By Leong Sze Hian
I refer to the article “HDB resale prices: Don’t just find a scapegoat – It is not an issue of us-versus-them, but one of a rise in demand” (ST, Feb 11).
It states: “But actually, what exactly is the issue? Are rising HDB resale prices an issue?”
Well, the issue is that the HDB’s Market Subsidy Pricing policy pegs the prices of new flats to that of the resale market. This makes new flats increasingly an affordability issue for Singaporeans.
As for the statement “Surely not to the majority of 880,000 or so households who already own an HDB flat, to whom rising flat prices means rising asset values”, what good is a higher priced HDB flat if you need to downgrade to a smaller flat in order to have enough money to retire?
Under current rules, downgraders can only purchase a resale flat. As the price differential between a larger and smaller resale flat may not be very substantial, the alternative of downgrading to a new smaller flat may mean a wait of 5.5 years (2.5 years waiting period plus 3-year Build-to-order (BTO) construction period).
This problem may be further compounded by the change in policy last year that after age 55, any shortfall in the CPF Minimum Sum (MS) must be topped-up from property sale proceeds (CPF monies utilised plus accrued interest), before the balance can be used for housing again.
With the MS at $117,000 now and projected to increase to $161,000 and $271,000, in 2013 and 2023 respectively, anyone selling to monetise their flat may not have much left after meeting this Minumum Sum rule and the price of a smaller resale flat.
The article also stated: “What of the charge that some people are buying HDB flats for rental income? Actually, this is patently the case – and rightly so. HDB’s 2008/09 annual report states there were 22,754 flats that were sublet. No one knows how many more flats are being sublet illegally. A number of HDB flat owners will also be renting out some bedrooms for income”.
Actually, the 22,754 flats that were sublet as stated in HDB’s annual report had their applications approved in just one year.
So, how many flats in total are being sub-let entirely?
How many applications were not approved?
How many are sub-letting their flats because of financial difficulties?
For those in financial difficulty, is it possible to apply for a waiver of the 5-year and 3-year rule before flats purchased with or without a housing subsidy can be entirely sub-let?
For those with genuine financial difficulties, this option may be better than compulsory acquisition of their flats at 90 per cent of valuation.
I agree with the statement that “(people have) to acknowledge that the market is moving faster than one’s income and savings can keep up with”.
In this context, the problem may be that some of the HDB’s policies are out-dated and do not reflect the reality of a changing environment, such as the 2.5 year waiting period, because in the past the HDB built to sell, as opposed to today’s BTO approach. This may effectively mean waiting for another threee years for a flat on top of the usual 2.5 years.
The income ceiling of $2,000 and $3,000 for eligibility for 2-room and 3-room new flats have also not been changed for many years, despite rising new flat prices and the higher cost of living.
I also refer to the “Special report : Homeless wanderers – Number of homeless people doubles” (Sunday Times, Jan 31).
It states that “About 60 flats are voluntarily surrendered to the HDB every month”.
Many of the occupants became homeless because they could not afford to pay for HDB flats.
In this connection, I refer to the articles “New flats to stay affordable” (ST, Jan 27) and “HDB flat supply will meet demand : Mah” (ST, Jan 14).
The latter states that “a family with a monthly income of $3,000 can buy a flat worth up to $250,000 and spend only 30 per cent of their income every month on the mortgage …. This means they can comfortably buy any of the flats (three-room and some four-room) offered in the latest BTO projects this month”.
A typical financially prudent household of four persons (couple with two children) may find it hard to make ends meet with a disposable monthly income of $2,100 ($3,000 less 30 per cent for the HDB mortgage).
A breakdown of a typical household’s expenses is as follows:-
food ($40 x 30 days) $1,200
education ($200 x 2 children) 400
transport 300
utilities 150
insurance (various) 100
telephone/internet 70
service & conservancy charges (S & CC) 40
property tax 20
television license 10
medical 10
_________
Total: $2,300
The household may be left with no savings or any money for leisure activities.
If the household has more than four people, like those staying with their parent(s) or have more children, it may be quite difficult for them to survive.
As there are hundreds of thousands of people with a disability or chronic illness, a household surviving on a $3000 per month income with such a family member may also find themselves stretched financially.
Affordability depends on individual circumstances, and it may not be quite appropriate to generalise that a $3,000 household can afford a HDB flat.
