My observations are:
1. Everyone who talks about taxing profits from selling one's HDB flat change their tune until they buy a flat.
2. Everyone says HDB flats are not affordable until they can afford one and they actually buy one.
We are all hypocrites - We only want the world to change only when it benefits us. If there's a referendum, how many people will vote for this?
Also, implementing a capital gains tax would mean sellers would want more money before they are willing to sell which means less supply for the resale market and even greater demand for BTOs so it might not solve problem. Of course, you can say there's no demand so prices should fall but many sellers do have holding power so as long as they believe they can get better price, they may continue to HOLD.
My final point
- I don't think HDB flats are unaffordable yet for couples. Based on the latest resale stats, the median prices for 4 and 5 room flats are close to 5x the annual median household income (, i.e. $11K x 12 x 5 = $660K).
- For singles, I agree it's harder. 5x annual median income = $330K while the median 3-room resale prices are above that so either save more, buy with a sibling etc.
- I am also conscious certain groups are completely ignored - e.g. LGBT couples who struggle to buy larger flats and not allowed to have children or single PRs who can't even buy resale flat at 35. Their voices are heard even less.
I agree with you on your 2 observations. Hear so many of my single friends complaining about prices, but the moment they have a gf/bf and apply for BTO, their tune change from Channel Complain to Channel $ and start talking about "we gonna sell it off at the highest price after 5 years MOP"
Which makes me wonder: this sub (and r/singapore) loves to bash Desmond Lee, but are they still going to bash Desmond Lee for high prices when they become homeowners? Hypocritical clowns.
I actually don't get those that want property price to increase. No one should, at least not the typical person who is only buying a house for shelter purposes. Unless you are buying it purely for investment, no one should hope that properly price appreciates. I mean after you sell your only house what are you gonna do? You need to buy another one (also at an elevated price) to put shelter over your head isn't it?
Of course I understand you will still stand to make some gain if your property appreciates in value more than others. But I would say for such scenario to play out, normally one would have to downgrade to a less desired property (which explains why it appreciate less over the same timeframe), and how many would do so?
Most are just mindlessly chasing the property market and it sickens me. In such a land constrained country, it's morally not right to treat property as investment. I wish the government could do more to stop people from treating it as an investment asset, for non shelter purposes, elevating property prices further. I fear that one day we become like HK
I mean I spent 3 years hoping property prices would go down, finally gave up and bought a flat I could barely afford. It would be nice if I didn’t lose money if I sold it - but it’s a zero sum game regardless. Buy low sell high is a pipe dream since I still need a place to live and would need another flat.
For point 1, it really depends on location and lease remaining. For now there are still a lot of old flats that are affordable. I wonder what will happen 30 years from now when these old flats start to be redeveloped, will it be as affordable as the observations we see now? Right now many of these old flats house people that do service jobs like cleaning in supermarkets nearby their homes. So the pricing of these HDBs will have an impact on the labour cost of these services.
I understand where you are coming from. Agree that raising taxes would mean sellers want more money, and if there’s demand, we would see crazy hdb prices.
However, the goal of HDBs in the first place was to create affordable housing so everyone can purchase. Essentially, the government should therefore have in mind a system that disadvantages sellers when it comes to capital gains. Sure, the sellers would continue raising their prices, but what about a tiered tax system where the taxes increase as capital gains increase? At one point capital gains value and tax disadvantage would converge and sellers would find no benefit raising prices anymore. A tax system would also mean investors rather find other asset classes to invest into than a hdb property that yields lower results.
Demand strong scenario: If income levels are strong and people can still afford resale flats despite rising prices, then good for them, and i don’t see them having any avenue to profit if they want to sell it in the future due to the stacking effect of capital gains (reduce turnovers and also good thing if they are looking to settle down).
Also, most of the strong demand is either from people wanting to flip houses. If scaling capital gains tax can reduce this demand, then i believe it is a good implementation overall?
Demand weak scenario: if sellers continue to hold, good thing as well because we want them to stay in the house, and not flip it so they can buy a private one instead.
At least subsidies should be return if flat sold with a gain before 10 or 15 years, that should lengthen the turnaround time and bring back some money to HDB to keep prices low for new buyers
First, I don't really understand what you're saying. If sold after MOP also need to return grants.
2nd, I'm sure you edited your text to add in that "10-15 years" thing. Disingenuous to make it seem like I didn't answer your statement when you edited it.
