Ash Tong / Guest Writer
I have always taken great discomfort, when MSM and biased marketing talk always refer to the pricing of new flats as “Discount to the market” or “Cheaper than comparative condominiums in the area’.
The Ang Mo Kio and Bishan projects are priced at above $400,000 for a new 4 room flat, applicant for these projects are subjected to the $8,000-income cap. A simple break down of the math.
Gross Income: $8000
CPF: $1600
CPF into OA for housing needs: $1082.56
Nett Cash: $6400
4 room Natura Loft project in Bishan: 465k
Monthly installment based on 30 years 2.6% calculation: $1861.38
Hence each family would have to top up $778.82 into their CPF for their housing each month, which makes up to 12 per cent of their disposable income. If you change the calculations for a 20-year repayment, the percentage of their disposable income used to top their CPF moves into the 20 per cent range.
Ideally, all applicants for these projects would have a perfect gross income of 8k, and the flats would be affordable. However, often couples with incomes below 8k, might be unsuitably stretched, by buying such flats.
As a side note, it should be no surprise that this project was awarded to the highest tender.
CPF housing grant for family living within 2km are only eligible for DBSS projects, and additional housing grants are only eligible for families who earn below a $4,000 gross income. Given the number of DBSS projects that have been released in the past year, it defeats the purpose of encouraging families to stay at close proximity as it comes with a huge price because these projects cost 400k and upwards. I do not recall any Non-DBSS projects in mature estates released in the past year.
The additional housing grants equates to lip service as no sane couple could afford a DBSS project with a 4k gross income.
All other new flats are not eligible for any grants as they are sold, “at a great discount”. The argument would not hold, when we look deeper into the figures; e.g. a new Toa Payoh Central Horizon flat cost up to 550k for a new 5 room flat, using the PSM or PSF to compare with resale flats will show that these flats are not priced at discount at all.
Now lets not be choosy as Singaporeans, HDB is trying their best to give us a home.
So we turn to non-mature estates like Punggol. Yet again, we’re subjected to manipulated pricing.
I refer to the latest BTO project, Punggol Arcadia offered by HDB.
In a similar location just across the street, Coralinus/Treelodge@ponggol BTO project, indicative prices taken from October Half yearly Sale:
In another location with similar proximity to Ponggol MRT, released May2008:
These 3 projects all hold the same proximity to Ponggol MRT station, and are all touted as premium projects. However we should question why the indicative price range has risen from between 7 per cent to 14 per cent? The internal floor area has all but gone up by less than 2 per cent comparatively. I have only drawn the comparison for 4 room flats, but similar directional trend can be noticed in 3 and 5 room offerings as well.
According to news reports, commodities have gone down, demand for construction might slowdown hence might require government reversal in placing some infrastructure projects on hold; so why the increase in prices for such flats?
Minister for National Development, Mr Mah Bow Tan, once said something along these lines. “Instead of building in sync with population growth, which resulted in several excess of flats, we shall now build in sync with demand, hence the BTO model.”
Doesn’t that mean demand will always exceed supply; hence the price floors/equilibrium prices for new flats will be artificial?
Can these directives by HDB be considered duress?
Quoted from their press release:
”The above measures will encourage applicants to consider their options carefully before participating in a HDB sale exercise. They will also help to minimize non-selection of HDB flats by applicants who repeatedly participate in sales exercises and thus divert HDB’s time and resources from those with urgent housing needs.”
This press release was in reference, to the change of rules for balloting of flats. However in the latest October half yearly sale, a 20-year old Bedok flat was also offered in the ballot. Half yearly sales do not allow applicants to choose the indicative area they prefer, nor do they allocate married child priority since applicants are unable to indicate the areas they prefer.
So one does wonder, if the applicant whose family nucleus is in the west, is invited to select a flat and this particular Bedok flat is the last choice available, does one fault him for non-selection?
We are made to pay even for the basic automated electronic process of balloting, yet HDB’s stand seems to infer that if we need a house we should take what they offer. As mentioned, we do not pay a discount, and HDB does make a profit from selling the flats, so why should we be penalized for being selective when we buy our flats?