According to the Department of Statistics’ Household Expenditure Survey report, there are about 106,000 households with less than a $1,000 monthly income, and about another 116,000 households with less than a $2,000 monthly income.
I therefore estimate that there are about 300,000 households earning less than $3,000 a month.
So, does it mean that about three in 10 households may find these new BTO three-room flats beyond their means?
The issue of affordability may be further compounded by the HDB’s Income Ceiling policy, whereby a household earning over $3,000 a month is not eligible for a new three-room flat, and has to purchase a new four-room or bigger flat.
As the HDB celebrates its 50^th anniversary this year, instead of just the HDB determining affordability, I would like to suggest that an independent third party be engaged to study the affordability of HDB flats.
To – lobo76,
The $3,000.00 was a typo.
Probably meant his own $3,000,000 annual salary
-$1 million plus annual salary,
- $1/2 million plus annual performance bonus,
- $1/2 million plus GDP bonus
- $213k plus MP annual salary,
- others $$$$ like board of directorship allowance
Quote
lobo76
Feb 12, 2010 9:03
Is the maths correct? I get the feeling it left out some things.
Is the 30% the extra cash amount that has to be paid after deducting from CPF?
Also, $3k is the amount on the payslip, since I am quite sure the income ceiling is not based on disposable income. you’d need to take out 20% for CPF deductions, before taking off another 30%. If 30% is indeed the extra top up amount, than 50% of income is gone.
Because of the high property prices driven by the HDB policies, citizen employees need more salaries to get by citizen businesses owners need greater profits to get by. All these make Singapore uncompetitive, people lose jobs, business owners cease businesses. Meanwhile, the government got very rich and finally, nation building collapse. Citizens who had the monies will leave. That’s whay they want high pay!
The prices for the Feb 2010 BTO in Punggol are still expensive. Selling up to $301k for just a 4-rm Standard Apartment, and so near a Electrical Substation.
Now HDB will be rolling out BTO in “Ulu” locations just to sell at slightly lower prices.
So generally it looks like they have lowered the prices.
It all started when HDB pegged Pinnacle @Duxton price at someone who sold his flat at Kim Tian for $700k. It was almost $200k more when launch in 2004. So tell me who is the one that is responsible for jacking up the prices?
Singapore is paradise for me and my children.
My son will be going for NS next year. I give him my blessings.
I relocated here from Malaysia 8 years ago.
Some of you shd get to know living in a racist country where only your taxes count when you open a shop. If you have no capita then it’s bad. Real bad. 1000s of Malaysians commute here daily in the early morning down the causeways to seek employment.
Beyond that – sorry.
Over there the majority don’t treat the minorities like what we do over here. NS for all, public flats reserved for minorities, state subsidised newpapers, radio & TV stations, places of worship in every housing estate, public sector jobs and the NGOS’ assisitance which is color-blind.
Thnak you PAP for building a benevolent little red rot in this dog-eat-dog world.
Have a blessed Lunar New Year everyone.
Some of HDB policies are outdated. We need to relook at them, especially the subsidy part.
The subsidy portion must also be pegged to the resale price index.
In addition, the rate of price appreciation for resale flats should also be moderated.
Singapore is a small country,so no place is really ulu.
PAP make the mistake of not explaining its policies to the educated population satisfactorily.
On IRAS’s taxes, agree that some tax relief claim are outdated.
It is not pro-family at all, in the sense that only one of the children can claim for parent-care relief.
Further, people who own a flat should enjoy more discount in tax payment compared to a person with the same earning power but stay in parents’ flat.
Case 1:
Say you take a loan to buy a flat at 400k.
It drops in value to 200k.
You want to upgrade to a bigger flat which cost 300k.
you sell your old flat at 200k, but because you take a loan of 400k, you need to pay 200k cash upfront to settle the loan.
After coughing up the extra 200k to pay off the entire loan, you happily take another 300k loan to get the bigger flat.
Total damage: 500k
Case 2:
Say you take a loan to buy a flat at 400k.
It increases in value to 600k.
You want to upgrade to a bigger flat which cost 700k.
you sell your old flat at 600k, but because you take a loan of 400k, you get a profit of 200k.
You then take a loan of 700k to get the bigger flat.
