It sure as hell seems to bent on doing it. In my first post on the topic of their "affordable homes scheme" I explained how these people don't even understand their own figures.
In this one I'm going to highlight just how catastrophic the consequences would be.
You know I like using hyperbole but this is a rare case when I'm really not. What they proposed would quite literally nuke the entire property market in Singapore, meaning that those S$7 billion per year their ideas could cost in lost reserves would pale in comparison with broader destructio.
So, just a brief reminder, the core of PSP's proposal is deferring payment of land cost for your property until you want to sell it.
When signing up for BTO you would only pay for construction, with mild variation depending on location, but you wouldn't pay for land - which makes up more than half of the price.
In other words the "Progress" Singapore Party wants to incentivize living in the same place your entire life. Leong Mun Wai himself said that those who choose never to move should not pay for land.
Now, please tell me, how many people would choose to move apartments if they suddenly had to fork out $300-400,000 to pay up for land under their old flat?
Unlike in the current scheme, where you gradually pay off the entirety of your property, PSP proposes that you pay little in the beginning but then are forced to find a huge lump sum when you want to upgrade or even downgrade.
Let's consider the socioeconomic consequences of this ludicrous plan:
1. Nobody would be buying small BTOs because it's better to max out your apartment size on the cheap (not having to pay for land) predicting you may never find it financially attractive to move out.
2. Since new buyers would be hedging their future this way, the demand for resale apartments would collapse, because it would make no sense to buy them. They would be 2-3 times more expensive than BTO and once you get the BTO you want, you would be unlikely to ever move out. Resellers would only keep trading between each other - an ever narrower group, as all new buyers would go for much cheaper launches.
3. With this fall in demand, prices would follow, eroding wealth of millions of Singaporeans for whom housing is supposed to be the nest egg for their retirement.
4. Younger generations, eligible for this program, wouldn't be better off either, because as they aged in the same place for decades, they would never have the ability to downgrade and retrieve at least some of the value of their home upon retirement, since they would immediately be hit with a huge payment for the land.
In other words, their own homes would not be able to support them in retirement in any way, other than giving them a roof over their heads.
5. Some people will argue that as you save on the cost of land when you're young, you could invest the money profitably and make even more than you would otherwise.
Sure, in theory, but what if you don't?
How many people would actually be able to do it in practice?
Since PSP's ideas are built around the populist slogans of making living more affordable, most people would not take the money saved on housing and put it into something else 1:1. They would spend at least some, often all of it, on consumption instead.
Under current rules you get your first mortgage early in life, when you're young, so you can gradually pay off relatively small instalments over two, three decades. You own the whole flat and can do whatever you want with it.
But under PSP's proposal you would still be forced to pay for land, albeit much later - what would force you to take a larger mortgage for a shorter period of time, later in life (imagine borrowing in your 50s just so you can find a new home), creating a massive obstacle to any upgrades or changes.
What they came up with is not affordable housing but an expensive rental scheme, leaving people at the mercy of the state for their entire lives.
It's quite literally a collection of some of the worst ideas imaginable, bundled into a single package.
You effectively don't own your apartment until you fork out the cash for the land anyway. And until that happens you de facto only rent from the state - but unlike in any ordinary rental you can't even move out.
Yes, it's THAT bad. How could anybody with half a brain come up and then decide to go public with this idea?
Accidentally, I think PSP must have made history with this.
This is a rare case of something so abysmally stupid that it actually helps nobody. Literally. Not a single person would be better off as a result of these ideas - and that must be some sort of a historic achievement for populists anywhere in the world.
Typically they come up with stuff that moves money from someone else's pockets to those they seek to buy votes from. Tax the rich, give to the poor etc.
But PSP has managed to come up with something that is disastrous for everyone - new home buyers, current home owners and the entire country.
