It is an unfortunate reality of life that sometimes, good ideas are not adopted because the people are not ready for it. For example, no one would question anti-slavery laws today, but such laws would never have a chance of being enacted at a time when slavery was commonly accepted as a fact of life.
SDP’s housing proposal is a radical shift from existing free-market housing policies. In order for SDP’s proposal to be accepted, a paradigm shift is needed not only in the elected government, but also in the minds of the citizens. Two of these mindset changes are described in this post.
Homes are not a retirement fund
The common view held by the average citizen is that money spent on their home is an investment because it grows over time as housing prices rise. Hence, buying a home serves as a hedge against inflation and as a retirement fund. However, home prices cannot rise indefinitely (the sub-prime mortgage crisis was a direct result of naively believing in home prices rising forever). Furthermore, high home prices may benefit the existing generation, but the resulting high mortgages will become a cost burden on the future generation.
In order for SDP’s proposal to work, this mindset of “homes as an investment” must be broken. The entire community must be willing to forsake the selfish act of making the most out of our home investments, and accept that home prices must be collectively curbed because they are a curse on our children.
I’m personally doubtful that this mindset change would happen anytime soon due to the inherent greedy nature of man. Furthermore, there are many people in Singapore who simply have no idea how to plan for their retirement. The PAP gave them an easy way out by telling them that they can simply put their money in their homes as a safe investment. If SDP’s proposal is going to take away this “safe investment”, then an alternative inflation hedge must be found for these people who are unlikely to be savvy investors. (More emphasis on CPF perhaps?)
Renting homes is not anathema
Home ownership is seen as a source of pride in Singapore. This is actually a good thing as long as homes remain affordable. But if homes become unaffordable, then the concept of home ownership is no longer a source of pride, but rather a burden imposed upon society by its own collective expectations.
To break this cycle, the collective expectation of home ownership must be re-examined. When everyone places too much emphasis on home ownership, the corollary effect is that renting homes is seen as a path for losers. However, we should ask ourselves whether rental is really a bad thing if the rental price is very low. After all, if the Government was able to give everyone homes for free, we would naturally rejoice as this frees up a lot of personal resources for other activities. If the next closest thing to free housing is cheap rental housing, is it really that bad? SDP’s proposal would only have a chance if this collective mental leap can be made.