Total damage: 500k
Case 3:
Say you take a loan to buy a flat at 400k.
It drops in value to 200k.
You want to downgrade to a smaller flat which cost 150k.
you sell your old flat at 200k, but because you take a loan of 400k, you need to pay 200k cash upfront to settle the loan.
After coughing up the extra 200k to pay off the entire loan, you happily take another 150k loan to get the smaller flat.
Total damage: 350k
Case 4:
Say you take a loan to buy a flat at 400k.
It increases in value to 600k.
You want to downgrade to a smaller flat which cost 400k.
you sell your old flat at 600k, but because you take a loan of 400k, you get a profit of 200k.
You then take a loan of 400k to get the bigger flat.
Total damage: 200k
Case 5.1:
Say you take a loan to buy a flat at 400k.
It increases in value to 600k.
You continue to stay in your house.
Total damage: 0k
Total gain:0k
Case 5.2:
Say you take a loan to buy a flat at 400k.
It decreases in value to 200k.
You continue to stay in your house.
Total damage: 0k
Total gain:0k
Case 6:
Say you don’t have a house, you want to buy a house.
The house price 3 years ago is 200k.
You wait and save money, and think it would drop in price.
Now, the price is 400k.
New buyers don’t want to wait and fork out the money to buy.
But once you buy, you go back to case 1, case 2, case 3, case 4 or case 5.
Case 7:
Say you don’t have a house, you want to buy a house.
The house price 3 years ago is 200k.
You wait and save money, and think it would drop in price.
Now, the price is 100k.
New buyers don’t want to wait and fork out the money to buy.
But once you buy, you go back to case 1, case 2, case 3, case 4 or case 5.
The people in Case 7 has the greatest benefit.
People in case 1,2,3,4,5,6 for 70%-80% of the population.
The conclusion is that there is no conclusion.
Downgrading at a period of property price rise seems slightly better than downgrading at a period of property price depreciation.
The issue is thus not whether price rise or not, but the rate of change. If the property does not appreciate too much too fast too suddenly, there would be so much less problem.
And the amount of subsidy also need to be increased accordingly according to resale market condition to help people in case 6.
Then, there would not be so much discontent on the ground, thats what i think.
Whyso
“Maybe Singaporeans should try living in Sydney, London, HK, Tokyo… so they can compare life there.”
- Why you mention main cities only? UK is so big, why zero in on London? I can also pick the one-room flats in Toa Payoh to compare you know. BTW I have lived in London and life is great there. Don’t want to go back if I can stay!
i feel no confidence here.
YummyMummy Feb 12, 2010 22:44,
You stayed in a one-room unit in London? Then it’s ok to compare with one-room HDB in Toa Payoh.
You can choose to stay at a semi-detached in some sleepy suburb in Johor Bahru, right? That would be a closer comparison.
Every time i asked to view a resale, the agent would say we have Chinese PR with ready cash. Our whole country is inflitrated with foreigners, even the elite schools are full of foreigners from South East Asia, all imported by our governments and granted scholarships. And most of them have assimilated to Singapore, have the same “i am elite, you are XXXX”, similar to that MP daughter who disappeared after writing some real nasty elitist comment. Of course, these students will be given PR and quickly awarded citizenships and they would in turn vote PAP.
Its true that everytime i go out , i see china-accented people. They are omnipresent.
but i do not know exactly how many of them are residing. i am just stating my observation which i am confident most of you see the same unless you cannot distinguish chinese accent from local accent. its not about liking them or not. its about an observation.
You really believe 2M foreigners in low pay jobs such as cleaners? ha ha ha
We dont have have 5M jobs to begin with!
//FT Talents Conquering Sg
The smart ones will eventually go somewhere else.
Why would they want to stay in Singapore?
//Dane
a steady rate of increase in value is better than MBT’s erratic rate of increase that send the market into panick.
//Jeremy Choo
You should ask your Malaysian compatriots who left Singapore for HK or Australia why they do so.
I agree that Singapore is superior to Malaysia now, but it is lousy compared with what South Koreans, HK , taiwanese are treated in their own countries.
I have nothing against Malaysian being treated well here provided Singaporeans are treated better, which is not the case.
Cannot be because Malaysian govt corked up that Singaporeans have to suffer too: since Malaysian standards are way too low.
sad. Really Mah bow tan says an increasing asset price is good. For who? We only look at it and pity the generation getting married. Our future children. How will they retire with expensive HDB flats and min sum scheme.
