I wish to suggest a dual approach:

> Allow applicants to buy HDB flats on current rules (with the price of HDB flats follow the market trends

> Allow some applicants to opt for the restrictive rules and controlled prices of HDB prior to 1980.

Some Singaporeans, especially those from the lower income groups, might prefer to revert back to the affordable housing of the “old days”. In the old days when my salary was modest, I applied for a 5 room HDB flat in Marine Parade and paid a price of $35,000. Allowing for inflation over 30 years, the price today, if it remained controlled, would probably be less than $100,000.

Give people a choice. Allow the option for them to opt for the controlled, affordable HDB housing, if they wish to.

Mr Tan K L, I fully agree with you, in 1988, the price of a 4 rm flat was $60,000.00, after 20 years, it shot up between 200 to 300k depending on location. How many % increase, I dont know how to calculate. We poor people just need a roof to come back sleep after a day’s work. We just want a simple flat, without any fancy facade, which cost more if HDB leave it to private architect and developer to design and build. As Mr Tan suggests, a dual approach can solve the problem we are facing due to escalation of flat price.

RH:
1. Actually, this problem of Singaporeans being cheated, swindled, scammed, etc, — a HDB flat costs only about S$20,000 to build at most but can be priced ~S$3/4 million — by the LIEgime, aggravated by foreigner-friendly and Singaporean-UNfriendly policies, is all because elections are routinely rigged by LIE KY LHL PAP.

2. When elections are rigged, you get Mugabe-type situations, with the top man ordering his thugs to beat oppositionists and supporters — here, LIE KY threat to call up the army to put down by force and bloodshed, any Opposition elected govt, is proof that this, too, will happen to us if need be.

3. I am daily tortured mentally and physically, and my family members ill-treated, too, all because LIE KY LHL PAP cheat in elections, namely the 1963 GE, 1997 Cheng San GRC, OTC Presidential election, etc, so they need no mandate and need fear no retribution except from God.

4. LIE KY LHL PAP are also emboldened by American vicious torture and ill-treatment setting the example. They think the Americans still have the moral clout; and democracy, human rights and rule of law credentials to shield them from retribution, ha3.

5. Not only can the LIEgime enforce stupid and exploitative policies — not only in HDB but also cars [another huge money-swindling cash cow] — they can systematically raise prices of everything, from the omnibus GST taxes on everything to selective targets — usually the middle class and poor, seldom the rich or foreigners, such as bus and train fares and university fees, etc.

6. There is only 1 solution and that is to remove the LIEgime from power, using WHATEVER IT TAKES, ha3. I could go on forever but not today. Thank you for reading.

Dear Sze Hian,

I applaud the article for its no-holds bar look at the “rejection” of flats offered.

Perhaps HDB really do need to look at its historic nation building role of providing housing to meeting Singaporeans’ needs rather than a hard-nose business approach towards sale of flats.

Given that there is a dearth of flats available by the HDB and a high demand from people looking for flats, should not HDB be looking at building flats to provide for the masses rather than allowing private developers to develop and build for the masses? That role is more suited to the privated developers to build condominiums for the population, so why then is HDB intruding into that space?

On another note, it is shocking to learn that a new 99- year lease 5 room flat from HDB in Boon Keng cost $727,000! Is that not too exorbitant a price to pay for public housing?

Regards
Chih-Yang

Hi Tan Kin Lian – What sort of “restrictive rules” are you referring to or are you proposing?

My parents have also bought a flat in 5-rm Telok Blangah flat in the late 1970s for $35K. Now its valued at $510K. That’s a 1357% increase after 30 years (which can be considered as the “holding period”)! Let’s say the average buyer was earning about $800 per month at that time, a corressponding increase in salary would be $11,657. How many of us are actually earning this amount per month on average? And if you are, I would be totally surprised if you are still buying a HDB flat…

If a 3-rm HDB unit can be built at $20K (Can someone from the construction line verify this, after factoring the increase in raw materials costs?), I am totally fine with HDB wanting to earn a profit from them. Even a 200% profit would price the unit just around $60K. But to charge $330K for a 3-rm City View @ Boon Keng unit, is that reasonable?

