Quick action makes short work of HDB market woes

When Mr Khaw Boon Wan put up his hand after the last general election to take over the National Development Ministry, he inherited a full slate of policy issues that had troubled voters.

Newlyweds and young families complained that their housing options were limited. They couldn't buy private property because prices had shot through the roof. HDB resale flats were unaffordable because cash over valuation (COV) was high.

Those who met the criteria could apply for a new HDB Build-To- Order (BTO) flat, but they had to compete with a flood of applicants facing the same problems - making it too much of a touch-and-go affair. And because the prices of BTO flats were linked to the value of resale flats around them, they, too, were on the rise.

Resolving the situation seemed a tough and lengthy process. It demanded not just a careful untanglingof tightly interlinked policies, but a fundamental relook at the answers to questions like who exactly does the HDB serve? Who should be eligible to buy a HDB flat, and why do they have to be priced in line with the broader national property market?

So Mr Khaw deserved to take a bow when he reeled off an impressive list of statistics this week during his Committee of Supply speech.

In just three years, the public housing market has been transformed.

He has pushed out so many new BTO flats that there are now just two first-timer applicants on average vying for one unit.

He has sped up their completion and delinked their prices from the market. He has also managed to cool the HDB resale market by barring private property owners from it and placing tough restrictions on non-citizen buyers.

The fact that his ministry is now turning its attention to so-called "peripheral" issues such as housing singles and divorcee parents, and softer aspects of housing policy like multi-generational living and proximity to parents' homes, is testament to how far Mr Khaw has come in sorting out the difficult housing issues he inherited in a relatively short period of time.

Of course, he has had some help from government colleagues in the Ministry of Finance and the Monetary Authority of Singapore.

Lending restrictions and the imposition of various stamp duties have played a big part in cooling property demand and moderating prices.

However, critics grumble that Mr Khaw might be overly populist. After all, which other minister quotes local pop star Stefanie Sun over famed military general Sun Zi, some remarked to me the other day.

They ask: Has he given due weight to the political or economic principles that had informed previous policies - or the potential longer-term effects of his new policies?

Yet it has been precisely this resolve to move quickly without being encumbered by the decisions of his predecessors that has been the basis of Mr Khaw's success.

Look at how decisively he axed the two-decades-old COV system this week - without any angst, and in just three paragraphs of his speech.

Still, the success of any housing policy is judged just as much by how its after-effects are handled. Now that property prices have tentatively turned south, this half of the battle calls for a different type of skill and care. Let's hope he and his officers will again be equal to the task.


Get a copy of The Straits Times or go to straitstimes.com for more stories.

SERVICES