An announcement by the Youth Wing of the Workers’ Party.
The Workers’ Party Youth Wing (WPYW) invites you to attend this seventh installment of the YouthQuake series of forums. This forum will bring together three Singaporeans who will share with you their unique insights and experiences on the current public housing affordability and policies. It promises to be an engaging and enriching session for everyone!
Selecting and financing a HDB flat
By William Hooi, 37, Teacher at Clementi Town Secondary School.
William will speak on his experience in getting his own HDB flat and share tips and budgeting techniques on selecting an ideal house.
Analysis of Facts and Figures
By Leong Sze Hian, an alumnus of Harvard University, he has authored 4 books, been quoted over 1000 times in the media , host of a radio show on money matters and a daily newspaper column, has been a Wharton Fellow and invited to speak more than 100 times in more than 20 countries on 5 continents. He has served as Honorary Consul of Jamaica, Chairman of the Institute of Administrative Management, the UNESCO Leadership Chair Council and founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters degrees in Financial Planning & Financial Services, 2 Bachelors degrees in Economics & Insurance, and 13 professional qualifications.
Mr Leong will share with us on HDB issues that matter the most – statistics and affordability. He will present his analysis of the facts and figures to give us a better picture of the affordability of HDB flats for young Singaporeans.
Bringing affordable housing back to the public
By Gerald Giam, 33, Senior Consultant with a global technology consulting firm and a member of the Workers’ Party.
Gerald will analyse the root causes of the current housing affordability crisis, and share his suggestions on how the system can be significantly improved to serve Singaporeans better. He will argue that there needs to be a fundamental shift in both policies and mindsets, in order to fulfil the core national objectives of providing truly affordable public housing for all citizens who need it.
Details of the forum:
15 May 2010,
Sat 2.30pm – 5.00pm
@ WP HQ, 216-G Syed Alwi Road, #02-03
Leaders -> take care of the citizens basic needs. I used to remember that the Pap vision is to make sure that each citizen has a basic shelter. As times go by this vision seems to be faded gradually…
Very often, we will come across acticles whereby the leaders encourage us to save our CPF for old age. With the rapid increase of property price, can WE afford to save $ for old age????
I have this sharing…MBT used to lead the public transport division -> the price of public transport increased. When he move to HDB, the price of the HDB flats (both new and resale market) increases…..
No more words can echo my sorrow…
I repost something (save me from retyping) from something i post on another website.
Anyway, I think there is a very fundamental problem with public housing scheme in Singapore. Singapore is a very very small country with very scarce land to house a huge population that we have now. Due to this fact, “housing” is a very limited, but yet, essential resource here. You can look at it as a small village with 100 families and there are only 100 antidotes for a disease that may spread in the village. Needless to say, it is a scarce resource that needs to be managed well. If we leave it to the villagers to buy/sell these antidotes at any price, the richer families would most probably be able to buy up bulk of the antidotes, both for safe keeping, as well as to sell them back at cut-throat prices. The same thing goes here for housing in Singapore. Knowing that land is scarce, we need to manage this scarce resource well. That’s where “HDB” comes in. Rightfully, their role is to provide affordable housing for Singaporeans. They are given the sole rights to use land allocated for public housing, build and sell houses to Singaporean at affordable prices. Also, they should control the price of not just new HDB houses, but also resale houses. There is no point a clinic in that village that i mentioned, in selling each antidote at $1 each, when at the end of the day, people start reselling these antidote at prices they see fit until each antidote reach $1000 each, right?
Now, you may ask, “hey, then it means that if I buy a HDB unit at low price, I cannot resell them later at a much higher price to earn money?”. Yes, that is true. If your intention of buying of house is for investment sake (i.e. you would like to buy/sell it at an uncontrolled price), public housing is not for you. Private properties is what you should be buying. The purpose of public housing should be for the purpose of providing shelter over Singaporean’s head. Public housing for the “needs”, private housing for the “wants”.
This is something that HDB failed to control from the start and it is this fundamental lack of control that is causing all other problems to arise, despite the government trying to install patches to solve the symptoms, not the root cause, thereby causing other complications.
Initially when HDB built its first batch of houses, it was much cheaper than what we have now. You may ask your parents, a typical 4-room unit cost probably tens of thousands, or less? With no price control, and being of scarce resource, inevitably, prices started to soar… low/middle class Singaporean started to feel that they cannot afford it while the well to do ones could buy and resell it at higher price. To patch this symptom, government opens the pandora box to enable Singaporean to be able to use CPF to buy house. This is a very wrong move because CPF is a retirement fund. It is supposed to be untouched till you grow old. If CPF can be used to buy house, why can’t it be used to buy rice, pay for daily commute fares etc since they are all necessity of life?