A lot of things don’t make sense. When something makes sense, it is already privatised and no further questions to be replied? That could be the reason why suggestions and feedbacks are not welcome. Am I out of point?

RH: I don’t have the latest figures but Mr LOW Thia Kiang was [probably] the first to raise this in Parliament when he produced newspaper official tender notices which proved that the contractors who tendered and built the HDB flats for the LIEgime got only very little, probably no more than S$20,000 now which I have already factored in inflation and costs increases. A little digging, either in the more recent issues of the newspapers tender notices, at the library, etc, would uncover the latest costs. Or write to your MP or the HDB and DEMAND a reply. Regards.

I have heard that each HDB unit construction cost is only 1/5 – 1/4 of the governement current selling price. Is it true? Anybody can verify this?

[...] – TOC: Making sense of HDB rejections – Mr Wang Says So: Ideas for Void [...]

Hi Singaporespirit;

it is quite a joy to read your comments in the blogs!

May I say, I enjoy your company here in cyberspace.

patriot.

Hmm Maybe all these are just marketing strategies to make the public (Demand)become insensitive to prices hikes of the average HDB-built flats? In marketing, this is one tactic where you create a ‘premium’ brand and slowly ‘boil the frog’ and increase prices without affecting a fall in Demand…….

Thanks, patriot. I learnt much from your sharing. I believe you will enjoy this illustration.
A man knowing if he dug a pit , his mischevious son would fall in it. But, he rationaled and said that I had got a remedy.
True enough, his son fell into the pit. This man brought a first-aid box , helped his son out of the pit and said: “Didn’t I warn you not to go near it? ” Who is to be blamed? The man or his son?

Dear Adrian,

In the “old days”, when one buys a HDB flat, there is a 10 year waiting period before the flat can be sold, and it has to be sold to another eligible person, and not on the “free market”. I cannot recall the exact details. It had the effect of keeping the HDB flat under some controlled prices.

This system was changed during the 1980s to allow the HDB flats to move like the free market.

RH: Dear 5 and 8,

1. I bought my point block 20th Floor 5-room flat in Bt Batok Blk 203 near the MRT and Central [before they were built] in 1985 for S$97,000 then.

2. If the HDB could sell that to me for S$97,000, with a hefty profit already, the costs of construction must be much less.

3. If you factor in inflation, general property price increases since 1985, a similar flat in a similar place should cost no more than say, S$200,000, that is doubled. But try searching the HDB for this price. It’s a lot >S$400,000.

4. If I may repeat, could someone google some recent digital copies of the newspapers for recent HDB tender prices? Do what Mr LOW did. We will then know the truth, that is, if they haven’t disguised it or stopped publishing, which is entirely possible.

The price shoot up after policy change for free market and allow resale after 5 years of hdb flat owner ship. When I get my 5 room in AMK was $35,000 in 1980. In 1986, market price is about $130,000 where the posted price is around $120,000. If will be good if one has the detail and post it here. I recall that it is the polices changes on ownership that further stril up the properties prices.

Dear all,

I think it will be good if we can verify the following:

1) Construction cost of HDB flats
2) Average land price cost to HDB

This will enable us to know if HDB had been making excessive profit as speculated or if it has been making a loss as claimed by the Mr Mah.

On my part I will be go check HDB info.

Regards
Chih-Yang

RH: Dear 16,

1. If I remember, someone [Mr LOW?] produced an official tender notice that showed that a contractor built 4 blocks of HDB [4-room, I think] for a certain $$$. He then divided this total $$$ by the FOUR blocks, then by the Number of Flats in each block, and then got the cost of the contractor building cost per flat COST TO THE HDB.

2. Note that the HDB does not build the flats itself. It is just a middleman, getting contractors to build, then arranging for us buyers to buy. Just a middleman but it profiteers astronomical profits. Someone else pointed out how the HDB “hides” such profits every year through scam accounting, but I am no accountant although my wife is.

RH: Dear 16,

1. Forgot to add that that is what you’d probably have to do as well to arrive at the cost of EACH flat, since that is a state secret protected by the official secrets act on pain of death and after that, torture.

