The following is a letter to the ST Forum by See Leong Kit which was rejected for publication:
I refer to your report, “Market-based pricing fairest for new HDB flats: Mah” (ST Nov 19).
The HDB has yet to rebut forum writer Tan Kim Chuan’s contention that it is “either over-pricing its flats or is profiteering from the property boom”.
Our private property market is now in a downturn. But the HDB resale flat market is still firm due to Permanent Resident buyers pushing up prices.
Thus, HDB’s pegging its new flat prices to similar resale flat market prices had resulted in prices of new flats and resale flats chasing each other in an upward spiral that is detrimental to buyers of both new and resale flats.
The Total Breakeven Cost of a new flat comprise Construction Cost(CC), Land Cost(LC) and Other Related Cost(ORC).
Its Pinnacle@Duxton project has 1,848 units cramped into 50-storey blocks occupying a small plot of land.
From available public tender information, the actual CC component is $150,000 per unit. The onus is now on HDB to publicly disclose the remaining LC and ORC components.
A quick estimate of LC plus ORC is around $80,000, leading to an estimated Total Breakeven Cost of $230,000 per flat.
When launched in 2004, average Selling Price was $370,000 (actual range: $288,000 to $450,000), which translates to an average profit to HDB of $140,000 per unit sold.
428 unsold units were recently relaunched at average Selling Price of $550,000 (actual range: $450,000 to $645,000), which is $180,000 higher than initial launch prices. This arose from the HDB market-based pricing approach as market prices of similar resale flats in the vicinity were between $593,000 to $670,000.
Applicants of HDB new flats are mostly young Singaporeans wanting to get married, move into their own homes and produce babies, which will alleviate our declining birth rate.
Why then is the HDB not doing the right thing as a not-for-profit low-cost public housing developer by passing on to such citizens the economy-of-scale cost savings in its huge developments through pricing new flats on a cost-based break-even basis?
A recent Ministry of Trade and Industry Forum reply on the huge electricity price hike had stated that “the Government’s approach is to price goods and services at their full cost”. Why then the double standards in the HDB statement that “the prices of new HDB flats are based on the market prices of resale HDB flats, and not their costs of construction”?
For the average Singaporean, his HDB flat is the single most expensive purchase item in his lifetime. Thus, it is important for HDB to clear the air once-and-for-all by providing transparent replies to the above two simple questions, and disclosing detailed cost figures for its Pinnacle project.
See Leong Kit
———–
Read also: Fed up with statistics (Part One) by Leong Sze Hian.
And: Reaching for the Pinnacles the profitable way by My Singapore News.
—–
HELP keep the voice of TOC alive!
If you like this article, please consider a small donation to help theonlinecitizen.com stay alive. Please note that we can only accept donations from Singaporeans. Thank you for your assistance.Do you have a flair for writing? Volunteer with us. Email us your full name and contact details to theonlinecitizen@gmail.com
I believe the main reason for taking in more foereigners is to jack up the prices of the residential and commercial properties as well as to increase the consumptions of foods, goods and services.
Singapore has more shops and goods than the local population could consumed and the country is doing itself in by building more shopping malls, commercial and residential properties. This will caused the tiny island to be saturated in every respect of developments in no time follow by its’ destiny.
Many Singaporeans are rightly worried about the futures of their offsprings and the best way to save them(children/grandchildren) from impending sufferings is to find a third world country such as Malaysia, Indonesia(including Borneo), Thailand, Vietnam, Hainan(China), India and Mainland China etc for those who prefer Oriental Culture. For those comfortable with English Speaking Country, there will be Australia/New Zealand, Europe and the Western World. For those with offsprings studying overseas, try to encourage them to find carreers and residences at the countries where they study.
Third World Countries are much cheaper in living expenses and most of them have vast expanses of land and natural resources. Livings are also much more relaxing and natures are abundant. Obviously it is not going to be easy having to adapt to new environment, culture/language and food, however, if one is able to obtain residency, the gain in the long run will be worth the inconveniences.
Personally, I am pessimistic about the future for the poor in Sg, the rich certainly can survive anywhere but the poor do have to seek alternatives that are presently within their means. If one waits till little or nothing is left(due to high living costs here), seeking settlement elsewhere itself could be more difficult. Those with oversea relatives and friends may get helps from them.
puppy.