A home to an ordinary Singaporean like me should be a nest of warmth where I return to my family every night, yet it seems to have been turned into a monopolistic business model, with minimal sense of ownership given.
I do also wonder what HDB’s urgent housing needs refer to, as all I see is an unnecessary spate of DBSS and overpriced projects.
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since watever we say now is useless, the gahmen will not bother anyway, so just vote maboh tan out of office in the next GE..
Like the TCs,GIC and Temasek, HDB is a fully transparent and accountable organisation. So transparent we cannot see anything and so accountable that we end up paying fines and getting evicted if we do not pay our arrears. Now that accountability..
My parents live in a 45 yr old 3 rm flat that is still valued at around $250k over (neighbour’s unit). It does not make sense given the age/lease of the unit. I doubt bank will ever lend for this kind of lease remaining. In my opinion, there is a gross miscalculation with valuations of resale flats
We can only know how much is discounted or how much cheaper than a condo
when there is full transparency on the exact cost of building a flat.
This info exists.
a real monoploy.
i stayed in the same flat with my parents for over 20 years and we have never considered moving. Can’t imagine paying the housing loan all over again. A humble house is good enough & i’d rather save the money to migrate…haha
I feel that the income cap is ridiculous. It actually discriminates people with a higher income from buying flats they deem more affordable. While the argument for the cap to be in place has been to ensure the availability of flats for lower income family, in the end what has happened is that it has made life difficult for most people as they have to constantly work to just be able to pay off their mortgage.
I take personal offense too at the ‘Cheaper than comparative condominiums in the area’ rationale. It is the job of HDB to provide public housing at AFFORDABLE rates, so anything more expensive that a condo would be contrary to it’s objective won’t it? And frankly, if you take away the additional facilities that a condo has and leave the basic building infrastructure there, suddenly you realize there isn’t that much difference in prices anymore.
Again, HDB needs to come clean with its figures and how much it actually costs to build one unit.
I dread the day we will even have to apply for HDB license to buy tents to pitch along East Coast Park and/or under Benjamin Sheares bridge…
If we base on the construction cost and the land cost, SLA / HDB charge us the Land cost at a very high cost per sq feet. Construction cost going down by 10% to 30% during bad time, but I see the HDB selling price keep on going up. So if the construction cost go down, then why our HDB price still going up, that mean the land cost went up to offset the saveing of the construction cost, is it? Where is the tranparency?
We Singapore Citizen start pondering all this so call increasing of price due to the pick up or down turn of the economy.
HDB should increase the income cap to SGD15000.
We have heard complaints like :
1. NEED TRANSPARENCY on TC investments.
2. NEED TRANSPARENCY on HDB costings.
3. NEED TRANSPARENCY on Electricity billing – oil price so cheap now, will 22% hike reverse? What goes up……cannot come down?
4. etc etc etc
Do we really expect anything to change?
For young generations, it will be difficult to buy the so called subsidised flats as the price shot up and will never come down. Young generations have to loan 30 years, and work whole life before they can complete the loan. This is different from those 70s and 80s time when the loan can be repaid in 10 years. I think this is the fault of the govt. Housing is basic needs, and they dare to say providing 86% of the populations a roof over their head. You compare the salary they earn and the quantum of loan, then you will understand.
I am going down East Coast Park to chope my place liao. Anyone got recommendations where to buy cheap tent to fit family of 5?
I agree that the new HDB flats are overpriced. Even with a dual income family, it will take many years to pay for such flats. It is defintely a mistake to peg the price of flats according to the resale market rates and then value them at 30 to 40k below such prices. Market fluctuations will cause many new flat owners to be saddled with negative equity due to all these jumbo mortgages being taken up.
In the 70s and 80s, a family with an average single income could still afford a flat and have sufficient money left to feed the family. I seriously doubt many single income families can afford to do so now after buying a new flat.
aiyoyo
public housing so x, how?
average people ~$1500/month, how?
not sure public housing PEOPLE got do investment also, like TC??
aiyoyo
In the context of Singapore, the strength of extended families and communities have been eroded (e.g. HDB’s Ethnic Integration Policy), because of various government policies through the decades. As such, the government (in its various levels), should be responsible for social welfare as the safety net of the extended family and the community have been systematically weakened through the decades.