2. Also forgot that Mr LOW and probably others have asked for the true accounts of HDB profits and cost of each flat but MAH Bow Tan and others NEVER REPLIED. This about says it all. The entire PAP LIEgime pantheon are liars, cheats, corrupt, nepotic, greedy, scam artists, swindlers, crooks, etc. But still wearing all-white, ha3.

Imagine paying a $300k flat for 30 yr loan, after 55 yr old, a time to retire, we find that our CPF is kosong (zero). How to set aside Cpf minimum sum, somemore the nonsence Cpf Life, how to retire, nia mah !!
Note: Cpf minimum sum keep increasing over the years, at present is $$99600.
If i am not wrong. Common ppl dont have so much Cpf. The govt is very smart in planning, until we go broke at old age !

let us unite!!! wear black on national day. too much of talk already.

Protest NDP. I hope those holding the NDP ticket, do not attend the NDP…. EMPTY SEAT… EMBRASS THE GOVERNMENT.

We ( Singaporean) will gather at the city to celebrate our National Day together.. AND NOT WITH THE PAP GOVERNMENT.

HDB is a big farce. You have to take a huge loan to rent a place for 99 years. You are renting twice over. Once when you sign the lease and another when you pay interest on your loans (which is essentially rent on money).

You don’t own your property and you still have to pay property taxes and maintain your ‘property’.

You can’t transfer the property beyond 3 generations. In contrast, our millionaire ministers live on free hold property and can perpetuate their wealth to their descendants. That is one of the many mechanisms in place to keep poor families poor and rich families rich in Singapore.

Paying your rent upfront is a very unusual practice that sucks your life savings from you.

The only other country that does that is South Korea. You pay a lump sum to rent for a few years but the owner gives you back the exact amount after the end of the lease. The owner uses that amount of cash to invest and generate interests. You are basically exchanging the ‘opportunity costs’ of money in exchange for shelter.

Living in a HDB flat makes you nothing more than a coolie to the PAP. Stop being a coolie and leave Singapore.

I have heard it said before that most of the cost of the flat goes to the price of land that it is built on. Since land is state owned and also a scarce resource, SLA will charge HDB close to market price. The government then “subsidises” the HDB flats by waiving/discounting some portion of its market price. Essentially, a transfer from left pocket (HDB) to right pocket (SLA). Naturally, the “subsidy” is not in full, and the citizen/PR has to foot the balance.

While the “subsidies” are fully accounted for in their financial statements, the profits from land sales are not and are excluded from the annual budget.

Note that I have no way of verifying the above.

Two HDB BTO were lunched yesterday at Ponggol Breeze and Fernvale Residence. Of the 1,587 mainly four room flats only 111 applied!

They were priced at $207,000 to $278,00.

Are Singaporeans coming to their senses or are the flats just unaffordable to the majority.

I fully agree that the HDB should go back to their core basics of providing affordable housing to the people. This would also include a cap on the prices of the buying and selling of HDB flats.

How can a average worker, fresh from studies, working a few years afford such prices? It is no wonder that more young people are not getting married and living with their parents or siblings. Cheaper to pay your parents a monthly maintenance then to worry of the HDB mortgage.

There is a deeper issue to the high prices, social manipulation. It is to keep people rooted and bonded ( bondage ! ) to Singapore. But I think the younger and more educated has more options now than to live here and struggle all our lives ( Pay and Pay ! )

As for the flats being subsidized, we all know that the figures will not be forth coming anytime soon. The other question is, how much HDB is making from their commercial properties too? There is something very wrong with our society and country. I hope Singaporean can have to wisdom and courage to change things here, hopefully at the next election. It is not what we want to do for us now but what can we do to make life more livable for our children and their friends.

On a different note I think the present government has lost all its morality and credibility to run the country. What a shame , with such talented people.

Their reasoning for many policies seems to be like sand flowing through the fingers. We are just now buying them anymore. It’s like a scripture verse, I may recall, “the man who build his house on sand!” How long can this country go on like this?

all of you really know what is wrong with the way this garment work. but what is the point? keep repeating what we all know. my question is what are we going to do about it. keep talking till they change? wait long & longer……….