Building cost is a national secret.
It will not be released under any circumstance.
The reason is to keep the prices high. In order to afford these housing, Singaporeans have to work harder, which in turns helps the economy.
That’s the reason why this information cannot be released. It will cripple the economy when people think they don’t have to work as hard to pay for their housing.
You would think that Singapore own their citizens at least a place to live. Yes they do, but the citizens have to return many times back to the economy for that place.
103 Parka
That’s sad. That’s seriously sad. If Ah Lee thinks this way… I would be very angry and disillusioned.
I was taught to want the best out of people. And this… exploitation-mindset is just too much to bear.
For those born in the HDB heartlands, it is difficult for them to understand exploitations.
Those resettled will know better, the question to ask is why are there many pieces of state land where formerly had pockets of settlements are now empty?
Almost all villagers have been resettled to live in HDB Flats. Why leave the state land unused even for living and primary production. It is such a great waste of our very very limited land(space).
puppy.
(a) My reply to My Paper just emailed (not sure if they will publish):
I refer to HDB’s reply “Using market rate fairest way to price flats” (my paper, Dec 17) to my letter “HDB should pass savings on to citizens” (Dec 11).
I had asked several specific questions which the HDB have left unanswered. The $530 million deficit in HDB’s annual reports probably arose from “creative accounting” in transfer-pricing between various ministries.
The HDB Flat Pricing issue is of immense public interest. It concerns not just the 90% of our population living in HDB flats but even those aspiring to upgrade to private property. Sky-high HDB flat prices will naturally push up private property prices.
Here is a quick summary of my points to help the HDB furnish properly-considered replies to Singaporeans who took the time and trouble to contribute feedback through the Press.
For HDB new flats at Pinnacle@Duxton :
Construction Cost (actual) = $150,000
Land Cost & Other Related Cost (estimated) = $ 80,000
Total Breakeven Cost (estimated) = $230,000
In 2004 (initial launch),
Average Selling Price = $370,000
HDB’s average profit per unit sold = $140,000 [61% profit margin*]
In 2008 (re-launch of unsold units),
Average Selling Price = $550,000
HDB’s average profit per unit sold = $320,000 [139% profit margin*]
[ *Note: Private Developers' profit margin normally around 20% ]
Unanswered Question 1: Applicants of HDB new flats must be Singapore citizens. Why is the HDB, as a not-for-profit public housing developer, not helping these citizens by passing on to them its economy-of-scale cost savings in pegging the Selling Price of new flats at their Total Breakeven Cost i.e. $230,000 in the Pinnacle example above?
Unanswered Question 2: Why the double standards in the Ministry of Trade & Industry statement “The Government’s approach is to price goods and services at their full cost” and HDB statement that “the prices of new HDB flats are based on the market prices of resale HDB flats, and not their costs of construction”?
Unanswered Question 3: This important issue first appeared in the Press five years ago. HDB’s responses throughout have been mere statements. Why is the HDB so hesitant to disclose the detailed cost figures that it possess? Our public-funded bodies are expected to be open and transparent.
(b) My Internet contribution “UNIQUELY SINGAPORE Political Jokes” is at:
http://groups.yahoo.com/group/Sg_Review/message/5126
101 tiresingaporean
I believe the policy of our greedy garment is to let all their ministers to rip in as much profit as possible in whatever area they are being appointed, and these ministers in return will be rewarded when they meet their quota. That’s why just barely 5 years ago or eversince PMLee took over power, there were strings continuals price increases and restructuring till this day that is affecting the citizens so badly. I am sure if the public have any access to check on each ministers’ bank accounts and the assets they owned, it will be something very interesting. But then again, we can’t as they’ve already passed it as a law that no one is allowed to check onto any of those MPs, clever move they’ve made to do this cover-up earlier. Try this in other country and see what can happen to them.
You want to check these ministers’ account ? very simple, vote them out the coming election and whoever the new party in power can dig out their smelly dungeon and they will run like hell for cover. This is what happening in TW.
Oh furthermore, why more HDB flats been built and price so high, you guess who gain more, of course the gov and their cronies esp the specific law firm for every transaction done.