HDB housing is definitely overpriced when the buyers have to service housing loans for most of their working years. In my opinion, we are living in a pretty miserable country. I recently saw an Ad on the Aircraft magazine in US with a nice house in Colorado, USA (looks like a 2 storey house) overlooking a snow covered mountain costs just over US$300k. Let’s sell our 5-room cubicle and own a nice house somewhere else.
PAP’s modus operandi is very simple:
Get the people to pay through their nose for a basic roof over their heads.
Come election time, make veiled threats about housing prices falling in value if Opposition voted in, if no lift upgrading, if no LRT/MRT etc.
With so much money tied to the flat, people will kuai kuai vote PAP back.
Even a fool can see what they’re doing.
Don’t fall for their trap. Buy what you can afford (smaller than larger) and then vote against PAP’s dirty tricks!
>>I am going down East Coast Park to chope my place liao. Anyone got recommendations where to buy cheap tent to fit family of 5?
Wait…kena slapped $200 fine for sleeping there how? The beach under NPark’s care?
How about S(leeping)MRT?….google for pics of folks sleeping in the trains.
i have posted in http://www.redbeanforum.com on the same issue. the pinnacles duxton 4rm flats are priced $457K to $555K. and this is supposed to be a discount over resale market price for similar flats in the same locality.
in hdb’s website, the resale price of similar flats is $508K. so where is the discount over market price? if i used the above figure, the average 4rm flat at pinnacles is priced at $506K. this will give a huge discount of $2K!. so the buyers must be very grateful for the discount.
with the market prices coming down, the buyers are going to get a shock next year if market price is going to be lower than their purchase prices.
incidentally, the pinnacle duxton’s price has been rammed up by $200k because resale market price has gone up.
aiyoyo
how? public housing so x,
very worry next time,
will more commoners live on the streets?
aiyoyo
The HDB flats are not for the local anymore, the pricing has been inflated so high is because now they targetted to alot of foreigners turn citizens who are also eligible to buy these flats. This is purely profiteering by the garment. Therefore, you local people whether suffer or not is not their bloody business anymore, what they want now is $$$$ and much more.
The only way is to have total transparency of the cost, however the garment will not disclose them as this will cost them to lose their vote. TOC should continue pressing for the cost or else the price will keep rising till no end. Who make the profits and where it goes to, ultimately?
The HDB price is too high.But, don’t worry,it will surely come down as the sun will rise in the east. HDB prices are a lagging indicator of the economy, notice that the prices rose quickly only last year when the economy has peaked. So, expect prices to drop as economy sags, maybe 2010 who knows?
Sincerely, i do not follow much on the property but i do ve a few concerns also.
“we shall now build in sync with demand, hence the BTO model.””
How are they going to predict the demands? Building a flat would be roughly i dunno, 2 – 5 yrs? If demand now, how to supply?
And if demand now without sufficient supply, won’t the prices sky rocket?
“”The above measures will encourage applicants to consider their options carefully before participating in a HDB sale exercise. They will also help to minimize non-selection of HDB flats by applicants who repeatedly participate in sales exercises and thus divert HDB’s time and resources from those with urgent housing needs.” ”
I could ve misunderstand the above which i always do, so pls do not mind me. But given the Gov’s take on encourging families, naturally pple will listen to their advice and get married. So newly weds mostly wan their own house. With this High Price and Limited Options, how to consider their options carefully when in the first place, the options are limited?
“We provide affordable homes of quality and value.
We create vibrant and sustainable towns.
We promote the building of active and cohesive communities.
We inspire and enable all staff to give of their best. ”
The above is the mission taken from http://www.hdb.gov.sg/fi10/fi10296p.nsf/WPDis/About%20UsVision/%20Mission?OpenDocument
Affordable Homes of Quality and Value
Affordable??
Quality??
Value??
Wat’s ur take?
