Government to blame for Singaporean’s housing woes: Opposition

Posted on 16 December 2010

HDB’s housing policy skewered at townhall meeting between opposition party leaders and ordinary Singaporeans.

By Terence Lee

What Mah Bow Tan would have said

We can be sure the minister would put up a spirited defense for HDB if he was there. Looks like imagination will suffice. Below is a summary of what he probably would have said:

HDB has good reason to resort to market-based pricing.
“A cost-based system means that the same price would be charged for different flats in the same project, regardless of their location, floor, direction, and other attributes. It would be unfair for the buyer of a second-floor unit to be charged the same price as a 40th-floor unit with an unblocked view, because the latter would clearly fetch a much higher resale value.”

HDB’s financial reports show that the housing agency has been losing money.
“Some have contended that with the market-minus pricing, the HDB is making money from Singaporeans. This is quite wrong. Every year, the HDB publishes its audited financial accounts. In these accounts, the HDB’s proceeds from the sale of new flats are shown to be far below what it costs the HDB to build them. Over the last three years, the average loss on the sale and development of HDB flats was about $600 million a year.”

HDB flats are affordable.
“Whichever objective measure we choose, it is clear that there are enough HDB flats within reach of today’s homebuyers. They range from smaller, no-frills flats in non-mature estates to premium flats in mature estates, catering for different aspirations and budgets (see table above). I hope buyers choose carefully, taking into account their budgets and aspirations. Housing affordability is decided not just by the options offered by HDB but also the choices of homebuyers.”

For deeper reading

If you want to understand the issue better.

Pricing flats according to their value. By Mah Bow Tan for Today.

Are HDB flats affordable? By Mah Bow Tan for Today.

Housing minister’s frustratingly incomplete sales job, part 1. By Alex Au for Yawning Bread

Housing minister’s frustratingly incomplete sales job, part 2. By Alex Au for Yawning Bread

HDB Annual Report : Deficit has doubled – really? By Leong Sze Hian for The Online Citizen.

IF THE Housing Development Board (HDB) was a lady, then she must have felt dejected. Opposition party leaders let rip yesterday at the ruling People’s Action Party (PAP) for over two hours, with the HDB bearing much of the criticism.

Curious timing indeed, considering how National Development Minister Mah Bow Tan was just recently left out of the ruling party’s Central Executive Committee for obscure reasons.

Exciting theatre might have resulted if he, or at least a Member of Parliament (MP), was there to defend her. But while one MP did express interest in attending, he was “unable to seek clearance”, said Mr Choo Zheng Xi, co-founder of The Online Citizen, the current affairs website that organised the event.

Not to say that the meeting, dubbed the “political event of the year”, wasn’t exciting enough. Turn by turn, opposition leaders lampooned the government in response to a question from the floor on HDB pricing.

More transparency, please

Mr Chiam See Tong (Singapore People’s Party), Dr Chee Soon Juan (Singapore Democratic Party), and Mr Chia Ti Lik (Socialist Front) expressed concern about the apparent lack of transparency in the government outfit’s financial accounting.

“We need to make sure that the HDB remains a zero-profit venture,” said Chee, adding that this can be achieved if they reveal the exact breakdown of development costs for HDB flats.

Chiam, an old stalwart of the opposition force, was more biting in his criticism.

Wary of what he calls “paper subsidies” issued by the government, he illustrated how the HDB prices flats at $3 when it is in fact worth only $1. They then sell the flat to Singaporeans at $2.50, calling that a discount.

“We’ve all been hoodwinked to believe that the govt is helping them with housing but actually they are not,” he warned.

Another common criticism raised by the opposition leaders was the supposed lack of foresight by the HDB, which led to the rapid rise in resale flat prices earlier this year.

Said Mr Kenneth Jeyaretnam (Reform Party), who graduated with Double First Class Honours from Cambridge University: “They’ve done a poor job of managing supply. Over the last ten years, house-building has tapered off while population has grown enormously.”

The government’s immigration policy, which saw a massive influx of foreign workers and expatriates into the nation, was a major factor in the population growth, charged Mr Gerald Giam (Worker’s Party).