If I’m not wrong, LTA, PUB, ENV and other agencies charge what they pay for new roads, new electricity and gas distribution networks, new drains and sewage systems, etc. for new HDB estates/SERS projects back to HDB. HDB then adds this development costs to Lad Costs (purchase from State plus clearing cost) and Construction Cost.
To: 107) Old wise man,
Yes i agree with you.
what you comment is true.
They never think for their citizen, they think how to make big money.
We are suffering, citizen are suffering,
We have to pay more and more for this HDB flats.
The Ministers are paid million but never “think” of how to help the citizen.
We have to vote PAP out in comimg GE.
We need two party system for Singapore.
We need Coalition government in Singapore.
We need to have Democratic parliment to debate certain issue for the good government in future.
I think there are alot of people’s willing to contest this coming GE.
We will support them.
i already told you this is the fairest way. that is the way it should be.
now don’t waste my time.
yeah, I guess so the only way is to vote them out no matter who the other competing party is.
Considering the ailing economy and bleak future outlook
plus poor market sentiments , poor job market and so low STI ,
I propose that the HDB pricing be capped now. No more higher.
Else, I fear for our young’s ability to Pay and Pay
while slogging away their whole life
trying to make ends meet
working in Asia as asians
who are employed by foreign MNCs from 1st worlds came here to
take advantage of the lower wage system
which not sure implies will a plumber here earn the same nett income as a plumber in western 1st world?
if not, what does it mean when cost of living escalated and continue to escalate
and businesses complain wanna migrate
if labor cost not give them good bonus and profits to stay alive?
the solution is
welcome and attract profitable companies
and say goodbye to non performing companies
incapable of staying alive
due to whatever mudder of all reasons they can conjure up.
there must be a STRONG ability in attracting strong companies to reside here
the more incompetent companies there are
the more retrenchments and insecurity of job
i actually do not support bailing out of non performing companies
looking at the long term perspective. look at the burden on the babies of USA citizens. they have to pay and pay for the debts incurred from the bailout.
cutting labor cost to stay afloat is a sign of weakness on the part
of companies’ management ability.
redbean#110;
your fairest lady maybe the ugliest to the rest!
puppy.
If only GIC and Temasek set up industries in SIN instead of investing those huge sum in foreign financial institutions. Much jobs will be created.
Yes? No?
puppy.
You think they will set up industries here? want to know the difference? Down here, anything went wrong, they will be held accountable. Outside, whatever happened, you people will never ever know what is going on behind the scene. Get it?
…and good or bad happen outside singapore, bottomline is we are all made a big sucker to pay for them to screw us all these years.
‘Considering the ailing economy and bleak future outlook
plus poor market sentiments , poor job market and so low STI ‘
with the situation so dire, who is the one who said vote them out?
the more challenging the conditions, the more we need the govt to help us and see us through. then we will have more good years. and our expensive flats will remain expensive. otherwise all will become valueless.
be grateful.
All stand up and hail! redbean;
… for being the wise one. How can we do without this govt at a time like this? Stupid people all of you. It is time like this that we must remain stupid and not try to be too clever, especially those who can do so by half measure only.
Hail! redbean.
thank you gemami.
i am taking a bow. applause : )
my pleasure, redbean.
In this world no one is indispensable and that goes with the political party and gov.
[i]the more challenging the conditions, the more we need the govt to help us and see us through. then we will have more good years. and our expensive flats will remain expensive. otherwise all will become valueless.
be grateful.[/i]
and without a doubt
after selling your expensive hdb flat
you would be camping in east coast park perhaps?
you ain’t upgrading
YOURSELF
for a BIGGER and more EXPENSIVE hdb to live in?
be very very great FOOL indeed
“nice” read bean…really “nice” another of those “oh you should be thankful of the gahmen” + “we need them to lead us out of this” speech that i guess alot of people are sick of…
When you sell your bigger flat, your money goes to back to your CPF, you have problem getting a smaller flat as it cost as much as your big flat, You can’t get a bank loan, we are not eligible for a rental flat. Ain’t it wonderful. Years ago I thought my friends were stupid when they rented flats instead of buying HDB, till they could afford a small private unit. Now I see their wisdom.
HDB’s trick is to price as close to the pain threshold. Govt policy is to squeeze as much as possible. How do they get away with murder ? Bec we let them.