When did I ever agreed to the $120,000 min sum scheme that has now become a reality? Why can’t I withdraw my CPF at 55 and do what ever I want with my retirement money? Why should the govt hold this money and give me a trickle of it at age 67? Why?
What can we do to change this? Hope for a change within PAP, or vote in the opposition en-bloc??
lky says mbt has to defend himself on the next election so opposition parties the rest its up to you
Had enough of the PAP’s lies and self-serving policies ?
Then do your part to help put the final nail in PAP’s credibility coffin.
Mr Leong has indeed written a good and insightful article. I do not know how much discussions in Parliament are as thoughtful and frank like Mr Leong has wrote. Everytime when I watch Today in Parliament, I saw plenty of empty seats and MPs yawning. In all frankness, I believe that we are over paying our MPs merely to attend listening sessions in Parliament and be seen only. Very lucrative side income. We ourselves are responsible for this pathetic state that we are in. Fellow Singaporeans, life is what we make of it. It is all up to us only.The power is in our hands.
All policies are not necessary for Singaporean’s benefits. It is only in name but in reality, they are just implementing them so that they can collect as much as possible – government coffers which includes GLCs etc.
Do you think they care? They only care about election and they would do everything to ensure they win. So they would be nice to us 1 year before election, so you can see those wayang like Singaporeans first. But lets not forget, we have been screwed for so many years.
This government is no longer compassionate, they only care about absolute control, power and money/greed. Look at the entire cabinet, hundreds of millions spent. But what sort of policies? Cheaper better fast? Or affordability? Our utility bill is amongst the highest in the region. Why?! Or losing 58 billions and town council money? We cannot even afford a public shelter/hdb.
Have they ever admitted their mistakes? They only blame Singaporeans for being lazy (irony – Singaporeans work harder than anyone), complaint kings and sheltered. How many of us really depend on the government for anything?
They have imported 2M of cheap labour and said they are doing low pay jobs such as cleaners, you believe? We are asked countlessly to accept low pay and tighten our belts but look at them, they have no qualms taking millions. What kind of leaders are these? Setting examples to follow or?
Whether MBT, RT, LBW… remember we voted for them.
I remember many years back when Howe Yoon Chong proposed the delay of the
withdrawal of our cpf savings, there was a great outcry and it was shelved.
Now they did it another way by increasing what they called the MS as they like
(minimum sum). Same outcry, but do they really give a a heck?
This govt has grown too arrogant and the only thing they understand is when us
the people collectively bring them down to earth this coming GE
MBT is well past his expiry date. He should step down or risked being voted out.
One thing is for sure, there will be no shortage of nails if Mah Bow Tan ends up in some coffin.
Another thing for sure, Mah Bow Tan can take a dive from the top floor of any HDB flat and the price of your flat will not dive. So go ahead and vote the dwarf out.
Mr Leong Sze Hian, excellent points, excellent arguments.
Keep up with the good work. I am deeply appreciative, and I would probably be right in saying that we all are.
I just wonder what further half-truths the govt or HDB is going to spout next.
Singaporeans, we have waited long enough. Make your votes count in the next elections.
MBT is just an empty vassal.
The only thing that is good is probably his range of spectacle frames he dons in different events.
He did not include and think about the high cost of living standards of the ordinary Singaporeans. All these ministers are sitting comfortably in their positions and attending functions and parties without thinking how to solve the problem.
They are taking away all our hard earned money and seeing us struggling to make our ends meet.
We have children to take care of, we have bills to pay, we have parents to feed too and also yes that 30 percent of gross salary mind you not nett, goes to paying mortgages.
What is left for us to save? How about our retirement? Do you think we would have enough money if something major happened in the family?
singaporeans save a lot and are very hard working, among the most hardworking in the world. they focus seriously on education and everyone try their best to get a degree if possible.
but over the years cost of living went up and up. job prospects are no longer as rosey.
HDB prices keep going up.
while people have saved as much as they could, most can only afford hdb flat. small and noisey (birds, neighbors, processions, congestion etc) and expensive.
but singaporeans actually have some money. but they spend it on overpriced flats. in many countries around the world, the price they paid for small flats is more than enough for a new super car and a semi-D so large you need a maid to maintain.
this is the price to pay and pay to live here, imho.
feel free to disagree with me.
