By Alex Au of Yawning Bread
In late January 2010, Finance Minister Tharman Shanmugaratnam, in announcing the increase in the Additional Housing Grant from the previous S$30,000 to S$40,000, said that with the increase, some 8,000 households annually would benefit.
What does “8,000 households annually” mean? What percentage of Singaporeans would qualify for the Additional Housing Grant? Is that a large percentage or not?
In attempting to grasp the significance of this figure, I tried to compare it to the annual demand for ownership flats as reported by the HDB in their Annual Report. Over the last three years, this has averaged about 10,000 flats per year. The HDB defines “demand” as “bookings received by HDB for 2-room and bigger flats under the various allocation exercises, as well as bookings for Design, Build and Sell scheme flats.”
At first glance, 8,000 eligible out of an annual demand of 10,000 suggests that even the Additional Housing Grant is a scheme that throws money like confetti to all and sundry.
However, the details complicate such a simplistic conclusion. The Additional Housing Grant can be used for resale flats, but not for second-time purchases, whereas HDB’s 10,000-figure for demand includes second-time purchases, but excludes resale transactions. Hence, it is not possible to compare the two figures. Nevertheless, one is left with the distinct impression that not only do all Singaporeans’ first-time flat purchases get an assist from the first grant, perhaps a majority also get the Additional Housing Grant.
It is hard to avoid the conclusion that the great majority of Singaporeans depend on subsidies to get a roof over their heads. We’re breeding a culture of dependency.
This cannot be tenable. I’m not against subsidies in principle, but it should only be for a small percentage of the population to mitigate extremes of poverty. Dishing out subsidies — and the schemes are permanent — to well over half the population cannot be fiscally responsible.
Unless…. they are not subsidies.
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Read the entire article at Yawning Bread
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It is refreshing to read an article such as this urging less subsidies. Most articles and comments in online forums normally lament about the high prices and then ask for higher subsidies. Some comment that public housing in singapore is not subsidied!!!
Should public housing (HDB) house about 80% of Singapore population? If HDB build the flats or engage in regulating the resale of flat, then it is inevitable there is an element of subsidy. If public housing subsidies is given for the poorest 20% of the population, then the 20-80% income population will need to buy their own condo (above $500K?). Will this group of middle income (60% of people) be more in debt and take 40 or 50 years to pay off their mortgage? Without a subsided and cheaper housing, will young couples marry and have children? Will they prefer to rent than buy? Will renting create slums?
Personally, I think that it is appropriate for the government to subside young couples in buying a home to start a new family. This subsidy is not like food when is 100% subsidied. The flat buyer still need to save for a couple of years for the down payment and then must make constant mortgage payment after the purchase. Thus it is not likely to create a dependency mentality.
Anyway, u can restrict the no. of cherries given.
HDB should provide more details of their pricing and cost structure, and hopefully de-link HDB valuation from Private Property valuation. HDB land prices should be cheaper. HDB should not be acting as land banker, property developer and sales agent.
HDB homes should not be viewed as the main asset of Singaporeans and should not be used for speculation to create property bubble or homeless situation. CPF cash should be our main asset. The Government should help to top up our medisave/retirement accounts and provide more liquidity options for partial withdrawals of CPF cash for emergencies.
The situation is kind of like Patong. The seller tells you the price and then immidiately offers you a 20% “discount”.
The party that sets the price is also the party that gives the subsidies. It is also the party that owns most of the land. Isn’t it ironical???
instead of arguing about subsidies for HDB units, we should ask the government these few questions.
how much does the flats cost to build.
how much does it make by selling all the units?
if the ratio of the cost and sale is too high, then ask them why are they using HDB to suck money and make citizens slaves, especially when the flat is good for only 99 years.
vote opposition. hell, vote for me. but u’ll have to wait for quite a while. lol…
We must begin to ask the right questions so that we can come to realised how much a fool we have been treated by this government.
Suppose you buy a car and the car agency offers you a handsome discount, but in return you have to surrender the car in nine months time. Would you still buy the car? Even if you do buy the car, do you think you can lay claim that the car is yours?
The fact here is that people do not consider all these simply because they believe they will not outlive the 99 year lease that the HBD offers under the pretext of home-ownership, when there is actually none. You will never be the owner of the flat you bought. It has to be returned when the time comes.
So all this talk about home-ownership is just PAP’s way of bluffing you that you are actually the owner of the flat you live in. Why is this notion important to the PAP? Simply because there are other lies it has to tie to it, for example, you are asset rich, that the flat value makes you wealthy etc.
The only way you can be rich and wealthy is to sell your flat and keep the money in your bank, and to make prudent investments with it.
Unfortunately, this would mean that you won’t have a place to live in. To rent a place would mean an outflow of cash that has no hope of ever returning. To purchase another flat would bring you back to square one, living the lies of this PAP government.
