Oh what a tangled web ...

... the latest Government moves, in response to the vocal minority wanting rules to rein in non-citizens from the HDB market, have proven!

As a result of new rulings recently instituted to placate those Singaporeans who can't afford to compete with permanent residents in the HDB resale market, many non-Malaysian* PRs would now have to widen their search beyond popular areas. This is because some parts of the island have already reached the limits set out in the new quota system.

Now what does this mean for Singaporeans who own HDB flats wanting either to upgrade or downgrade?

The market for their flat will be smaller as a result of the quota, if their flat is so unfortunate as to be in a block where PRs already form 8 per cent of the households. Even if their block has fewer than 8 per cent of PR households, these Singaporean owners can't breathe a sigh of relief until they determine that their neighbourhood doesn't have PRs forming 5 per cent of households.

This is what I call shooting Singaporeans in the foot!

But it serves citizen owners right, if they are among those who had been badgering the Government to rein in the PR buyers, forgetting that when their turn comes to sell, the bigger the market, the better it is for their assets.

What is even more galling about the "restrict the PRs" move is that it makes those HDB flats already owned by PRs potentially even more valuable than rising property prices have already made them.

This is because PRs without a HDB home -- who for whatever reason want to move into a block or neighbourhood where the quota is already filled -- have no choice but to buy from other PRs. So suddenly HDB flats owned by PRs in such blocks and neighbourhoods can demand from fellow PRs a premium over the asking price.

Of course the Government could stop the PRs from enjoying this unintentional benefit by decreeing that PRs in a quota filled neighbourhood wishing to sell must sell it to a Singaporean or the Government.

But I'm certain it won't be so dumb as to further complicate an already complicated move.

So far, it has been dumb enough to open the HDB resale market to all PRs. Sure, when that step was taken, the intention was good -- to allow Singaporean sellers to enjoy a larger pool of buyers.

Having taken that step, it was dumb enough to respond to those citizens who want an easy ( read "cheap") way into the HDB resale market -- by imposing the PR quota as well as by making resale buyers keep their flats longer.

As I've pointed out  in my March 8 post, the move to make resale flat buyers keep their flats for three years won't bring down prices; instead, by locking up chunks of flats from the market for 36 months, the Government is effectively underwriting a better price for those who are able to sell.

How that is going to please Singaporeans whinging to buy at lower prices I don't know. I also don't know how the Government is going to appease those Singaporeans who are unitended victims of the PR quota. These have to sell to Singaporeans, at perhaps a lower price than would be the case.

Tell them that this is national service? They will tell Mr Mah Bow Tan to tell that to the marines.


*PRs refer to non-Malaysian PRs only, as the quota rules don't apply to Malaysian PRs.