Affordability is when you are rich enough to pay for ERP and Petrol and COE.
ERP is artificially created price. So is COE.
but i must say these are so great they solved the traffic congestion problem.
actually traffic congestion problem can be solved in another more effective way by not focusing all the city area to the south of singapore. But our dumb ministers cant figure it out. High IQ but low EQ types.
I wonder why CPF min have to raise, since 20 years ago, the lower income earns 1k and they r still earning 1k now while the standard of living have gone up so much. Isn’t it becoming logical that no wonder the number of poor have increased by 5 folds now to 20% of the total population and another 50% living dangerously with debts?
Folks,
Let’s be honest enough. This current ruling party has stopped serving us anymore. Now they only want to maintain the standard since they have ruled for 44 years and to them they have already set the pace to its ground already.
Right now, they only think of collecting their easy money every month and give lame ideas to this country , but can’t be bother your life and death anymore.
So vote them all out!! And best is make sure before they are voted out, their multi-million dollars have to cough out from their mouth and return back to us all truly born singaporeans becos they don’t deserve that obscene pay! Pui !! Pui!!
yaya, I agree with you.
For the good of Singapore and Singaporeans – for the majority at least – we need to ensure as many papies as possible are kicked out in the next elections.
30 over years ago, ah gong slapped this island with a 2-child policy and the rule was so successful that 30+years passed, and we have to have a brand new generation of immigrants to fill up the population gap.
5 years ago, ah gong’s blue-eye boy slapped the island with a “public housing freeze” citing that there are many many unselected units sitting around for the choosy ones to choose. Now, we are paying for that supply-gap that has been widening for the last 5-years. And Ah gong’s blue-eye boy had the cheek to advise the population that we need to be prudent in finding the right home & not over-pay COV?! It doesn’t take an idiot to know the equation of supply-and-demand, much less words from someone who’s drawing million-dollar paychecks!
http://happyangelclub.wordpress.com/
CNY Eve: He drank the soup which left on the tables by others / 吃残羹的老人家
Posted by happyangelclub on February 18, 2010
On 12/2/10 one day before the Chinese New Year eve while most of the people maybe having special meals at home with their families members.I saw two old people walking around one table by one table at the HDB food court. Why???
They were there looking for left over food. When some people left the tables.They quickly went near to the tables and drink the soup which left on the tables.
What is your feeling when seeing the action of these two elderly?
除夕前夕，当多数新加坡人都在家里准备团圆大餐时，我在小贩中心看到两个老人家，将食客吃剩的汤和食物，往嘴里倾倒。
看到这一幕，你作何想？
=======================================
In response to YP face book :
Young PAP Being poor is not “your own fault” in Singapore. We believe in promoting independence and dignity rather than dependency. We cherish the value of family and sustainable social security. Hear us and read our point of view in response to “The Stingy Nanny” (by The Economist Online) on our Notes page and YP website!
Tong Ming Quah :
Mr Tan before we teach them how to fish, we should remember to feed them with fish as they could be starving. If that bit cannot be done, we will lose them before you can teach them.
Geminii Po:
being poor is not everybody’s fault. it’s own fate to blame.
but the govt still have to help the poor and make sure they don’t suffer in own motherland since their ancestors also help to build up singapore.
[i].I saw two old people walking around one table by one table at the HDB food court. Why???[/i]
what you saw was just 2 old couple..what i saw in a hawker centre was a near 40 yearole man..the 1st thinggie in my mind i thought he was the cleaner’s supervisor till he sat down relax his foot on the other empty stool cleaned up the whole table..not with his hands but with his mouth usin the same leftover chopsticks/spoon..
//Singapore Short Stories
if you let in 1 million poor FT and convert them to Singaporeans/PR, and set a downpayment at the 10% instead of 20%, so that they compete with natives for low cost housing of course, demand for HDB will be high.
if you let in 1 million of RICH/Wealthy FT, you don’t even need to convert them, they will demand more condos.
The new demand for hdb is a reflection of the wealth status of the immigrants, the pigs are allowing into singapore.
How can it be that being poor is one’s fault but being rich is the part played by PAP?
It is not logical at all.
