On Tone-Deafness and the Danger of the House Burning Down :-(

Ben Leong
22 min readOct 7, 2022


Disclaimer: Opinions expressed herewith are strictly mine as a private citizen and has nothing to do with my employer, the National University of Singapore.

People ask me why I don’t write more often. It turns out that I actually have a job (or some say many jobs) and no one is paying me to write.

That, is why I generally don’t bother to write.

However when 2 conditions are met, I often end up having verbal diarrhea:

(1) When I am stressed (it turns out I am stuck grading midterms and I really hate grading midterms);

(2) When something *really* bothers me.

Unfortunately, both of this conditions have both been met and so I am again picking up my pen. I truly pick the *worst* possible times to write. :-(

If you don’t know me and haven’t read what I wrote in the past, I am v v longwinded. So if you cannot accept TL;DRness, now is the time to bail. You have been warned.

Long Pre-amble

To make things worse, I have also decided to write a long pre-amble as a warm-up because I am also doing to do something I surprisingly have never done before. Before one jumps off a cliff, one often needs to walk up an down a couple of times to “warm up.” This is exactly what I am doing.

While I have routinely criticized the government in the past and I suspect many will give me credit for doing it some finesse, I have never explicitly directly made public statements to the effect that I feel that existing policies are wrong.

It should be abundantly clear from this post that I have always been perfectly been able to do so, but I have just chosen not to do so. Allow me to explain why.

There are 3 reasons:

(1) I am actually friends with a number of politicians and senior civil servants. I did not overtly try to network with them. I just happen to get to know them over the years because of work and other random reasons. It is plausible that some of them don’t consider me a friend, but I do think that the vast majority of them are v decent, well-meaning and hardworking folks. Directly criticizing them in public is not v good form. One just does not stab your friends in the back if you think they are good people(!);

(2) Most importantly, I don’t think it actually helps. Highlighting the problem(s) publicly might potentially make it harder for the government to deal with it;

(3) What I write would likely be used by the Opposition to attack the government, which likely makes the situation *even* worse.

I have been teaching my students self-regulation and self-mastery. I am not your 20-year-old. Old men like me do not do rash things that don’t help.

Why Now?

To explain, I offer the following allegory:

57 years ago, old man built this house. It was a little shabby at first, but over the years, it grew to become a jewel of East, admired by all and life was good.

Unfortunately, about 20(?) years a small part of the roof caught fire. Because we had a big house, it wasn’t much of a concern. Over the years, the fire grew bigger.

The owner is not completely oblivious. Someone did realize from time to time and warn the owner, “your house is on fire.” The owner said no problem and took out his fire extinguisher (cooling measures), which obviously did help somewhat but did not completely put out the fire. Once the owner stopped using the fire extinguisher, the blaze got bigger.

I wanted to say something about this a couple of years ago, but COVID came. I told myself, “Great, the rain in coming!! How cool is that!!”

But after the rain is gone, not only did the situation not improve, the fire is now threatening to burn down the whole roof (resale prices hitting $1 million not once, but routinely).

The owner tells us, “don’t worry, we have our trusty fire extinguisher!”

Some inhabitants are suggesting that we form a bucket line and that’s not a bad idea, but *it’s not* going to put out the fire.

Others are suggesting that we pee on the fire.

What I am hoping to convince everyone is that we *really* *really* need to dial 995 and have the fire trucks come in to put out the blaze once and for all. I am convinced that if we don’t change course, the whole house will really burn down in 20 years.

It is said that the definition of insanity is doing the same thing over and over and expecting different results. Cooling measures have not solved our problem in the past. Why do we believe that they have any hope of keeping the house from burning down?

Why did things go wrong?

Before we talk about solving the problem, we first need to *understand* the problem. I teach my students that once we fully understand the problem, the solution is most likely obvious.

This is also a v risky section for me to write because some people will likely be taking offence and I would *no idea* who I will be causing offence to. I haven’t got time or energy to check who was in charge of what and I really think that there’s no need to start a witch hunt. More likely than not, the folks who are responsible for the current mess would have retired and we can leave it as such.

