For richer or poorer

There used to be a time when investments in property in Singapore was sure to yield high returns - very high returns. I remember my boss once said that there is certainty in the property business - you can't lose. That was back in the earlier 1990s, and indeed he was right. The company is now a major player in the property market in Singapore. I, in turn, bought an HDB apartment in 1993, and over ten years, saw its value more than double what I originally paid for it. I was not the only one. At that time, how much you made in property from your HDB apartments depended on how near you were to the head of the booking queue.

Fast forward 10 years and the situation has changed drastically. Now, Singaporeans who bought 5-room and executive apartments for over $400K apiece are suffering negative equity - i.e. the current value of their apartments is significantly lower than the price they originally paid for them. Losing $50K on paper can be psychologically painful even in spite of the fact that they were aided along in purchasing that apartment in the first place by the government (read tax payers' money) to the tune of $40K. Some are asking who should pay for this loss, as if it is the government's fault that they bought into the property ownership dream. I hope they don't think it is the taxpayers' fault.

Property values, like the values of stocks and shares, rise and fall with the times. The only difference between the two perhaps is the turnaround time between the rises and the falls. Property cycles tend to be longer, but correspondingly, they are more stable investments and can yield rental income in the meantime, irrespective of the assessed value of the property. You either buy or sell stocks, you can't rent them. Speculators can dump their shares in a matter of days rather than years.

So should anyone bear the blame or be held responsible for a personal investment decision such as purchasing an apartment to live in, with a $40K gift from the government to boot? Saying 'yes' is ludicrous and shows a naivete characteristic of juveniles. To suggest that somebody else bear the paper loss shows an inability or unwillingness to take responsibility for an action nobody forced them into. Of course, there are those who would argue that their property prices were inflated in the first place by the government charging market prices for land on which these HDB apartments were eventually built. Yes, I agree about the price inflation part - but only on hindsight. But then, who has the benefit of hindsight when a purchase decision is made? We all hope to make money from the investment some day - sooner rather than later. Even I put money into .com companies that turned out to be .dud companies. Perhaps only those who have been burnt before, or who have lived longer and seen more of these cycles will be more cautious and are more circumspect. Even then, some experienced hands have been burnt before. While I sympathise with owners who are sitting on negative equity, they can hope that when the time comes, their paper loss can be converted to gains. The only problem is that this might take some time coming. In the meantime, enjoy your house and don't think too much about the present. A property is a long term investment. There are troughs and there will be peaks.