125) Sad on December 18th, 2008 8.10 pm
:(
People,
why complain?
i see no need to complain as the majority chosed them and like them.
else, how they got to where they are?
i no no wor. u know meh?
Sze Hian
Thanks for the numbers crunching
It shows the blatant profiteering of the board.
I chose not be buy a resale after making a profit from my first resale ( I am a single) because of the ridiculous prices.
The board has stop building 3 roomers until only recently thus creating a short supply which push the prices up artificially because of demand from the prs
This artificially created market and muck up prices reflects the out of touch elites
who are out of touch with market forces and condition
u hv decided to choose those blood sucking servants, why complain? As long as u can kick them out of the office, tmr will be different.
HDB was formed to provide not for profit housing for singaporeans, then some smart alexes suggested to sell them to PRs. It rises your value and you make some profits from the sale. then the servants want to have some shares of the profits. levy here levy there.
Later, they become greedy and want to have more shares and they want it fast so HDB is now a company that make a lot of $$ from the poor singaporeans. Long time ago, people asked: why hdb pricing is like the private housing ah, they said: no, no still affordable and we dont make profits. see now, all the dirts are out from the bag.
CST was offered to build the flats, but he chicken out. He shld be steady and build the flats and maybe his team is the gov now.
HDB why dont u out-source the whole org to me and I guaranteed to build the flats and sell to singaporeans at costs. u happy and all singaporeans are happy and u get the votes. good idea or not hah!
Come on HDB, go back to basic and provide poor singaporeans a roof lah! make what $ from poor us, we are already so poor still want to squeeze us dry.
125) Sad on December 18th, 2008 8.10 pm
Do you konow the real reason? Your Friends made a profit from their sale of flats brought 10 to 30 years ago up to $350,000, You think it’s fair that HBD allow them to rent for peanuts under their rental scheme after the sale of their flats! Wake up !!!!!!! Know your facts before putting crap here!!!!!!!
Hi #130) HaiGong,
Please let me know when the HDB out-source to you. I will become your best friend.
As long as we keep asking these questions day in and day out it will soon create a magnitude of awareness for the internet populations, questions and articles are propagated on other forums and this will keep the Singaporean thinking, with thoughts, we have questions, and with questions we should have answers.
If the answers are not logical, then it will reflect poorly on our leaders and MPS. Because it will just goes to show , that they don’t know.
So keep the articles coming, we dont need to stimulate the economy, we need to stimulate the minds of the Singaporeans that have been forgotten.
There are too many Singaporean trying to outsmart HDB rules by trying all kinds of ways and mean to to buy and rent flat out like one family with 4 children married all owing a flat and with spouses and living elsewhere in a private house.
Don’t blame HDB with all these A$$e$$ trying to take advantage of cheap housing..
Take our COE as a classic example of all things gone wrong and prices eventually tumble… Prices for new flat cannot hold ground at current high prices with private properties falling like a stone.. Eventually new HBD will fall in line with private properties prices.
Vernon Smith, a Nobel laureate and economics professor at George Mason University, has said the tax law change was responsible for “fueling the mother of all housing bubbles.”
— Tax break may have helped cause U.S. housing bubble. International Herald Tribute, Dec 2008.
http://www.iht.com/articles/2008/12/19/business/19tax.php
Uniquely Singapore solution is : “THE Housing Board will offer 4,000 smaller flats over the next two years, marking the biggest comeback for such flats which has not been built for 20 years. Next year’s supply of 2,000 three-room and smaller flats will almost double this year’s supply of 1,163.
HDB’s move closely follows National Development Minister Mah Bow Tan’s announcement in Parliament last month that there will be a steady supply of smaller flats for lower income families and for those who need to downgrade to smaller flats amid the current economic crisis.
HDB also launched a new project on Thursday – Dew Spring @ Yishun – under its build-to-order scheme.It will offer 504 four-room, 144 two-room, 215 three-room units – the largest number of smaller flat types out of all of HDB’s projects launched this year.