For me, I just want to state things as they are. 就事论事. Can I remind everyone that the roof is currently burning as we speak? Even if people want someone to crucify, can we please do that *after* we have put out the fire??

I hope I still have a job come Monday. :-)

The start of the fire was the opening of the HDB resale market. That, in itself was not a bad idea. At many levels, I actually thought that it was a policy innovation.

If I were the one who had to run HDB, I would have had a hard time trying to set the price of HDB flats. Obviously, we could have stuck to some naive cost-plus scheme (which I suspect was what HDB did initially), but I shall explain later why that is not such a great idea.

Anyhow, open-market resale flats is *not* the problem. The issue with markets is that some markets need to be regulated because they have special characteristics. The housing market is one of them because it is big and basically inelastic.

My view is that the government failed to regulate it properly because of 2 past policy mistakes.

Asset Enhancement Defies the Laws of Mathematics

When I first heard of about this policy I didn’t think it made sense. How do we achieve asset enhancement with 99-year leasehold properties? How does the Math work out??

Well, as it turns out like my instincts were right, it does not. And DPM Lawrence Wong had to stand up in Parliament and tell everyone in no uncertain terms that when the HDB lease runs out, the property returns to the government. Why is that any surprise?

I am actually curious to know how such a flawed idea could have gone ahead. I can think of two possibilities:

(1) Staff error. Staff was working on the assumption that we could en-bloc all the aging flats and only projected for like 10 years. A quasi-mathematician like me would never have made this mistake — and that’s why it is good to have mathematicians in the administration;

(2) (Poor) political judgement. Staff told the big boss, this can only last 10, maybe 20 years, and the boss decided to go ahead, since in 20 years, *not his problem*.

Whatever the reason, Houston, today we definitely have a problem. Allow me to admit that I haven’t actually gone to work out the figures, so the above numbers 10 and 20 are mere placeholders. I really have no idea exactly how many years, but you get the idea. ;-)

The Real Culprit

However, it is actually still plausible that that staff who worked out the sums for “Asset Enhancement” didn’t actually completely get the estimates wrong. Yes, Asset Enhancement is confirm *not* sustainable *in the limit*, but if we can regulate the market well enough to cap the price increases to say 2% p.a. (or whatever matching the prevailing inflation), the runway could actually potentially be long enough that it is a problem that could have been left for a later date.

I don’t fully recall why some genius invented the BTO, but my impression was that for a while, HDB has excess flats in Punggol because it was too ulu and nobody wanted to move there.

Whoever was the minister in charge was obviously under pressure and needed the problem solved, or at least needs a solution so that the government doesn’t have to deal with this problem in the future.

Some genius comes up with BTO. You make sure that you have buyers before you build. This way confirm won’t have “ghost” towns. Wah so clever! Promotion for the man!

This is where I need to digress into a teaching moment.

Everything decision in life involves tradeoffs. When there is such an obvious and simple solution, likely there is more than meets the eye!

The reader might want to pause for a moment to see if he can come up with the issues with BTO before scrolling down.










There are 2 major problems with BTO:

(1) Having excess flats is actually a feature and not a bug. It just means that if some Singaporean want to get married and wants a new house straight away, there is a house available! That said, Singaporeans are choosey. Just because they need a new place doesn’t mean that they will necessarily move to some ulu place. Hold that thought.

However, one *obvious* consequence of BTO is that because of the artificially induced lag of (at least) 3–4 years for BTO, we automatically generate a housing shortage (think own goal). Does anyone need to learn Econs to figure out what a perennial shortage does to an elastic market?

(2) What the BTO also does is that it delays the child-bearing for many couples. I encourage my students not to wait for BTO, but to marry and rent first. No need to wait for BTO to start a family! However, most think renting is a waste of money and they are not entirely wrong. My wife also tells me that women have this nesting syndrome and they want to have a place of their own before they start their families.

To me, BTO is the real culprit behind our uncontrolled fire.

Just a quick digression back to the problem of how to solve the “ghost town” problem.

BTO is not the only solution. What I would have done if I were in charge would be to do a reverse auction. For every month that a flat remains unsold, I would reduce the selling price by $10K. Why cannot?