“What a shame , with such talented people.”
They are still very talented people, very talented at exploiting and making money off the citizen. No wonder they are worth millions.

“So long as there are new families being formed and new immigrants coming in, the HDB market will remain a very active one.” – MInister Mah Bow Tan from Today newspaper.
Indeed, it is pertinent for the population to increase to over 6 millions maybe more for one unit accommodating 90 people. What a prophetic statement!

inflationary pressures and an aging, average and underpaid population are causing more and more people to cash out of their ‘wealthy homes’. the garmen better think of ways to channel some of this capital gain from the sale of their homes to better use than let it be wasted on frivolous spending like gambling, cigarettes, holidays, plastic surgery, viagara, luxuries etc when these folks can ill afford them in the first place. if not, we may see more people erecting permanent tents in east coast since most will be denied rental flats.

better make it mandatory for people to assign a portion of their capital gain from the sale of their property to fulfilling the requirements of cpf, insurance or ensure basic standard of living are maintained without becoming a social liability.

better not encourage easy way out for them without a roof.

Note: In my published BT letter below, the estimated total breakeven cost for a 5-rm new flat (in year 2000) was $120,000 — comprising $50,000 construction cost (actual, from contractor’s tendered sum) plus an estimated $70,000 for land cost and other related costs(eg piling,project management) — BUT the new flat selling price was pegged at $200,000 [ ie HDB was actually making a cleverly-disguised profit of $80,000 for every flat sold! Thus, providing the large sums of money for GIC and Temasek to play "tikam,tikam" ]

(A) MY BT LETTER:

Business Times – 20 Jun 2008
LETTERS TO THE EDITOR
HDB contibuting to price spiral

See Leong Kit

I REFER to the article ‘HDB pricing policy limits impact of rising costs’ (BT, June 11).

As a 60-year-old Singaporean, I empathise with the growing despair of young couples when it comes to such a basic aspiration as home ownership. Private property is mostly beyond their reach. Even for HDB flats, they are caught between waiting as long as six years for new flats or paying exorbitant prices for resale flats.

In the 1970s, a graduate’s starting pay was around $1,000 per month. Then, in HDB Marine Parade Estate, prices of 3-room, 4-room and 5-room new flats were $17,000, $20,000 and $35,000 respectively. By 1990, the average price of 5-room new flats was $70,000. Such prices then reflected a ‘cost-based’ pricing approach.

Now, graduate starting pay is three times higher than in the 1970s, but prices of new similar HDB flats have gone up 10-30 times.

These massive price hikes are largely due to the HDB switching over to a ‘market-based’ pricing approach, following the 1994 property bull run.

In 2007, the HDB finally confirmed that ‘the prices of new HDB flats are based on the market prices of resale HDB flats, and not their costs of construction’.

In 2000, the total break-even cost for a 5-room new flat was an estimated $120,000.

But, under the market- based pricing approach, the HDB first looks at the prevailing market price of, say, $260,000 of a 5-room resale flat. It will then pick a slightly lower figure of, say, $200,000 as the selling price for the 5-room new flat (despite its $120,000 break-even cost).

HDB will then say the new flat buyer is getting a so-called ‘market subsidy’ of $60,000, arising from the difference between the resale flat market price and new flat selling price. There is thus no actual ‘cash subsidy’ given at all.

This market-based pricing approach had resulted in new flat prices and resale flat prices chasing each other in an upward spiral, affecting buyers of both new and resale flats.

It has also led to current prices of 4-room new flats varying so much from $200,000 (Sengkang) to $400,000 (Telok Blangah) and a whopping $590,000 (Boon Keng).

HDB is supposed to be a low-cost public housing developer. Why then is it not passing on to flat buyers the economy-of-scale cost savings in its huge developments by pricing its new flats on a cost-based break-even basis?