Whats more important to HDB is the bottom line at the end of financial year. It doest help to justify their bonus if you have or dunt have an affordable roof under your head. The long you take to repay the loan the happier they are, so they can continuously tax you as long as they want.
Affordable Homes of Quality and Value
Affordable??
Quality??
Value??
Wat’s ur take?
All are rubbish!
TOC should suggest asking minister Mah to have a dialogue with the people at HLP and see what more rubbish comes out from his mouth again.
today the cost of building hdb flat is no longer in the computation. it is the market price. the pinnacle duxton is the most glaring example. the cost of the second batch for sale is the same as the first batch. but they added another $200k to the sale price because resale price has gone up.
with a clever decision maker like that, hdb should reward him with $10m bonus. but he must remember that he has just tied a $200k millstone on the necks of the flat buyers. and many are first time buyers, young citizens.
I must compliment the quality of housing, but with regards to affordability I’m afraid its way out of even what a middle-low-income earner can reach. Nice words and MSM stats are nice to look at, but the bottom-line is for all to feel and experience.
HDB housing has seen one of the biggest shift in PAP policies.
HDB’s main role was to provide Singaporeans with affordable housing so that Singaporeans can concentrate of helping to build the economy without having to worry about issues that are tied to owning a home or raising a family.
What else can one say about the lure of money? Every PAP pro-Citizen policy has been turned on its head. Do we still recognise these policies in the same cover they were presented to us at the beginning?
No we don’t. Everything about them have changed with one recognisable feature. All are packaged with the same paper that carries the $ print.
In the 60s and 70s the HDB would dangle many juicy carrots so that many Singaporeans would buy those pigeon holes.
Those who became citizens recently ar that time enjoyed these bland designs
A two room flat would cost $6240 (1969) prices and 5 room flat in the new town cost $30K (1978 prices). All of them heavily subsidied
Then out of the blue, they remove all subsidies for these pigeon holes and the prices go sky rocketing.
By the end of the 80s many of these pigeon holes had become not less than $100K
Average young Singaporeans entering the job market could not buy these pigeon holes
Funny for sacrificing and serving the nation like in National Service the least the govt could do is retain the subsidies
So much for expecting loyalty or appreciation
Why won’t there be contemplation to emgiration
I did and I have done it.
good one! the HDB needs to review their pricing structure and also the govt needs to take into considerations the sentiments of the people.
How many couples can really purchase a flat without worrying about the payments where the amount is so huge?
Should public housing (not resale) be much more cheaper and not following the market formula?
Good article. I have been feeling distressed recently when I was considering settling down. The article clearly sums up the cause of my distress. It is a real catch-22 situation. With the current downturn as well, there is a possibility that more people will downgrade thus making the possibility of “owning” a 3 or 4 room flat difficult as well. This is no longer public housing.
aiyoyo
for commoners how to migrate? anyone knows?
aiyoyo
just use your common sense, If you buy a flat, you need to pay until you 65 years old. The contribution to the CPF will be zero by the time you reach 65( only balance special and Medisave). So CPF don’t need to make any retired money back to you. (Maybe just balanced the money inside special account)
Don’t you get the hint? HDB insist their flats are priced for affordability, meaning that if you can’t afford, don’t buy, live in rented flats like foreign workers.
Government complain Singaporeans too expensive, cannot work like slave for $1k per month. You should live like how foreign workers live. Send your family to Batam, Malaysia, China or India, take your pick. You alone stay in Singapore to work, then you can also accept $1k pay.
When your sons come of age, return them back to Singapore for 2 year cheap military labour.
This is just crappy. HDB should not compare prices with other private developments, they should have the people’s considerations in mind. Just make it affordable for the people with no comparison at all. Public housing should always have the one objective which is to have each Singaporean family sheltered. No extra cost, no jacked up prices, no funny quotas or conditions.
I can’t believe our govt still want to make “untung” when it comes to their own people.
An important premise of the article is wrong, so half of the article becomes irrelevant:
“I have always taken great discomfort, when MSM and biased marketing talk always refer to the pricing of new flats as “Discount to the market” or “Cheaper than comparative condominiums in the area’.”
