Your flat > Land + Brick & Mortar

Photo by BBH Singapore on Unsplash

Dear Readers,

Thank you for coming here!

You probably already know that the value of your flat is higher than the combined value of the land it sits on and the brick & motor.

There could be a few reasons why this is the case. 

Here I would like to discuss it from the perspective of “Public Wealth” and would like to advocate that controlling the property price is important to a balanced society in Singapore.

“Public Wealth” is defined as below in Oxford Dictionary:

1. Public welfare, the public interest (now archaic)
2. Public financial resources, national wealth

As the name suggests, “Public Wealth” belongs to the public. 

However, we, as a member of public, may not get our share.

A significant portion of the “Wealth” is used in building infrastructure, such as MRT stations, schools, hospitals, parks.

As you can easily image, the infrastructure has a big impact on the value of your property.

When you own the property, you also “own” that piece of the “Public Wealth” associated to the your property, while people who do not own a nearby property do not.

So that portion of the “Public Wealth” was allocated to a subset of population because they own the right properties, while it rightfully belongs to the whole population.

And more expensive properties tend to occupy more “Public Wealth”. It is a no brainer that the infrastructure in Orchard is more valuable than that in Sengkang.

This creates a re-enforcing cycle to enlarge the wealth gap among the population: 

• Rich people can buy expensive properties, occupy more “Public Wealth”, become richer and buy more expensive properties
• Poor people can only afford cheap properties or no properties, occupy little to no “Public Wealth” and become poorer and poorer (relatively)

Therefore, it is important for the government to control property prices so that most people can afford it and do not have to “give up” all the related “Public Wealth” that is rightfully theirs.

Photo by Cindy Chan on Unsplash

However, it is worth noting that this does not apply in all the countries.

Some countries have negative “Public Wealth”. For example, the infrastructure is built using loans or simply there is no national infrastructure and the communities have to build their own.

However, in Singapore, “Public Wealth” is obviously and hugely positive, thanks to the government.

Therefore, for residents of Singapore, we should buy properties, upgrade when we can and own more properties when we can, trusting that the government will control the wealth gap on our behalf. We just make sure that we do not add more burden to the government.

Till next time!