I guarantee that before long, all the surplus flats would be taken up. :-)

Why the Clear and Present Danger

Before we talk about possible solutions, I would like to say that this fire is going to kill us (or perhaps our children), if cannot deal with it decisively and in time. For completeness, I will cite some well-known issues, but what is more important to me is that people fully under the extent to which we are getting burnt.

First, we don’t want to be a China or a Hong Kong. We don’t want our kids to grow up having this stress of not being able to afford a roof over their heads. Yeah, the government is saying every day that it will do its best to keep housing affordable. Do our kids believe that when they see that BTO prices are now at $700K?

And they haven’t even finished school yet! Do they look like they cannot learn from past trends on what’s likely to be awaiting for them when they actually graduate and want to start their own families?

It amazes me that a government consisting of supposedly clever people can be *so* tone-deaf.

For good measure, allow me to say this again: for all that’s said about trust, the people currently *do not* believe an iota when the government claims that it can control the housing prices. Obviously cooling measures will temporarily dampen the market, but what happens after?

Allow me to say that based on what I am seeing as the current trajectory, I do not believe Desmond when he stands up in Parliament to emphasize that the government will keep housing affordable.

This is not to say that I think Desmond is lying. On the contrary, I think he is perfectly well-meaning and he means what he says. So where is the problem?

This leads me to my second point.

What exactly is the definition of affordable? Is having to spend a sizeable chunk of one’s income on mortgages what we accept as “affordable?”

One of likely the blind spots of the present government in my view is that the policy makers don’t seem to understand that “their” understanding of what affordable means is not what many people like as a definition of affordable.

I talk to the young people and they tell me that in spite of the government claiming that housing is affordable (aka they can get a loan big enough and they make enough every month to pay they mortgage), they feel v burdened by the huge mortgages.

Let’s do a thought experiment: 20 years ago, a 4-room flat might cost about $200K (plus minus). Today, the same flat, same size might cost $600K?

Do we actually get 3 times the value out of the flat today compared to 20 years ago?

No. Then someone explain to me: why are paying 3 times the price today, only to have our money locked up and depreciate to zero when the lease runs out? How does this situation make any sense even if the government might be giving out supposedly generous subsidies?

How about an alternative? We keep the prices low and the government can keep its subsidies? Win-win for all eh? How about the government consider *this* definition for “affordable?”

If the government could only have contained the property market and the flat was today only $300K (to account for inflation), we would have been able to use that extra money for more vacations, to save for retirement, or for our children’s education!

Not-So-Obvious Problem with the High Property Prices

First, let me just say something really obvious in Singapore: there are a lot of foreigners in Singapore. Like a lot.

Captain obvious I know.

While the foreigners are supposedly paid quite a lot, aka above some minimal sum, my back-of-the-envelopment calculations seems to suggest that the vast majority of the “working class” foreigners will be renting because it is unlikely that they can afford properties.

While there are rich foreigners, my understanding is that vast majority are “working class” types. If not, why would people be concerned that they are stealing jobs?

Well, then my question is: who actually owns these properties that the foreigners are staying with?

I would venture to suggest that the vast majority are own by the rich, some locals, some foreigners. It doesn’t matter who owns the properties, what is true is that they are collecting rent and these days, *a lot* of rent.

While there have been recent announcements about the increase in the salary requirements for EP and S-Pass, did anyone pause to think about whether the foreigners are any better off? I would venture to guess that the vast majority are likely not much better off because most of the increases (if any) have been soaked up by the obscene rentals that we have been seeing. Basically, high property prices translates to high rentals which cause

All in all, high property prices lead to more inequality, likely leads to worse outcomes for our migrant workers and will feed in the business costs and raises the costs of living for both local and foreign workers.

Rent Seeking is Bad

Singaporeans have often been criticised for being lacking in creativity and entrepreneurship, but can we blame them?

What role models do they have, when all their lives they are told stories of “successful” people who bought and flipped properties. But even if not, they should all seek to build a second or even third property for “passive” income.