With CPF being able to be used to buy houses, Singaporean suddenly feel a false sense of buying power. “Anyway, CPF is there doing nothing in that account!”. So, Singaporean begin to cash out their retirement fund to buy shelter over their head, and with that, prices continue to follow a general upward trend. Now, that got someone thinking… “Hey! I know a way to get my CPF money out!”… and so it began… Singaporean began to do cash-back. It works like this, if I have $200K in my cpf, and you are selling a house at $100K. I approach you and say, hey, I want to buy your house at $100K. But, know what, on paper, please sell me at $200K (since there is no control of resale price right? remember the fundamental problem!). My $200K in cpf will go to you and you pay me back the extra $100K. In exchange for helping, I will give you $20K! good deal? … you get the idea. Like this, people started cashing out their retirement funds.
Now, to patch this new symptom that arises (because buying cpf was enabled to patch symptom of rising house prices), “Cash-over-valuation” (COV) was introduced. So, back in that same scenario, if you sell me at $200K, i would have to cough out $100K. No longer was I able to cash out my cpf… damn! yeah, problem was solved!… or was it?
With the fundamental problem not addressed, resale prices of public is still not controlled and seller begin to sell houses at high price, regardless. Why? because demand increases due to influx of PRs and that PRs can buy resale HDB flat. Also, new public housing sold direct by HDB also got pricier despite average low/middle income remains at no relative significant changes. “Why is the HDB flat at boon keng sold at more than $700k?”. Because private condo in that area is selling at $800~$1M? HDB housing shouldn’t in the first place to price match private properties. So, with increased demand, plus increase in price of new public houses, you do not need a degree in economic to figure out why resale flat are getting pricier and pricier.
Now, this “stroke of genius” COV begin to work against honest Singaporeans who has “little” cash and not able to afford paying COV + renovation cost. In the current market, this could easily reach $100K, which, was sufficient to pay for whole, or bulk of the price of a unit many years ago. So, all these “wah, ridiculously high COV!” complains you hear are all symptoms of the fundamental problem.
Yet another complication that resulted from a symptom patch of enabling cpf to buy house is that you started seeing retiree not having enough because bulk of their cpf is either withheld in the cpf account (because you have worked more than half a century of your life in this society but you are still senseless and irresponsible when it comes to managing your own money), or has been used to buy that shelter over your head. So yes, that’s right, another patch, another ko-you(chinese herbal patch to temporary soothe muscle ache) that goes by the name of “reverse mortgage “! Using reverse mortgage, you use your existing house as collateral to get a mortgage loan again (yippie! i have retired and i would love to go in debt again!) and if you die just return your house :) So in effect, you have worked your whole life for necessity and in the end, you die with nothing much to call your own.
why is there a lack of creativity in Singapore? Why is there lack of talents, or real experts that pursue their field so passionately? why is Singapore soccer team not full-time professionals? because we cannot afford to do so. we are so caught up in our daily life working for the necessity like a roof over our head. Imagine, what it would be like if housing are really affordable, peg close to cost price (hdb should be non-profiting in the first place), not valued using private homes as yardstick. If so, I believe, many of us will not be working because we need to, but is because we want to. many of us will pursue our passion. There will be creativity, there will true skillful technicians, true experts in their field who has been in their field because they love to be, not because they need to be.
Of course, in order to do that, we need to address the fundamental problem of uncontrolled public housing. The present government would not enforce this (gradually, i mean, starting from the new houses they build), because doing so would anger many existing home owners who has been suckered into believing rising home prices is good. To address the fundamental problem, we need a government which can be self-sacrificing, and nip problem at the root. Sadly, I don’t think it would happen. To make problem, worse, many Singaporean don’t even see this problem. Many just quietly work away, praying that they could be one of those who are able to ride on the right boat and get out of the loop by selling high and upgrade to private home and live happily ever after. What will happens to their kids? coming out to working society with starting pay of say $2000+ or so, which is not big different from their parent’s era, but are faced with house prices (PUBLIC ONES) of $400K and above? with news like $900K HDB sold, it is a matter of time before $1M HDB houses are to be transacted, and there is absolutely no control whatsoever to prevent it from happening.
There is only hope if enough Singaporeans open their eyes to see what we are heading.
Good luck fellow future Singaporeans.
ps: sorry for the loooooooooong post ;-)
walamak,
10years back
3room 130k
now 3room 300k
salary 10year back 2.5k
salary now 3k
how to balance this type of living?
above only illustrate 3room flat
if 4room/5room illustrated
think lagi scary…
walamak
Good and relevant post especially for young married couples like me.And yes “walamak” indeed.