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(04-05-2011, 12:08 PM)nsengkia Wrote: I have a slightly different perspective on the interaction btw CPF Policies and Housing Prices.
One of the major drivers of rising housing prices is low interest rates. CPF and bank deposit interest rates may be low but it is the bank LENDING rate that is key to driving up housing prices. Bank lending rates are low because housing is a ZERO risk lending proposition for them. Even a US subprime scale magnitude 9.0 property crash will only affect them LAST because BANKS HAVE A FIRST LIEN ON YOUR PROPERTY AND (YOUR) CPF ONLY THE SECOND. So in the event of a major crash, the population's CPF retirement savings will be wiped out first before the Banks loose a single cent. On top of that, loans in Singapore are full recouse to the borrower so the owner, after loosing all his CPF (which if you leave untouched in your CPF account is protected from all lawsuits), may also end up owing the bank.
If you agreee with the above analysis, one solution to moderate housing inflation would be to reverse the order of priority of the lien i.e. (your) CPF has first lien and the bank only the second. The full recourse can stay so that borrowers beware but they will not end up destitute without CPF in their old age. The banks will become more careful on their valuation limits and interest rate chargeable so the amount of cash chasing property will be reduced. The only downside is that the banks become exposed to an economic slump and that may not be acceptable to the most business friendly government in the role even at the expense of their own citizens retirement or lack thereof.
P.S.: And I do not need a $2+ million salary to be able to come up with the above policy suggestion.
All that will do is increase the credit risk to the bank lending you the money. When that happens expect the bank to ask for more collateral, higher value to loan ratio (e.g. 50% downpayment), higher interest rates or to simply refuse to lend you money.
(04-05-2011, 12:01 PM)corydorus Wrote: Not that i support pension fund, but the point is this is mainly government to worry and find a balance way out.
There is no free lunch. More benefits given to you without corresponding increase in income means resources have to come from somwhere, whether in higher taxes now, or your children having to bear the burden of funding your benefit.