Is that all they know? Why didn’t we teach them that they should create new things and develop new skills so that they can create value?

The landlords and property speculators consider themselves investors; I consider them parasites of society.

Exactly what value do they actually bring to society by collecting rent?

Also, if people can just sit around and make easy money flipping property, who will be willing to work?

Imagine this: if we can make rental mostly unprofitable, we might have a chance at changing the general rent-seeking mindset of the society at large to something halfway productive! Let’s hold that thought for a moment.

Whither the solutions?

Before we discuss the solutions. I would first like to do some public education on the recent brouhaha about HDB subsidies, aka explain why Desmond Lee makes people angry by saying that “HDB incurred $270m loss for Ang Mo Kio BTO project.”

I suspect that the government really didn’t get this, or he wouldn’t have said it. I think the problem with this statement is best explained with a simple example.

Suppose I can make shovels that you want to buy for $10. Just last month, you complained to me that shovels were too expensive and I said I understood. I will do something about it.

Now, instead of selling you the shovel for $11, which to you would have be patently reasonable, I turn around and tell you, “bro, actually hor, the shovel is worth $20 at NTUC. Tell you what, I will be a bro and sell you for $15!”

I say I understood and now I try to sell you for $15 and expect you to be grateful? How can people not be angry?

Now, I shall offer not one, but 5(!) policy proposals. Not all need to be implemented and even if a subset are to be implemented, probably not all at the same time. :-P

Naïve (and Wrong) Proposal 1A

The naïve and obvious solution would be and I quote (because I cannot say it better than ex-GIC Chief Economist Yeoh Lam Keong):

A more equitable, transparent and affordable way to price BTO flats should thus be construction costs plus a small premium for location available by ballot.

If prices are much lower than resale flats then a longer minimum occupation period ( MOP) can be used to protect the market value of resale flats especially in prime locations as already the case.

The true cost to the government after subsidies will then be much clearer and BTO flats in all locations much more fairly affordable.

Why is this not the right solution? Doesn’t it solve the problem by making the price cheap for the fella buying the BTO?

Sure it makes the fella buying the BTO happy, but does it reduce the property price?

Apply some imagination: what do we think will happen after the MOP? Well, the BTO buyer will sell the flat and pocket the cash(!) gain. This is real money. Take another mortgage to buy a resale flat. Instant cash! How cool is that? People don’t need to know how to do this, ‘cos the property agents will be a-knocking.

What HDB would have succeeded in doing would be to have created yet another Toto! Do we need yet another Toto in this country?

Proposal 1: Cost-Plus with No Resale

Selling at cost-plus isn’t a complete bad idea if we can fix the lottery problem. What need to do is to introduce a new class of flats that is equivalent to HDB in its pre-open-market days, aka can only sell back to HDB.

To give credit where credit is due, SDP has proposed a similar scheme. I cannot say that I agree with their numbers ‘cos I dun have the time or energy to look into them, but the high level idea is more or less there.

However, introducing this new class of flats does not do an iota of good for the rest of the massive resale flat market, which would could continue to spiral upwards independently.

This policy is good for preventing gentrification. Who do we think can afford to live at the Pinnacle? If we can set aside some stock of price-controlled flats at the Pinnacle then even Singaporeans who are not well-to-do also have the chance to stay at the Pinnacle.

As astute reader highlighted that “Cost-Plus with No Resale” is just a long-lease rental flat — and he is completely right!

Proposal 2: Completely exclude private property owners from owning HDB

The only people who can afford to own 2 properties are the rich people.


So why are we allowing the rich to live in a private property and make rental income out of their HDB flat? What does that do for inequality?

I think it’s fair for owners of private properties to be precluded from buying a HDB flat, but then why do we allow those who move from HDB to private properties to retain their HDB flats. Where is the equity?

Proposal 3: Make foreigner ineligible to buy more than one property in Singapore and they must die die stay inside if they own it

Does the government realize that it makes people angry when the Straits Times reports from time to time that most of the recent condos/private properties have been snapped up by foreigners? What’s worse are the reports that many buy not just one to stay but allegedly multiple units.