This is why the public housing policy in Singapore no longer serves its initial purpose. It is now a game of profiteering. You are paying for something which you can never call your own.
One way of working around this, to beat the game so to speak, is to sell your flat, buy a home in another country where you can call it your own for generations to come, and move the entire family there to start a new life abroad.
If the government still cannot see this as one reason why many are running away from Singapore, then it is either blind or too obsessed with making money for the country (and the ministers’ pockets) by continuing to milk its citizens.
Goh Meng Seng has good ideas but he can be very long winded. He has written two blog postings on what is WRONG with the current pricing of new HDB flats.
http://singaporealternatives.blogspot.com/2010/03/give-us-hdb-flats-at-cost-not-30yrs.html
http://singaporealternatives.blogspot.com/2010/03/hdbs-flawed-direction.html
The following is a summary of what he is trying to say:
1) Under the current system, first time HDB home owners have to pay a very high price because HDB flats are priced based on the price of resale HDB flats.
2) HDB flats should be priced based on the cost it takes to build them rather than the price of resale HDB flats.
This simple message has been twisted by the PAP Internet Brigade into
1) Goh Meng Seng wants to collapse the price of HDB flats
Logically, this cannot happen. This is because to buy a flat from the HDB, you have to fulfill
1) Citizenship/Ownership requirements
2) Family nucleus requirements
3) Occupancy requirements which prevent first time buyers from immediately selling their flats in the resale market
Goh Meng Seng also talks about the idea of using your HDB flat to finance your retirement. This is a BAD IDEA because
1) The price of resale HDB flats can fall.
2) Other than selling the HDB flat, there are no other means on monetizing it. Previous attempts to monetize HDB flats via reverse mortgages failed.
Hence unless you have second property or are planning to emigrate from Singapore, it would be foolish to rely on your HDB flat as a means of providing for your retirement. Unfortunately many Singaporeans are FORCED to do so because they have spent ALL of their earnings on their HDB flat.
Goh Meng Seng will be running against Mr Mah Bow Tan in the upcoming elections.
A vote for Mr Mah would therefore mean a CONTINUATION of the current policy of INFLATED prices for flats bought DIRECTLY from the HDB.
A vote for Goh Meng Seng would mean HDB policy REFORM so that you pay based on the COST of building the HDB flat.
“…it would be foolish to rely on your HDB flat as a means of providing for your retirement…”: aurvandil.
Isn’t this what the drunkard Mabok Tan is trying to sell us in recent times when he tied it in with the increase asset value and personal wealth value reasoning, as if we are all suddenly very rich. We can ‘feel’ rich but the HBD value will eventually benefit only one group of people, the one we are paying our mortgages to.
We are emptying our pockets into a bottomless pit that we have no eventual share in.
The only way out is to sell our HDB flats and keep the profits. This would mean a life outside of Singapore if one intends to rebuild his life and that of his family. If we are going to live here and continue living in our hdb flats, the day will suddenly come when we see our make-believed wealth and assest value becoming a handsome ZERO.
It will be too late for those realising the wicked and merciless lies of the PAP when that day comes.
Gemami
Their long term plan might really be to make emigration an attractive option for older Singaporeans. Malaysia for example has a silver hair program which seems to be designed to attract Singaporeans who have retired. If you sell your HDB flat, you would have enough to make the deposit as well as buy a modest place to stay. The recent introduction of allowing MediSave in Malaysian hospitals might be an indication of this long term policy of encouraging elderly Singaporeans to leave Singapore and retire elsewhere.
This would then free up housing and other resouces in Singapore which can be allocated to “cheaper,faster,better” FT who can continue to be allowed into Singapore by the thousands to make the MNCs happy.
In one bold stroke, this FINAL SOLUTION would
1) Export the aging problem
2) Import FT to solve the expensive Singaporean worker problem.
Hi aurvandil,
I would think so too. The Mandarin language has also become less important with the new focus on the conversational rather than written aspect of it. Perhaps we should take the cue and start learning Malay for our retirements in Malaysia?
@aurvandil
that is very perceptive of u. thanks for bringing it up.
@aurvandil
thanks for the summary!
one logic i don’t understand is this- if price of new flats differs significantly from resale flats, wouldn’t it depress the prices of resale flats?
about monetizing flats- there is also downgrading to monetize the flat.
i met quite a few older folks selling their house for a smaller unit
because their children married and move out.
NO Free Lunches… but, got Subsidy…
If you price according to cost, then won’t the first timer buyers earn alot by reselling the flats? If you control the price of resale flats, then won’t more people suffer as they already bought it?