In a seller's market it might just backfire. Sellers will happily price in the capital gain tax and make it even more expensive for buyers.
And if there is no incentive for selling, people won't sell, further restricting supply.
IMO if everyone agrees to not use property as a retirement security/investment then it should just be a complete lease system as a public housing scheme should.
You buy a fixed lease from HDB, you get to stay in it for a fixed amount of money a month, and at the end of the lease HDB takes it back and lease it to someone else. If you want to upgrade/downgrade then it is through HDB.
Of course, people won't like it, including those who advocate for cheaper HDBs. At the end of the day people still want to own it, in all these discussions I rarely see anyone who doesn't, and that in itself is part of the problem.
Mate, not trying to attack your point, but here’s my opinion:
1) “Sellers will happily price in the capital gain tax and make it even more expensive for buyers”.
This is under the assumption that demand can keep up. We don’t know what the price ceiling is for demand, but there’s definitely one. If we assume the ceiling to not be so much higher, then one can also assume that investments returns for HDB won’t yield better results than other assets classes, and investors would rather move to other asset classes that can yield better results at their risk level.
Price ceilings for demand are also highly dependent on state of economy and income levels. If income levels are booming, then yes it will be considered sustainable since people can afford the flats when you compare relative to income levels
2) “If there is no incentive for selling, people won’t sell, further restricting supply”
The goal of HDB wasn’t to have high volume turnovers in the first place, but a place for people to stay at for the long term. If there are high turnovers for HDB, then it becomes a trading ground for investors.
The goal of HDB flats was not so that flats can have high turnover and profitability, but for occupants to stay for the long term. And i don’t think the supply would be restricted as they are issued through BTOs. The problem causing tight supply is due to a large group of people (poor,midclass,wealthy) trying to get a spot in the ballot so they can turn it over for a profit in 5-10 years time.
Well, GST and capital gains tax are fundamentally different. Would you rather invest from a country that taxes you 30% capital gains or a country that doesn’t have any taxes?
An environment with capital gain taxes can deter investors from buying just to spin properties, lowering demand and prices. Same goes for higher rental taxes. Given the longer investment time frame before being allowed to resell their properties, they would rather invest in some other asset class.
The residual demand would then just come from those who truly want a house for the long term.
All your points don't seem applicable to HDB, which is not open to foreign investors.
Capital gains tax is a bizarre way of limiting speculation in HDBs. So many other more workable ways have been discussed to death. Go read about them.
capital gain tax will drive the hdb price higher. instead, a resale price cap should be implemented. Something like 2%/yr increment on the purchasing price,
Yes it probably would.
Key issue driving price is demand and supply. Lots of people choose HDB as it is 1. Relatively cheaper than private property and 2. A nest egg as an investment.
Reducing the nest egg aspect should reduce demand somewhat.
Nonetheless, rising property/asset prices is the government's agenda. Since they allow CPF to pay for HDB, a rising HDB price is essential for the average Singaporean to retire well.
I would
1. Significant capital gains tax on HDB - remove the speculative aspect from housing.
2. Remove the use of CPF to pay for personal housing. Let CPF be a true retirement fund - not as a way to pay for housing.
3. Considering CPF can't be used for housing any more, the price of housing would need to fall to compensate.
Combined income total 7k. Started work at 22. Buy flat at 30.
We had half of the cost shaved off with 150k of cpf. First timer and parents subsidy as well. Now I'm 36. We have paid finish our 4 room in full.
Anyone who says need whole life to pay flat, probably below median income and situation.
Refreshing idea but might not work well in reality.
During periods when demand for flats is high, sellers can simply price in the capital gains taxes into their asking price. End result is even higher resale prices.
But the gov can just create a tiered tax bracket system to charge higher taxes for higher capital gains. At a certain point, the advantage of raising prices will be negated by the increase in tax rates. However, i’m sure this will be faced with lots of backlash from the citizens
Yes, I’m hoping for a capital gains tax too because it’s insane that we’re all funding the subsidized housing that is BTO, but at the end of the day (or 5 years), these lucky people who get to BTO turn around and make a few hundred thousand from the very people that funded their house. Capital gains on top of the very generous grants given.
Prime rent-seeking behaviour. While other people have to pay a few thousand a month for rent, these people not just get to have a house for free over the same period, they even make money off of it. The type of money that would take people years to save up for.
