HDB moves: good or bad?

As someone who enjoys having our Government step in whenever I feel the lone individual is no match -- whether for an aggressive neighbour or an overbearing big corporation -- I'm surprised at myself for thinking that the latest HDB move to "curb" speculators may be a bad thing.

To reduce the number of people using HDB flats to speculate in the property market, the time that buyers are required to live in their flats before reselling them (minimum occupation period or MOP) will be increased to three years for all flats bought in the resale market, Minister for National Development Mah Bow Tan announced last week.

Currently, the MOP is 2.5 years for buyers who choose to take up an HDB concessionary loan and just one year for buyers who either take a commercial bank loan or do not take any loan.

'I want to emphasise that HDB flats are provided primarily for owner-occupation and not speculative profit or rental return,' said Mr Mah.

OK, sir, i hear you loud and clear.

But seriously, do you think the measure will help buyers hoping for a collapse of the property market be4 they buy? Will it help those who are anxious to get on the boat be4 it chugs out of the harbour, leaving them behind for good?

The latest action has been prompted by many MPs' concern that some buyers were using HDB flats to speculate in the property market and driving up prices in the process. HDB resale prices hit a new high in Q4 2009, with prices climbing 3.9 per cent from the previous quarter. The median cash-over-valuation (COV) for all resale transactions doubled to $24,000 in Q4 from $12,000 in Q3.


Data from HDB show that the proportion of flat owners who sell their units within three years of purchase rose to 8.9 per cent for the first 10 months of last year. And in 2008, 7.9 per cent of buyers sold their units within three years. In comparison, less than 7 per cent of buyers sold their flats within three years from 2005 to 2007.
 
IMHO, this trend isn't about speculating but about buyers having more options: more attractive alternatives springing up in the market, though not necessarily price-wise; buyers having more mobile lifestyles such as moving abroad to work or study; owners receiving irresistible offers etc
 
True speculators won't want to be stuck for even one year! Twelve months are an eternity for the genuine flipper. So, they are unlikely to have gotten into HDB in any meaningful way. 
 
Too much shouldn't be read into the rising trend of buyers quitting within three years, unless the bulk of them falls within the minimum one-year period. Also, how does this quit-within-3-year trend compare with the trend in the private property market?
 
Now while the thrust of my argument is that Mr Mah has made a pointless move, the worst part is that it may in fact turn out to hurt those it most intends to help.
 
Instead of removing competition from the resale market for the so-called "genuine" buyers to have freer rein, the move may have the effect of making the market less liquid. 
 
Speculators and genuine buyers will be locked up for longer and with interest rates remaining low and private property getting more and more beyond the ordinary heartlander not yet on the HDB boat, I predict that HDB prices will go higher, even as dear Mr Mah launches a frenzy of BTOs. 
 
But there's just so many BTOs that can be launched in a year compared to how many resale flats there are that could be prised from the fingers of loose holders.