——————————-
Shortest man in white U turn to build even smaller pigion ass hole@$250 000, 65sqm?
mah bow tan is blood sucker
Shortie latest prices not adjusted to current market condition yet.. What a RIPPED OFF !!!!!!!!!!!!!!!!! if you buy at this price .. helping to screw the low income also..in bad times… shortie will pay back in his next life…
YOu see, the government here has the best of both world, and is most profitable businessman of the world. Why ? When property skyrocket, it says Free market and market subsidy, and when property dropped, it says regulation must set in to prevent new HDB flat price from dropping. No wonder Our gov has the best job of the world and it only can be done through exploitation of the citizen.
Head they win, tail they also win, if this is not scam job, what is it ?
>> 39) T on December 16th, 2008 & 89) Teo Kueh Liang on December 17th, 2008
Q: What is the role of Government?
A: To provide following basic “social services’ for the people:
— housing (roof over our heads)
— utilities (water/electricity/gas)
— education (to earn a living)
— healthcare (protect health; prevent diseases)
— transport (move people/goods to support economic activity)
— defence/security (maintain law and order; protect the innocent)
Q: How should the Govt charge the people for these services?
A: (i) IF the country is rich enough, provide some form of “true CASH Subsidy”.
(ii) EVEN if the Govt do not wish to or cannot afford to subsidise, the VERY LEAST a GOOD/CARING Govt should do is to go on a “cost recovery” basis — i.e. charge at Total Breakeven Cost (with no profit element).
Unfortunately for SIngaporeans, our Money-Sucking PAP Govt likes to make “big fat profits” out of the people for such essential “social services” !!!
WHY? to pay for their obscenely-humongous million-dollar pay/bonuses/perks; as a cheap source of funds for GIC/Temasek to play “tikam,tikam” with the people’s hard-earned monies; etc…..
NOTE 1: In housing:
HDB is a public-funded body and thus should be a “not-for-profit” low-cost public housing developer.
Whereas Private Housing Developers are businesses which have to make “profits” to cover “business risks”. (HDB build flats according to pre-determined demand — as good as “risk-free”)
NOTE 2: To suck so much monies from the people here, there and everywhere is DISGUSTING ENOUGH.
EVEN MORE DISGUSTING/ DEPLORABLE/ UNPARDONABLE is for the PAP Govt to make such obscene profits on something SO BASIC as a roof over our heads (HDB flats).
>> 91) Gilbert Goh on December 17th, 2008
PREVIOUSLY, S’poreans who emigrate are mostly old folks wanting a slower pace of life.
NOW, the worrying trend is younger/educated S’poreans migrating (main reason: disgusted with Arrogant & Money-Sucking PAP Govt)
It is INCREDIBLY STUPID for the PAP Govt (under Our Great LEEder, Chairman LEE) to have this mentality:
More S’poreans leaving? Don’t worry — we can easily replace them with FTs (= Foreign Talent or Foreign Trash???).
>> 94) tiredsingaporeans on December 17th, 2008
Agree with your sentiments.
WHY should we and our sons perform National Service “with commitment” and support the PAP Govt and its dumb policy of “welcoming FTs with open arms” so that they compete with us for jobs; for housing (and pushing up prices — both HDB & private property); etc,etc….
[ I've completed full-time NS in the early 1970s (amongst first batches) and so has my 26-year old son.]
>> 136) Overclock Singapore on December 19th, 2008
Yes! Yes! We are a so-called “First-World” Nation that has “progressed” from “obscenely-priced pigeon-holes” [HDB 5-rm flats] to “over-priced bee-hives” [smaller and smaller HDB 4-rm & 3-rm flats].
Adding insult to injury, our Bird-Brained Million-Dollar Ministers keep telling us to have “3 children or more”.
HOW to cramp 2 parents, 3 children, 1 maid and possibly 2 in-laws in a 1,000 sq ft pigeon-hole (much less the smaller bee-hives)???.
No wonder a S’pore Netizen once aptly described HDB Minister-in-charge Mah Bow Tan as “short in stature (both physically and politically)”.
my maid laughed at my 5 room flat saying her bungalow in her home town is much much bigger and cheaper than mine when i haolian boasted to her how big a 5 room is to singaporeans.
:(
dam malu balu ku siah.
TOC should keep this thread in the main forum and not allow it to fade away.
i second redbean that we should all help keep this thread alive for the simple reason that
this is one of the most public interest question given
that majority ‘s biggest most expensive thing they will ever spend on is
a flat, as a leaseholder.