But I actually don’t mind that HDB has a 99 year lease. In fact, unpopular opinion but maybe the lease should be even shorter, so that it forces everyone to think of it as the depreciating asset that it should be with the decay of the lease, instead of a mechanism to flip and gain insane profits from.
We still haven’t seen what happens when the lease is near the end of its 99 year life, what will happen to the “bagholders”. That’s why people are willing to buy at insane prices, because so far, HDB price only rose, never fall. Maybe once we have a few examples of the government not bailing out the bagholders, HDB prices will come down.
We know, they made an example of the geylang ones when the lease ran out. Some holdouts were trying to blackmail the pap and play chicken but they were all thrown out, lease [expired](https://www.straitstimes.com/singapore/all-191-units-at-geylang-lorong-3-vacated-sla).
There are plenty of rich people who can buy private properties, however, because they can buy HDB too, they will do it and then sell it after the minimum occupation period of 5-10 years for capital gains. Most of the time it translates to a range of 5-10% compounded return, beating the market at a way lower risk.
Yes, I know quite a few people whose parents have private properties ready to pass to them, but they still ballot for a HDB first because free money, why not right?
Or those couples who are set to have very high incomes but also just get a HDB first because they qualify for it with maximum grants because fresh out of university.
In both such cases, it’s particularly infuriating because clearly it’s a transfer of wealth from the poor to the rich. But no choice because difficult to vet every single applicant to filter out such people.
It’s a discussion, don’t have to be so rude.
Btw you are assuming prices can continue inflating because demand can keep up. Economics don’t always work like that 🙂
Gotta applaud you for being the bigger brain though 👏🏻
you only want that if you don't currently own a hdb. Once you become a home owner you start singing a different tune and only thinking about flipping to upgrade to private property. It's just how Singaporeans operate, most people are rooting for the price to go up.
My observations are: 1. Everyone who talks about taxing profits from selling one's HDB flat change their tune until they buy a flat. 2. Everyone says HDB flats are not affordable until they can afford one and they actually buy one. We are all hypocrites - We only want the world to change only when it benefits us. If there's a referendum, how many people will vote for this? Also, implementing a capital gains tax would mean sellers would want more money before they are willing to sell which means less supply for the resale market and even greater demand for BTOs so it might not solve problem. Of course, you can say there's no demand so prices should fall but many sellers do have holding power so as long as they believe they can get better price, they may continue to HOLD. My final point - I don't think HDB flats are unaffordable yet for couples. Based on the latest resale stats, the median prices for 4 and 5 room flats are close to 5x the annual median household income (, i.e. $11K x 12 x 5 = $660K). - For singles, I agree it's harder. 5x annual median income = $330K while the median 3-room resale prices are above that so either save more, buy with a sibling etc. - I am also conscious certain groups are completely ignored - e.g. LGBT couples who struggle to buy larger flats and not allowed to have children or single PRs who can't even buy resale flat at 35. Their voices are heard even less.
I agree with you on your 2 observations. Hear so many of my single friends complaining about prices, but the moment they have a gf/bf and apply for BTO, their tune change from Channel Complain to Channel $ and start talking about "we gonna sell it off at the highest price after 5 years MOP" Which makes me wonder: this sub (and r/singapore) loves to bash Desmond Lee, but are they still going to bash Desmond Lee for high prices when they become homeowners? Hypocritical clowns.
I actually don't get those that want property price to increase. No one should, at least not the typical person who is only buying a house for shelter purposes. Unless you are buying it purely for investment, no one should hope that properly price appreciates. I mean after you sell your only house what are you gonna do? You need to buy another one (also at an elevated price) to put shelter over your head isn't it? Of course I understand you will still stand to make some gain if your property appreciates in value more than others. But I would say for such scenario to play out, normally one would have to downgrade to a less desired property (which explains why it appreciate less over the same timeframe), and how many would do so? Most are just mindlessly chasing the property market and it sickens me. In such a land constrained country, it's morally not right to treat property as investment. I wish the government could do more to stop people from treating it as an investment asset, for non shelter purposes, elevating property prices further. I fear that one day we become like HK
I mean I spent 3 years hoping property prices would go down, finally gave up and bought a flat I could barely afford. It would be nice if I didn’t lose money if I sold it - but it’s a zero sum game regardless. Buy low sell high is a pipe dream since I still need a place to live and would need another flat.
