Tag Archive | "HDB"

Is HDB a good investment? Part 2

Is HDB a good investment? Part 2

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Is HDB a good investment?

Is HDB a good investment?

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The middle class nightmare

The middle class nightmare

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The government can do more to reduce the price of property in Singapore, alleviating the financial challenges faced by a large middle class.

By Fang Shihan

The outlook for average Singaporeans can be scary, especially considering the high cost of living. Photo: WILLIAM CHO / Creative Commons

IT’S probably a universal phenomenon. Fresh graduate comes out into the working world, draws his first paycheck, and wakes up one day a few months later breaking out in cold sweat.

It’s the middle class nightmare. You know, the one where you’re taking a photo at the main door, spouse in arm, kids running around at knee level. You flash a hugeass smile as you look proudly into the camera feeling like your life is absolutely perfect.

And you wake up feeling horrified at how you’ve transformed into a mindless automaton in the economic machine. You also feel ashamed at desiring the perfect middle class life because you’ve been taught in school that it’s all a damn construct.

We all have the same nightmare. But here on the island it’s a little different. See, friends in Australia or countries with a larger land mass feel their skin crawl at the sight of a house with a lawn, a dog and…. a white picket fence. Here we dream about a three-room flat in Punggol with a steel gate, a view hopefully not of the neighbour’s kitchen and…. a maid.

I remember growing up in the 90s listening to the debate about Singaporeans and their 5Cs- cash, car, condo, credit card and country club. Fast forward 20 years later, we’re not even dreaming of the condo anymore. We’re dreaming of a flat. Friggin little cubicles built so close together that you become paranoid about your neighbours eavesdropping while you have sex at home.

Were we ever supposed to aspire to public housing?

MP Mah “Your Assets will Appreciate!” Bow Tan wrote a piece sometime last year reiterating that “the Government’s basic principle… is to provide affordable public housing for the vast majority of Singaporeans – not just for 10 or 20 per cent, like most countries, but up to 80 per cent of the population.”

The government has obviously forgotten about the initial proposal of ‘public housing’ and above all, what constitutes as ‘affordable housing’.

The logic to co-opt Singaporeans under the public housing umbrella undeniably made sense back in 1960, where slums and squatter settlements were aplenty. After all, a housed, clothed and fed worker was a more productive worker. Public housing also made for a good social control mechanism but.. let’s not get into that.

But the past is the past. As the saying goes: “Last time policemen wore shorts”.

There are no slums now save for a small group of happy campers at various beaches and parks. However there’s a large middle class with aspirations for social mobility.

Does it make sense for the government to co-opt these aspirations into the public housing system? More importantly, SHOULD the government even try to cater to the middle class family with a household income of $10,000?

Thanks, but I’d rather not the HDB have a monopoly of the housing market on the pretext of housing provision.

When I describe the HDB to my friends abroad, they’re usually in awe of the efficiency of the system. Homeless rates are close to zilch, that’s quite a feat. Then I tell them about how much an average flat costs and almost certainly, jaws drop in shock. $300,000 for a tiny 3 room flat??? Yes Siree, and I haven’t even gotten to COE prices yet.

Here’s my take on why housing HAS to be increasingly expensive: To keep 80% of the population within the arms of the nanny state and to a lesser extent, to keep the upper middle income class politically subservient. Imagine being within the $10,000 income bracket. Too rich for public housing yet too poor to afford a million-dollar condo. Would you be pissed? I would.

And the solution? Executive HDBs. Because that’s considered ‘affordable housing’ for a family that’s not-quite-there-yet.

Just to prove that this is not just a gigantic conspiracy theory, think about this. In a situation such as this, would the logical solution be to reduce the percentage of those living in public housing, and to free up more land for private development?

Condos are obviously more expensive than HDBs, in large part because of land prices. But instead of passing policies to reduce the prices in the private market, what’s happened is that the public sector trying it’s darndest to match the private sector. And everything goes up up up.

The government has obviously forgotten about the initial proposal of ‘public housing’ and above all, what constitutes as ‘affordable housing’.

Government to blame for Singaporean’s housing woes: Opposition

Government to blame for Singaporean’s housing woes: Opposition

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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.