SINGAPORE: In a video posted over social media on Tuesday (March 11), Leong Mun Wai, the secretary-general of the Progress Singapore Party (PSP), said that it is the youngest in society who are the most affected when prices rise too quickly.
Using the example of public housing, Mr Leong, a former Non-Constituency Member of Parliament (NCMP) who has had a long career in finance, said in his video that young Singaporeans tend to feel the pressures the most amid high living costs.
When the prices of Build-to-Order (BTO) homes approach the $1 million mark, this strains generational equity, the principle that different generations should have similar opportunities, resources, and rights.
Generational equity ensures that the present generation does not leave an unfair economic, environmental, or social burden on future generations.
Mr Leong warned that without the Prime and Plus adjustments that are intended to keep housing prices available, “some properties may already be there.”
He also made the point that housing affordability in Singapore is often measured against the city-state’s median income, which means that houses are considered to be affordable if a middle-income household can buy them.
This implies, however, that the other half of households that earn less than the median income struggle to afford housing.
This causes them to save and wait longer until they can afford the down payment to buy a home, which, as property prices rise, they then buy at a higher price than earlier buyers.
“Property, like any asset, can overshoot fundamentals,” added Mr Leong, meaning that the price of housing can rise above fundamental value, or rise more quickly than people’s incomes, leading to a phenomenon called an asset bubble.
When homes are purchased at elevated prices, “many people can become losers,” he said.
And while private investors can choose to take risks, Mr Leong asked, “Should young couples have to take market risk just to start a family?”
The former NCMP ended his video by saying, “If not, we need a structural adjustment,” calling for a reform in public housing prices so that Singaporean households may better afford them. /TISG
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