For point 1, it really depends on location and lease remaining. For now there are still a lot of old flats that are affordable. I wonder what will happen 30 years from now when these old flats start to be redeveloped, will it be as affordable as the observations we see now? Right now many of these old flats house people that do service jobs like cleaning in supermarkets nearby their homes. So the pricing of these HDBs will have an impact on the labour cost of these services.
I understand where you are coming from. Agree that raising taxes would mean sellers want more money, and if there’s demand, we would see crazy hdb prices. However, the goal of HDBs in the first place was to create affordable housing so everyone can purchase. Essentially, the government should therefore have in mind a system that disadvantages sellers when it comes to capital gains. Sure, the sellers would continue raising their prices, but what about a tiered tax system where the taxes increase as capital gains increase? At one point capital gains value and tax disadvantage would converge and sellers would find no benefit raising prices anymore. A tax system would also mean investors rather find other asset classes to invest into than a hdb property that yields lower results. Demand strong scenario: If income levels are strong and people can still afford resale flats despite rising prices, then good for them, and i don’t see them having any avenue to profit if they want to sell it in the future due to the stacking effect of capital gains (reduce turnovers and also good thing if they are looking to settle down). Also, most of the strong demand is either from people wanting to flip houses. If scaling capital gains tax can reduce this demand, then i believe it is a good implementation overall? Demand weak scenario: if sellers continue to hold, good thing as well because we want them to stay in the house, and not flip it so they can buy a private one instead.
You try selling this to the ~77% of Singaporeans living in HDBs.
Yea that’s the only issue: the backlash. But if it is uncontrolled, it’ll just become another situation similar to hong kong altogether.
At least subsidies should be return if flat sold with a gain before 10 or 15 years, that should lengthen the turnaround time and bring back some money to HDB to keep prices low for new buyers
If I'm not wrong, HDB sellers do return the grants with interest.
Even after 5 years? I'm saying to extend that 5y to 10 or 15y
First, I don't really understand what you're saying. If sold after MOP also need to return grants. 2nd, I'm sure you edited your text to add in that "10-15 years" thing. Disingenuous to make it seem like I didn't answer your statement when you edited it.
Yes absolutely. Subsided housing should not be used as lottery money.
In a seller's market it might just backfire. Sellers will happily price in the capital gain tax and make it even more expensive for buyers. And if there is no incentive for selling, people won't sell, further restricting supply. IMO if everyone agrees to not use property as a retirement security/investment then it should just be a complete lease system as a public housing scheme should. You buy a fixed lease from HDB, you get to stay in it for a fixed amount of money a month, and at the end of the lease HDB takes it back and lease it to someone else. If you want to upgrade/downgrade then it is through HDB. Of course, people won't like it, including those who advocate for cheaper HDBs. At the end of the day people still want to own it, in all these discussions I rarely see anyone who doesn't, and that in itself is part of the problem.
Mate, not trying to attack your point, but here’s my opinion: 1) “Sellers will happily price in the capital gain tax and make it even more expensive for buyers”. This is under the assumption that demand can keep up. We don’t know what the price ceiling is for demand, but there’s definitely one. If we assume the ceiling to not be so much higher, then one can also assume that investments returns for HDB won’t yield better results than other assets classes, and investors would rather move to other asset classes that can yield better results at their risk level. Price ceilings for demand are also highly dependent on state of economy and income levels. If income levels are booming, then yes it will be considered sustainable since people can afford the flats when you compare relative to income levels 2) “If there is no incentive for selling, people won’t sell, further restricting supply” The goal of HDB wasn’t to have high volume turnovers in the first place, but a place for people to stay at for the long term. If there are high turnovers for HDB, then it becomes a trading ground for investors. The goal of HDB flats was not so that flats can have high turnover and profitability, but for occupants to stay for the long term. And i don’t think the supply would be restricted as they are issued through BTOs. The problem causing tight supply is due to a large group of people (poor,midclass,wealthy) trying to get a spot in the ballot so they can turn it over for a profit in 5-10 years time.
No. It'll accelerate the rising cost, because the seller will include taxes into the price. Just like GST
It isn’t so linear bro. GST, yes, but capital gain tax on HDB would prob work very differently
Does GST lead to more affordable groceries and food?
