold”, The Straits Times, November 5).

Besides, any buyer who has difficulty paying 12 percent ABSD after settling the downpayment, buyer stamp duty and legal fee is not a “genuine” upgrader, but a “marginal” buyer who can barely afford a condominium home in the first place.

In the midst of Singapore’s worst recession in 55 years, our focus should be put on prudent spending to ride through the storm. Home upgrading is a desire, not a necessity. It is fine for anyone to upgrade their home if the person is financially sound. But it doesn’t make sense for the government to subsidize private home upgraders who cannot afford to do so.

As of September, there are already over 34,000 property owners asking their banks for mortgage payment deferments. The least thing we want to see is more cases of distressed homeowners and mortgagee sales in the market in the near future.

We hope that the government can monitor the private residential property market closely and caution home buyers to be prudent in their property purchase at this critical time.

Regards,

Vina

Name: Vina IP
Address: xxxxxxxxxxxx
Contact No: xxxx xxxx


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