It is known that Singapore’s (lower end, less than $1m per unit) residential property market is a near-monopoly, or an oligopoly with HDB as the price leader. Thus, there is no such thing as a “fair” market price – the market price is set by the HDB.
The price of condominium units is determined relative to the price of HDB flats. The fact that condominium units are more pricey reflects the fact that condominium units are “better” to live in than a HDB flat, so the price of condominium units is adjusted above that of a HDB flat.
The price of open market/resale flats are determined relative to the price of HDB flats.
Since price is determined by HDB, it bears little relation to costs or actual value. (Even costs exceed price is possible as HDB flats are subsidized.) Thus, the arguments based on cost or value of the HDB flat shouldn’t be made.
YA I agreed with most here that now, our public housing is no longer quoting public housing prices but more reflective of the private home’s.
I bought a HDB EC flat in 1993 at $143,000 in Pasir Ris . I could not sleep for 5 nights as I was afraid that I couldn’t pay for the mortgage repayment of around $400 per month for the next 25 years. The downpayment was $28,000 – full CPF payment. I have to borrow $10,000 from the bank to renovate my flat. Those days, the floor was not done up and it was almost bare to the bones.
Five years down the road, I make a small fortune when I couldn’t believe my eyes and ears that HDB housing pirces had exploded. Someone was willing to pay $600,000 for my HDB hole! I sold it off instantly.
Several years later, the price of the flat around that area slided to around $450,000 at it’s lowest valuation after the 911 and Sars epidemic. Just two years ago, someone told me that the housing around the same area could fetch $600,000. What an irony!
I find that HDB public pricing has followed that of the private market’s closely. There is a slight lag period though as valuation takes some time to factor in the prevailing private housing pricies. This is largely affected by the economic environment of course.
My fear is that many people will be trapped by the huge mortgage loan they take up when they buy their dream home. It is almost a sure way to financial disaster when you start your family on a negative financial perspective. They could not sell it off easily as their houses are not heavily subsidised like the 1990s. Most in fact may need to sell it off at a loss if they buy it during the boom period and sell it off during the downturn which is usually the case when we are either out of work or facing some financial difficulty.
My take is that if couples want to buy HDB flats at skyhigh prices of around $500,000-$600,000, they should go for private housing. If you can afford a HDB unit at that pricing, surely private housing is not beyond you.
Most mass market private housing costs around the same price. Just few years back, the Astoria Park at Kembangan was sold for around $450,000 for a 2-bedroom unit. Just last year, the same unit was transacted at around $650,000. Not bad if you have the foresight to buy and sell properties.
Owners of private housing have the advantage of selling it anytime they want or even rent it out when they face financial difficulties easily. HDB houses need a permit from the board to rent it out.
Private housing also sometimes has the added benefit of endbloc potential which will provide you with a landslide return.
I am not for the valuation of HDB new housing using the prevailing resale housing prices. Buyers will lose out if the economy fizzles out which is the case now. Buyers of Pinnicle stand a high chance of buying at the high end. All the best to them.
I dun understand. I’ve been thinking about it and i really don’t. Why make us pay so much? Why? How does it benefit the Gahmen? Why they need so much money for? Even if some of it goes to their pay, also don’t need so much what. Why? Why? Why? What long-term thinking is involved in this?
40)Zefly
I think govt worldwide have this fear that they do not have enough money for budgetting. Ours may border on the paranoid.
It is a realistic fear as many countries now are running into deficit – they not only have to borrow money from the world bank but also think of ways to tax their people.
In Australia, the govt is running on a A$40 billion budget deficit. Now, they are thniking of ways to take back from the people by removing alot of social benefits like school going children’s transport subsidy and not building the promised rail way from west Australia to the city.
AS we cant tax our people and businesses too much due to our tax-haven status, the only way to take in more money is through the GST taxation and other means e.g. ERP, CPF, COE, S & C and others.
Of course, the people suffer whereas those in businesses enjoy their profits due to our business corporate tax philosophy. Singapore is one of the most profitable place to do business and many foreigners flock here to start a business. Our people so far have yet to catch on this business mindset. Thus, the govt van only allow more foreigners to come in and set up businesses and employ our workers. It could be due to our educational or cultural upbringing that we can only be workers and not bosses. Even the govt encourages us to give way to businesses as their budget will be very pro-business in nature.