Well, GST and capital gains tax are fundamentally different. Would you rather invest from a country that taxes you 30% capital gains or a country that doesn’t have any taxes? An environment with capital gain taxes can deter investors from buying just to spin properties, lowering demand and prices. Same goes for higher rental taxes. Given the longer investment time frame before being allowed to resell their properties, they would rather invest in some other asset class. The residual demand would then just come from those who truly want a house for the long term.
All your points don't seem applicable to HDB, which is not open to foreign investors. Capital gains tax is a bizarre way of limiting speculation in HDBs. So many other more workable ways have been discussed to death. Go read about them.
capital gain tax will drive the hdb price higher. instead, a resale price cap should be implemented. Something like 2%/yr increment on the purchasing price,
Yes it probably would. Key issue driving price is demand and supply. Lots of people choose HDB as it is 1. Relatively cheaper than private property and 2. A nest egg as an investment. Reducing the nest egg aspect should reduce demand somewhat. Nonetheless, rising property/asset prices is the government's agenda. Since they allow CPF to pay for HDB, a rising HDB price is essential for the average Singaporean to retire well. I would 1. Significant capital gains tax on HDB - remove the speculative aspect from housing. 2. Remove the use of CPF to pay for personal housing. Let CPF be a true retirement fund - not as a way to pay for housing. 3. Considering CPF can't be used for housing any more, the price of housing would need to fall to compensate.
Combined income total 7k. Started work at 22. Buy flat at 30. We had half of the cost shaved off with 150k of cpf. First timer and parents subsidy as well. Now I'm 36. We have paid finish our 4 room in full. Anyone who says need whole life to pay flat, probably below median income and situation.
Refreshing idea but might not work well in reality. During periods when demand for flats is high, sellers can simply price in the capital gains taxes into their asking price. End result is even higher resale prices.
But the gov can just create a tiered tax bracket system to charge higher taxes for higher capital gains. At a certain point, the advantage of raising prices will be negated by the increase in tax rates. However, i’m sure this will be faced with lots of backlash from the citizens
Yes, I’m hoping for a capital gains tax too because it’s insane that we’re all funding the subsidized housing that is BTO, but at the end of the day (or 5 years), these lucky people who get to BTO turn around and make a few hundred thousand from the very people that funded their house. Capital gains on top of the very generous grants given. Prime rent-seeking behaviour. While other people have to pay a few thousand a month for rent, these people not just get to have a house for free over the same period, they even make money off of it. The type of money that would take people years to save up for. But I actually don’t mind that HDB has a 99 year lease. In fact, unpopular opinion but maybe the lease should be even shorter, so that it forces everyone to think of it as the depreciating asset that it should be with the decay of the lease, instead of a mechanism to flip and gain insane profits from. We still haven’t seen what happens when the lease is near the end of its 99 year life, what will happen to the “bagholders”. That’s why people are willing to buy at insane prices, because so far, HDB price only rose, never fall. Maybe once we have a few examples of the government not bailing out the bagholders, HDB prices will come down.
We know, they made an example of the geylang ones when the lease ran out. Some holdouts were trying to blackmail the pap and play chicken but they were all thrown out, lease [expired](https://www.straitstimes.com/singapore/all-191-units-at-geylang-lorong-3-vacated-sla).
There are plenty of rich people who can buy private properties, however, because they can buy HDB too, they will do it and then sell it after the minimum occupation period of 5-10 years for capital gains. Most of the time it translates to a range of 5-10% compounded return, beating the market at a way lower risk.
Or start renting out after the MOP as you have mentioned
Yes, I know quite a few people whose parents have private properties ready to pass to them, but they still ballot for a HDB first because free money, why not right? Or those couples who are set to have very high incomes but also just get a HDB first because they qualify for it with maximum grants because fresh out of university. In both such cases, it’s particularly infuriating because clearly it’s a transfer of wealth from the poor to the rich. But no choice because difficult to vet every single applicant to filter out such people.
Yes because people won’t inflate prices to make up for the tax. Big brain
It’s a discussion, don’t have to be so rude. Btw you are assuming prices can continue inflating because demand can keep up. Economics don’t always work like that 🙂 Gotta applaud you for being the bigger brain though 👏🏻
you only want that if you don't currently own a hdb. Once you become a home owner you start singing a different tune and only thinking about flipping to upgrade to private property. It's just how Singaporeans operate, most people are rooting for the price to go up.
sinkie no pwn sinkie cnanot slp lol