(B) HDB’s standard “dodgy” reply ( avoiding answering the simple question in my last paragraph; stating numbers without detailed breakdown — pointing to “hiding the full facts and figures” from the people):

Business Times – 2 Jul 2008
LETTER TO THE EDITOR
HDB approach reflects true subsidy

WE refer to Mr See Leong Kit’s comments on the pricing of HDB flats in his letter ‘HDB contributing to price spiral’, (BT, June 20).

HDB adopts a market-based pricing approach so as to reflect the true subsidy that buyers are enjoying. Under this approach, HDB determines the market value of the flat, based on its location, the finishes and other attributes. Then, it sells the flat at a discount to the market value.

HDB buyers understand this, and appreciate that new HDB flats are priced lower than resale flats. Similarly, when they want to sell their flats in the open market, they are allowed to do so at the prevailing market value, not at their cost of purchase of the flat.

We also wish to highlight that under this approach, the current sharp escalation in construction costs does not directly affect the selling price of HDB flats.

Currently, a new 4-room flat can cost close to $300,000 to develop, taking into account land, building and other costs. This is significantly higher than the subsidised price of a 4-room flat sold by HDB at about $200,000-$260,000.

Kee Lay Cheng (Ms),
Deputy Director, Marketing & Projects
for Director, Estate Administration & Property,
Housing & Development Board

“Currently, a new 4-room flat can cost close to $300,000 to develop, taking into account land, building and other costs. This is significantly higher than the subsidised price of a 4-room flat sold by HDB at about $200,000-$260,000.”

Either that statement is fact or fiction. If you are so cocksure it’s false, sue them in court!

RH: Many, many Thanks to Mr SEE Leong Kit for sharing his research with us :

“29) DavidSeeLeongKit on July 2nd, 2008 9.30 pm

“Note: In my published BT letter below, the estimated total breakeven cost for a 5-rm new flat (in year 2000) was $120,000 — comprising $50,000 construction cost (actual, from contractor’s tendered sum) plus an estimated $70,000 for land cost and other related costs(eg piling,project management) — BUT the new flat selling price was pegged at $200,000 [ ie HDB was actually making a cleverly-disguised profit of $80,000 for every flat sold! Thus, providing the large sums of money for GIC and Temasek to play "tikam,tikam" ]”

2. It is very clear that this greedy, rapacious, corrupt, lying LIEgime gang is ‘charging what the market will bear’, that is, exploiting its monopoly to extract maximum profits from us, with profiteering as its only consideration, not social, welfare, or any other consideration. It fits in my essay analysing their “5 Aims of govt” in :
http://theonlinecitizen.com/2008/06/university-admissions-employment-and-help-for-the-poor/#more-874

I refer to DavidSee’s HDB reply.

First, Ms Kee mentions that HDB “adopts a market-based pricing approach” and “sells the flat at a discount to the market value”.

Then, at the end of the letter she contradicts herself by saying that “a new 4-room flat can cost close to $300,000 to develop, taking into account land, building and other costs. This is significantly higher than the subsidised price of a 4-room flat sold by HDB at about $200,000-$260,000″

So is the subsidy market-based or cost-based?

And my 2nd question would be: What are these “other costs”?

I would also like to thank David for providing the following breakdown:- “total breakeven cost for a 5-rm new flat (in year 2000) was $120,000 – comprising $50,000 construction cost (actual, from contractor’s tendered sum) plus an estimated $70,000 for land cost and other related costs(eg piling,project management)

May I know the source(s) of your info? Thanks.

An appeal letter sent recently, don’t know the outcome.
Guess we know some people in the same situation.
A heartless government or just “following the rules” ?

Are the public flats priced too high for the average Joe and Jane to afford, or they didn’t do their sums properly. Anyway I remember some years ago a PM said we should enhance our ( brick ) asserts!
Singaporean will only be able to rent flats or rooms only in due course.

Dear Honourable sir, We,…………………………. Ic no:………………………………., would like to seek your help for a HDB Loan for a purchase of #room flat in the open market.

Currently, we are staying at Blk …………………………………………… under a bank loan. During the time of my purchase , I was in a high paying job. Recently I met with an accident and was hospitalised for some time.