Allow me to highlight that it is not a law of nature or right that foreigners should to be allowed to purchase properties at all.

Yes I understand that we were worried the locals couldn’t afford units in Sentosa Cove, so let’s limit them to Sentosa Cove. Why let these rich foreigners compete directly with Singaporeans and increase pressure on property prices?

Basically, prices can be reduced by curbing demand.

(Gold Standard) Proposal 4: Ensure the Supply Exceeds Demand

Actually, my view is that it is not entirely so hard to regulate the property market. All the government needs to do is to have the stomach to ensure that there is always excess supply.

Can this really be done?

For those who say that Singapore doesn’t have enough land, recall the Population White Paper? Do people not believe the government when it claimed that we can fit 10 million people? Do we seem anywhere close to 10 million? Then how can there not be enough land?

Can we predict demand well enough?

People think that the government doesn’t know how many kids or born each year or have marriage statistics? How hard is it therefore to predict local demand?

Foreigners how? Even easier! We actually get to decide how many to let in!

Anyway, we don’t need to match supply and demand perfectly. In fact, we want to have excess supply, but not *too* much. Now, let’s take a moment to convince ourselves that this would work. I make 2 claims:

(1) A person can only physically sleep in one house at any one time;

(2) An unoccupied house is a money-losing proposition.

The first claim is self-evident. As for the second claim, for the properties that are not fully paid up, the owner need to pay mortgage and doesn’t get to collect rent. That is clearly net negative. But forget cash flow, even if the property were fully paid up, a 99-leasehold property would be depreciating every year. Even a freehold property will incur periodic maintenance and repair costs.

Basically in a market where you are convinced the property has no chance of appreciating, how much would you want to pay for a property that ends up causing you to lose money?

Essentially to achieve this steady state of surplus supply, we will have to significantly ramp up the building of HDB flats and go back to the old “Build-to-Projection” regime. If we can execute this policy, then we can also throw BTO out of the window and our children can marry and have kids earlier! How cool is that?

(Real) Proposal 5: Use Political Will to Coerce the Market to Behave

Here, allow me to digress into a short Economics lesson. For those who learnt their Economics well, the real factor that determines prices is not so much supply and demand, but expectation.

Say today a flat is worth $500K and everyone is convinced that next year, it is only going to be worth $400K. Who (except perhaps for folks doing money laundering) would possibly want to pay more than $500K for the flat tomorrow?

So imagine if DPM Lawrence stands up in Parliament and says that he agrees with this loudmouth prof called Ben Leong and he will introduce (over time) whatever necessary policies (some of which I have cited, but there are likely others and other variants) to die die make sure that the price index drops by 50% over the next 15 years of his tenure as PM.

How do we think the market will react?

If the market completely ignores him, then the PAP probably has no need to run in the next GE and the Opposition can take over (why waste time?); but if we do believe that the current PAP government does retain a sizable reservoir of trust, then I think the things will already start to improve, even without anything being done….. though the government must actually indeed follow through later.

At the end of the day, it boils down to managing expectations. The details probably don’t matter *that* much. As long as the Government is willing to inflict pain, prices will drop; inflict more pain, prices will drop more. Unfortunately, inflicting pain does not win votes, so finesse is required.

What the government probably needs to do is to make it abundantly clear where the government wants the market to go and that it has the willingness to inflict whatever pain it takes to make it happen (credible threat), and it might be enough.

Of course this is easier said than done, but I hope we actually do something. We might fail if we try; but if we don’t, we fail by default. :-(

Why Am I offering the solutions? Why Now?

Now, allow me to explain why I decided to offer solutions.

First, I am convinced that I am not the only one who can write this post. None of these ideas are particularly clever. I could have written this 10 years ago…. but guess what? I was waiting for that someone *else* to do the dirty job.

I guess I blinked.

I have recently come to realise that if I didn’t write this and some Opposition party dude wrote the same instead, the country might end up in a deadlock. It would then be v difficult for the PAP to do the right thing politically. This fear is actually real and perfectly rationale.

It leaves me with great sadness to say that we have really lost our way in our regulation of the housing market in Singapore. I also think it might be timely to do some public education.