Whoever says that PAP is responsible for us being rich is non nonsensical.
//They do it for their coffers
if they had better investment abilities and not cocked up the show with TH/GIC, there is no need to squeeze Singaporeans further.
If military generals can invest well, there is no need to have business schools, everybody should just go to the military.
I really look forward to the day, MBT is voted out (for that matter, LimBoonHeng, LSS, GY, and all the other military general turned pigs @ parliament) and they walk around like the Lee Yok Suan in Orchard road, when I will spit at them.
To choose between MBT and a donkey in an election, i would have no second thoughts in voting the animal. This should be what most singaporeans should do come this election. Vote for anything than the arrogant out of touch money faced PAP!
If they promised goodies before this election…take them and still vote PAP out! Whatever you take now from them will be taken by double time and end up losing more. If PAP help you means trouble for your pockets in the future…think about 9% GST. More levies and taxes and ERPs. I just hope the budget promised nothing more but to help the needy and poor.
Let me share my own story. I hv 6 kids n only breadwinner.
I decided to sell my HDB flat due to $$ issue in mid 2007. No savings at all. Negative sales.
I approached Mr LSS MP for Holland for help. No help. Approached HDB , wasted.
I told HDB, to consider waving the levy as I lost in selling the flat. I’m moving for survival reason and not to make profit. It’s HDB policy so hv to pay levy. It’s human made policy , yet cannot be flexible for human. Why , so cruel ?
Finally I bought a Flat at JW and all my 5 daughters travelling from one end to the other end. Meanings it will further bite into my transport costs.
I approached nearby school to allow my daughters to transfer. What u expect ? Worse human beings i.e the Principal.
With just one person’s salary I can’t afford to sent my daughters for tuition classes b’cos of $$. Eventhough I wish to sent for SINDA, the timing they reach home after school by school transport is around 7.20pm. To go to tuition class , 7.40pm. The class starts at 7pm.
I served the nation and yet what I get ? Zero plus -ve support ?
You can say that again, Mon! MBT has been lying. Period.
Recently, a friend who migrated to Perth told me he did so ‘cos the government was planning to LOCK his hard-earned CPF.
Yup, I agree with you, FeverGUY.
If Singaporeans know what is good fro them, they should kick out the papies, all of them if possible, in the next elections.
Do NOT continue to be fooled by them with their offer of titbits; what they give you with one hand they have already decided how to take them back, many times over, from the other. Do NOT miss out the opportunity in the next elections – kick them out!
Yup, I agree with you, FeverGUY.
If Singaporeans know what is good for them, they should kick the papies out, all of them if possible, in the next elections.
Do NOT be fooled by their offer of titbits. What they give you with one hand they have already decided when or how to take them back, many times over, with the other.
Do NOT miss out on the opportunity the next elections offer; kick them out!
I don’t think the people can forget and forgive this HDB misaction for a long time as many young voters have to live with it. MBT needs to do damage control now.
They give me a chicken wing now; only to take a whole chicken away later.
You pay peanuts, you get monkeys. But why is that when we pay bananas, we STILL get monkeys? Please explain.
This is a reply to Whyso.
I work and live in Tokyo. No Tokyoites want to stay in Ginza ‘cos it’s noisy and the air is unclean. Second, there are a lot of lights around in the city and it disturbs your sleep. In Japan, they are ample choices for housing. The key difference is that you need to pump in some key money to the landlord if you want to rent an apartment. There are many singles in Japan, so there are many apartments for singles that comes with a small balcony and LAN internet. There are also cheap houses in the suburbs and it is not far to take the JR line to work. It takes me 45 mins to get to Tachikawa, 45 mins to Shinjuku. If you want even cheaper housing, you could always go to the countryside and take is easy for your old age. Clean air and peaceful surroundings and with Yahoo Broadband services, no worries. In Singapore, …[fill in the blanks]
I decided to not vote for PAP in this election because LKY called me “daft”.
HDB can simply make it tough on the subletting rules such that the owner will not buy the so-called ‘subsidized’ flat as a money making instrument for rental.
I am in the real estate industry and there are many CPF rich singles cashing in on the rental HDB flat they own while still living with their parents.
HDB needs to minimize abuse on the ‘subsidized’ flat by these owners and maintain the low price for these ‘subsidized’ flat to make them affordable to citizens.