Due to that there is alot of diiference in my last draw pay. This month my Cpf has been dried up. I have started to incure default payments for my home loan through bank. I and my wife has went to seek the help from the woodlands MP .He has appealed to HDB loan dept to help us out. They did call us for an interview around 3 weeks back. To our surprise, the officer in charge of our case told us to go and take another bank loan even though we explain to him that we are not eligible fpr a bank loan anymore.

Alternatively, he told us to go and borrow money from others to settle our home loan problem. We were very much shocked to hear that from a HDB officer from woodlands branch office. We did bring this matter agagin to our MP and he tried appealing to HDB for a Loan again . But again it was unsucceesful. Me and my wife, have my old age mother and 2 kids to look after.

The reason we went to see the HDB officer at the branch office is to give us a solution in our loan. but he’s idea will ruin my whole family to the street, please help us sir. We have no one to turn to as we have tried our level best in all angles. You are the only hope we have sir. Please help us to get a HDB loan sir.Sorry for the inconvenience caused sir. Thank you.

Dear Acacia

Please email your tel to me leonggsh@pacific.net.sg – I would like to speak to you regarding this HDB appeal case

Cheers

Leong Sze Hian

Don’t subcribe to the ridiculous prices of the new hdb.
The HDB has forgotten the old found aim of providing affordable housing to the average Singaporeans.
For a new hdb flat selling at $750k seems exorbitant and ridulouse
I rather stay in jb and get a nice house for $200k with money to put in a fd acu
earning interest – when i retire
Yes it not safe – but if u think of it either you get rob here mentally and financially everyday with the current government policies or risk it the other way

I agreed, HDB has forsaken their main role in providing a affordable housing for all Singaporeans. With the inflated prices since 1990s and with our government emphasizing on property ownership, this has fooled alot of us into thinking that our flat is worth the value which in fact it does not.

And I remembered hearing news back then when HDB had a major reshuffling whereby many were given the love letter to go, the plan was by 20something which in phases that all new flats will be outsourced to private developer. Maybe some of you can recall this news or was I imagining?

Many Singaporeans were victim in most of the HDB new policy, like the housing grant, downgrading levy fee, bank loans extra. Many upgraded and downgraded their flats when HDB adjusted the valuation price to market price, Most may have benefitted from sales but however do note that the profit is not even a peanut in NKF issue, i.e. it may not even cross a half-mil from what I gathered. So to put a stop, they have a new policy to curb this fashion, i.e. a downgrade levy imposed, subsidised rate stop at 2, bank loans etc.

I also agreed that the policy for ownership of both private and HDB should be reviewed. I have seen private property owners bought HDB units and gaining rentals instead of staying there while depriving a chance for new or second chance low or middle income owners to own a flat.

Simple it is.
They need the money to make overseas investments and of course, to support the operations of the state-linked firms.

The solution is to ask them to find a new way to fill their coffers but apparently, exploiting their own countrymen is the easiest way to do it.

I really do agree with the pofiteering idea that is being bounced off here. I can imagine the national coffers growing exponentially each year while the average citizen slogs and struggles to maintain a reasonable standard of living, having a roof over their head and food in the stomach.

Then of course we have the almighty saying that we should not be looking for subsidies and should struggle more to maintain our competitiveness. That is of course easily said after you have gazillion dollars in the bank with half of the nation’s business going to the companies that you have a share in.

We do have a great talent pool in the Govt, they are all established entrepeneurs with good track records, but I think that is the root of the problem. These businessman are so profit minded that they have forgotten that they are running a country and in that “business”, the most important thing to look out for are your citizens! The bottom line for these ppl is how much year end profit ends up in the coffers! These reserves are of course essential for the maintaining of our cross border ties and helping with the international community! Sometimes at the expense of the citizens who contribute to these fundings.

Anyway, I have seen and heard too much and it seems that the only way to have a reasonable response to our queries and appeals is to express your views with your vote during the GE. At any other time, whatever is said will be “taken note of” but never acted upon.

To all who have suffered the high inflation rates and high costs of living, hang in there and pra… for a more citizen oriented Gvt as I am doing everyday….

Cheers!