Dew Spring @ Yishun
(Standard Contract)
2-room 144 units – $76,000 – $90,000
3-room 216 units – $120,000 – $146,000
4-room 504 units – $197,000 – $238,000
TOTAL Units Avaliable – 864
http://services2.hdb.gov.sg/webapp/BP13BTOENQWeb/BP13J011DS?strSystem=BTO
————————————
Shocking news, did shortie say new HDB price will be based on market condition only.. what talking him this time?
Seems like land price has already drop 30% since property developers golden age period but no information on size of 2, 3 and 4 room flats. I guess these must be mini size of normal flats.. 35 sqm for 2 room, 60 sqm for 3 room, 80 sqm for 4 room.. hope ayone can correct me on most expensive pigeon holes in asia.
142) redbean on December 20th, 2008 10.12 am
TOC should keep this thread in the main forum and not allow it to fade away
This thread should be kept active at least till the next GE. Hope any new emerging party should take heart that this topic is a very useful one as it is concerning one of the basic living needs that the government in any country should provide to their citizens, and not profiteering from them just to make that extra millions to keep them in power.
[i]SINGAPORE, Dec 19 – Singapore said on Friday there were 10,450 uncompleted private homes purchased under the country’s deferred payment scheme, revealing for the first time the potential number of homes that may be returned to developers.
[/i]
so mr shortlegg smartarsh
what is next?
blamed us again for being complaint cents?
Not only HBD, SP also sucking our blood with oil price closing friday at USD 34.00 plus ….our Jan to Mar at SGD90 plus equal to USD 61 plus… Apr to Jun we shall see what another bloody ripped off and using natural gas even as fuel for the 3 power plant. all sold to foreign interest …KNN !!!!!!!
no no why, this month bill so high.
i gonna verify every meter reading from now on.
how much you all pay and pay each month huh?
3 room electric and water bill is just under $140 is it high ? I dont use the aircon, just the fan. got 1 fridge and washing machine . simple life.
why so high bill?!!??
can someone advise a bit?
tango yankee.
I believe they are not going to bother or give a shit to all you people complaining about the increased SP bills no matter how persistant you are going to go after them. This is their usual moves all these years, play tai chi and all kind of delay tactics so the whole thing will just died off somehow, becos we are too timid to go after them and rather suffer in silence all these years, unless . . . . . something drastic happen in singapore then. . . .
I remember a few years back when the property prices had rocketed beyond the means of an average Singaporean, the then Minister of National Development had said our HDB prices are still affortable to most Singaporean.s And the present Minister ,Mr Mah said it is Market-based pricing. Both method of dictating HDB prices is not fair to home buyers. “Affortability” to me and the man in the street mean ability to purchase something without borrowing. If a home buyer need to borrow substantialy for long period of time, that mean he actually cannot affort. And HDB prices shouldn;t be priced to affortability. Market-based pricing does not refect the real prices of HDB , it is artificial. The secondary market prices uses HDB valuation as an indicator. The valuation is usually high so that the new HDB flats can be sold higher. All these methods of deciding HDB prices
will have adverse economic impact in the long run. And it is happening now, as home buyers lost their job and couldn’t affort to service their loan. Even they can manage until the end, there will be not much left in their CPF for retirement. Young people will hesitate to get married and have children due to high cost. All these will create social and financial problems and will have adverse impact in the day to come.
is this the kind of policy that the people think is good for them? the govt could maintain the HDB prices so that singaporeans need not empty every cent they have for a flat which is the only property many would have. by keep pushing up the prices of HDB, it is good for those who have already bought and see price appreciation. but every year there will be another 20,000 or 30,000 young couples coming into the market for new homes. these young people are going to pay dearly for this kind of ‘caring and compassionate’ govt policies. affordable my foot!
it is no joke taking a $200k or $300k loan to repay. and many are taking much more. in the private property market, many are taking $800k or $1m loan to service. and some think they can make money by flipping on each launch. now the 10,450 units based on deferred payments are going to take its toll. the economics cannot support such a reckless price inflation.
a caring govt should try to minimise the burden of its population, not to increase it at every opportunity. now it is very obvious who is the culprit in the rising cost of living. look not further. it is not cause by external factors. it is deliberate.