Many of my friends work for Indians, Chinese, Saudis, Arabs, British, Dutch, Americans who many are first-time business owners. They could only dream of starting a business in their own country due to the many bureaucratic and corrutible environment. They find starting a business in Singapore a breeze. Some even could get very good loans from banks.
I DO NOT understand the singapore situation.
I DO NOT understand this 1st world population.
Do you think you are different than any other country people in the world when it comes to asking and getting answers?
I THINK WE MUST NOT RUN AWAY FROM THIS PROBLEM ANY MORE.
TDDW, now.
Gilbert, I don’t think Singapore is, as a whole, considered a “most” profitable place to do business. Perhaps it is more profitable and simpler than some other places, but it is hardly the most. I could link you up to the relevant statistics which contradicts such claims as yours. On the other hand, if you have evidence which supports your point, I would be most interested to hear it.
Depends on what kind of business and who you know, I suppose.
43)Dingfeng
Hi I don’t have hard evidence to support my views.
It is probably more from hearsay and personal perception.
If you have evidence to support your stand I will be glad to know.
Anyway, it is like a trend that many foreigners prefer to set up shop in Singapore than their own country. Maybe they are mostly from Third world countries like China, Vietnam. Indonesia or Malaysia with poor infrastruture and corruption to boot. Though the costing is high, they find that our country provides more opportunities to succeed than theirs.
You Singaporeans are Really full of COmplain everyday… It is all you people that voted for PayAnd Pay every election and get crap MP new talent from Malaysia like Ms Lee for AMK GRC … Full of TALENT like how she handle Table Tennis team .. anyway AMK this coming election DON’T forget to VOTE PayAndPAy Again. THE BEST NEW TALENT TEAM AMK GRC..BEST NEW TOilet Award goes to AMK MP from the Cina Kampong
1 A quick summary of “The HDB Flat Pricing Scam”:
(a) There is no COST subsidy given for HDB new flats by PAP Govt.
(MBT’s clever use of the term “MARKET subsidy” is meant to confuse the people — it merely means “priced slightly lower than prevailing market value of similar resale flats”)
(b) On the contrary, the HDB is making cleverly-disguised profits from the sale of new flats. (The millions of losses in HDB annual accounts are likely from “creative accounting in inter-ministry transfer-pricing” eg between HDB and S’pore Land Authority).
2 More details are in my post “HDB Bullshit Replies (under $2m Minister Mah Bow Tan) at:
http://groups.yahoo.com/group/Sg_Review/message/5197
Hi all,
I know this is off topic, but did anyone read the straits times and today paper on the Lehman brothers update.
It seems the news on both the Straits times and Today is split into 2 pages.
I usually thought news would be covered on one page to give readers better visibility.
I had this problem of reading one section and then looking for the other piece in some other page. By that time I have forgotten what i have read on the first page.
Wonder if anyone has this problem or is it just me
The truth of owning a condo and HDB:
Condo: When enbloc, you collect a windfall of maybe a million dollar or a few more millions. Because the land belong to the individual owners.
HDB: When enbloc, you end up with a compensation that may still not enough to buy a new replacement flat that is smaller in size(surely) and needs another $50 to $100k renovation.
The newer DBSS HDB
Private …………………..vs………………………………. HDB
Cost (Freehold higher than 99yrs)…………….Quite X
Manitenance comparable ……………………….or lower / mass market
Security manned…………………………………….Zero Securiy or Survelliance Camera
Full Facilities…………………………………………..Limited Facilities or communal facilities
En-Bloc windfall……………………………………….SERs entitlement if any.
Real Ownership……………………………………….LESSEE as HDB is owner?(If correct)
Class Status ……………………………………………Commoner
Good Re-Sale value………………………………….Limited Re-sale value
48) Off topic on December 3rd, 2008 10.17 pm
thanks for sharing your observation. I personally have not bought or read MSM for a long long time. thanks for the update.