I believe a free market is the way to go. If the price of flats are so high? How come still everytime over booked. Like MBT pointed out, the pinnacle costs 600k because of its location, and he’s right. Everyone will want to stay there, those that bought. Got a guy I know bought a flat there but unfortunately got divorced, he die die want to hold onto his flat? why? Because the condo opposite is selling at 0.9 – 1.2 mil. This is not called subsidy? Everything else equal but you get lower price. If give me I sure buy.
People also forgot about the land cost, which is not from HDB but HDB bought from SLA.
RW
The price of new flats from HDB cannot depress the price of resale flats due to all of the restrictions mentioned in the earlier post. If you cannot form a family nucelus or if you are a FT, then there is no way you can obtain a cheap flat from HDB no matter how cheap that flat may be. As long as the supply of new HDB flats entering the resale market every year is consistent with demand, then we will have stable prices.
RW
On downgrading, if you poor and living in a 3 room flat, where can you downgrade to?
Also for thsoe who are more fortunate, it is a very bitter pill for elderly Singaporeans to move from a 5 room HDB flat to a 3 room HDB flat. They would not have to swallow this bitter pill if Mr Mah had charged them based on what it cost him to build the flat rather than an inflated resale market price. With the savings from the lower purchase price and interest payments, the elderly Singaporean couple could have a much better retirement that does not involve them selling their home to make ends meet.
Minister Mah say HDB very affordable, why don’t he buy back from us at market price then sell us at cost price.
Our retirement fund is being sucked away by the HDB.
Eventually, the retirees are left with no cash. How is the government going to help these retirees?
They created the shit and don’t have solution to this. By then the shit will be passed on generations after generations if we don’t resolve it soon.
The new flat offer does not come with renovation and extra furniture and fittings, so it should be at least 30 to 50 thousands dollars cheaper compare to resale flats. So the price of new HDB flat is in fact not at subsidized price. So if you are not first time buyer, you do not enjoy any subsidy at all. The grant given to first timer is in fact cash back to them for taking 30 years long term loan that young couple with small starting income usually opt for.
You sure everything else equal?
Your HDB flat got gym/swimming pool/tennis court?
Your Condo need to wait for X years to sell/rent out/etc?
Your Condo need to get dumb ethnic/foreign quotas?
Your HDB flat got good quality furnishings inside? Quality lobby outside?
Your Condo got every small thing need approval from HDB?
Think again dude, don’t get brainwashed.
objectivity
Mar 20, 2010 15:46
I believe a free market is the way to go. If the price of flats are so high? How come still everytime over booked. Like MBT pointed out, the pinnacle costs 600k because of its location, and he’s right. Everyone will want to stay there, those that bought. Got a guy I know bought a flat there but unfortunately got divorced, he die die want to hold onto his flat? why? Because the condo opposite is selling at 0.9 – 1.2 mil. This is not called subsidy? Everything else equal but you get lower price. If give me I sure buy.
People also forgot about the land cost, which is not from HDB but HDB bought from SLA.
@legal eagle
I agree that HDB and condo is not equal. What u state from gym to quality lobby is true. However, are this difference worth $300k? It is for the individual to decide.
I do not think that a HDB buyer will get brainwashed as he has most probably visited a condo launch. I am more worried about the condo buyer being “sold” on the condo lifestyle that he paid $300k more.
ludwig
Mar 22, 2010 16:09
@legal eagle
I agree that HDB and condo is not equal. What u state from gym to quality lobby is true. However, are this difference worth $300k?
why not? when the shortleggs minister gonna charged you $5 for usin a hdb rooftop just to view the ships landin in tanjong pagar? ludwig oleboi as i hav mentioned before you should sticked to beermatin in aushwitz for the annual october fest where i can legaLEE kicked your backside for free…
Ludwig, please don’t forget the extra rules and regulations that HDB owners have to comply with. 300k is not only the gym and lobby.
On top of that, please factor in the actual cost of building a HDB flat, vs its selling price, then compare that with the actual cost of building a condo and its selling price.
After considering these can you start to see where the problem lies.
@legal eagle
I agree that HDB and condo is not equal. What u state from gym to quality lobby is true. However, are this difference worth $300k? It is for the individual to decide.
I do not think that a HDB buyer will get brainwashed as he has most probably visited a condo launch. I am more worried about the condo buyer being “sold” on the condo lifestyle that he paid $300k more.
damagedDNAs
personally, i think that the $5 charge to go up the Pinnacle for the view is reasonable. U must not in the property business because u will be surprised that many people are willing to pay for a good view. Anyway the $5 view is a luxury and not a necessity. U cannot fault the government for charging a luxury.
After reading your comments, i realised that it is true that your DNA is damaged.
//ludwig
The $5 price for a view in a HDB will be extended to other HDB flats and priced into the flats for consideration.
That”s how it works in S’pore.