What I have effectively done is to “open source” some solutions. I hereby grant any parties to use whatever ideas in this post. Dun need to attribute me, but please don’t try to claim originality. What I am essentially trying to do is to ensure that most of the reasonable solutions to the problem remain in the public domain so that the present government has maximum latitude to operate (think defensive patenting).

This is actually the most difficult post that I have had to compose and publish, ever. I resisted for 10 years.

Now I see my children growing up and seeing HDB prices hitting $1 million routinely, I have found it v v difficult to keep ignoring that inner voice. As a father, one cannot help but worry for your kids.

I teach my students 4 words: “Do the Right Thing” and I share with the young public servants I work with another 4 words: 问心无愧 (live without regret).

Basically, this issue bothers me so much I actually cannot sleep properly. Furthermore, I am actually desperately trying to recover from illness. Cannot sleep = #diefaster

From where I am standing, the barbarians are at the gate. Our government while well-meaning is somewhat tone-deaf. Hiaz. If no one speaks up, I fear we’re all gonna die. Even if I speak up, we might still die anyway, but at least I get to sleep well on the way there. :-)

The Catch

There is no utopia on earth. Allow me to admit that life isn’t all sunshine and roses.

Life just does not work this way.

If what I am asking for comes to pass, some (not all) existing property owners will lose money. As always, the fast ones will escape; the slow ones will be left carrying the can.

I will likely personally lose money (at least on paper) because I only have one property and I am not planning to move out.

However, I am convinced that if we can collectively tame the housing problem, our children will less stressed. They will no longer be forced to take on these huge financial burdens when they get married.

The vast majority of us (except the ultra-rich) will also be less stressed for our children.

While I believe there will be long-term economic benefits to the country, just for our peace of mind and for our children, I hope that this is a tradeoff that we can collectively agree to accept.


I have known DPM Lawrence Wong for a number of years because of a number of interactions over the years, mostly due to work. He is a pleasant and earnest chap.

What I do want to say also is that I v much appreciate him standing up in Parliament to tell people in no uncertain terms what a 99-year leasehold means. I didn’t think it was political expedient and I was surprised that he said it anyway. I saw hope.

I hope he finishes the job he started.

At some point, some kaypoh reporter (possibly Bertha Henson) would likely ask him what he would like to be remembered for as PM.

I have a suggestion.

If he can solve our housing problem (which something that perhaps none of the other developed cities has done and can do) once and for eternity during his tenure, I would personally petition to have a bust of him erected next to Stamford Raffles (or the Merlion if he prefers).

The plaque beneath would be the words, “Here stands the man who tamed the monstrosity called housing prices and brought comfort and solace to the people of Singapore.” :-)

In case people want to post comments, the discussion is here.

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Afternote 1

I have come to realize that while I might have said a lot above, there is one really important idea that I really want to put out there. It is commonly acknowledged that housing prices will and can only keep going up in major cities like Singapore. Pretty much everyone in the world likely believes that and it’s not just us.

I would like to challenge this assumption.

I actually believe that if there is enough political will and support for the populace, it is possible achieve a different equilibrium where housing prices can be kept controlled for the long term at a level where it actually does not make financial sense to invest in property as as asset class(!). I suspect that this is quite a heretical idea.

If this point has been missed above, everything problem boils down to managing expectations.

Cooling measures alone will never be effective, because the prevailing wisdom is that they but provide temporary relief, and then the prices will start rising again! Given what we have seen in the past, what are people expected to believe?

At the heart of this problem is that people don’t actually believe that the government feels that it is in its interests to keep the prices down. Allegations that the government is trying to profiteer from land sales will keep coming.

— — — — — — — — — — — — — — — — — —

Afternote 2

Some folks claim that I have been misleading in this post and have not represented the current situation fairly, so I wrote a Part 2. People need to understand the distinction between “the roof is on fire” vs “the house has burnt down.”

If indeed the house has burnt down then really no need to talk so much. Talk also no point. People should just find another house, aka move overseas.



Ben Leong

Fulltime prof, parttime kaypoh