Offering solutions

In order to mitigate the high costs of flats and make them more affordable for Singaporeans, Giam advocated that these apartments should be fully paid with a 20-year housing loan instead of the usual 30.

“The price of new HDB flats should also be pegged to the median income of Singaporeans rather than price of surrounding flats,” he said.

More solutions were offered by the other political parties, although insufficient time was devoted to explaining these alternatives in great detail. The audience, consequently, were left with little chance to consider whether these policies were half-baked or solid.

Chia, for one, promoted the idea of create a separate category of flats for young couples and needy Singaporeans which has a lower price scale and a shorter lease period which further drives down costs.

Jeyaretnam, on the other hand, saw merit in allowing residents to own their flats indefinitely so that they can enjoy the profits reaped from rising property values. But Mr Goh Meng Seng (National Solidarity Party) does not favour this approach.

“You do not use home as investment; you use your property as an investment,” he said.

In addition, Goh added that couples applying for resale flats should not receive housing grants because such practices inadvertently raise prices by fueling demand.

Implementing something like that though could be tricky, considering how unpopular such a policy might become. But he is undeterred, believing that politicians are responsible for selling difficult measures to the skeptical masses.

Giam agreed that unpopular policies are usually flawed ones.

“The government’s immigration policy was bad, but they had this dogma that they must bulldoze an unpopular policy through Parliament. They did not consider that if many people voice out, then it may be wrong,” he said.

Do share with us whether you agree with the Opposition’s proposals on lowering HDB flat prices.

This post was written by:

- who has written 81 posts on New Nation.

Terence is an online media nut that is obsessed with writing and publishing on the Internet. Recently, he took up photography to expand his repertoire, and hopes to learn videography soon. He has worked in both online and print publications such as The Straits Times, Today, Mind Your Body, The Online Citizen, and Funkygrad. He is currently the assistant editor with SGEntrepreneurs, a website that covers entrepreneurship in Singapore and Asia. Terence can be found on LinkedIn and Twitter.

Contact the author

  • raj

    fantastic work…together you guys can create the change we are so eagerly awaiting.

  • Elice

    I agree with Kenneth Jeyaretnam that giving the nation’s stakeholders a permanent ownership of their homes is much better than returning a possibly million dollar HDB flat at zero value after the 99-year lease expires.

    • Landon Leo

      I agree to a certain extent, but this means fundamentally we will run into other problems due to the global economy effect (basically starting from US fed reserve issue which started 5 decades ago) + the natural problem of lack of SG landspace. Still, it is the right call to promote/enforce transparency on our end in SG. Times are tough for anyone, yes, but at least let the (common) people know the truth.

  • Pingback: United PAP, divided Opposition? | New Nation

  • Pingback: Perspectives on Wikileaks | New Nation

  • Landon Leo

    Regarding ‘What Mah Bow Tan would have said’, this is an actually pretty accurate depiction. ‘Taichi’ responsibility.

  • terence

    Hey Landon,

    just to clarify, the quotes attributed to Mah is actually lifted from the Today articles I cited below. I should have made that clearer. Thanks for reading!

    I don’t understand the first part of your comment though. Which part of the politician’s responses did you not agree with?

    Terence

    • Landon Leo

      I agree to a certain extent because regardless of the option of permanent ownership or 99 year lease, we have not solved a fundamental problem of HDB flats being taken down when reaching 40-50 years old. The natural problem of lack of SG landspace comes in mind here. It is also a tricky technical problem on the engineering level. That’s why I reasoned permanent ownership might not necessary improve the situation.

      In fact it may worsen : homeowners may be forced (hey you know ANYTHING can happen, right?) to take FULL responsibility for their property. With the global economy effect in play, everything adds up. That’s not good news at all.

      But I cannot fully disagree, since Kenneth Jeyaretnam might has saw something I missed.

  • GoldenCard

    Today, our HDB is more of a liability than asset. Government is trying to make Sinagporean borrowing a huge sum from CPF or bank to write off our CPF saving and creating debt.

    In fact, the land should be owned by Singapore people but managed by housing authority. Governmnet do not have the right take free land and generate debts for Singaporean.

    Where all our CPF saving going to?