The Housing and Development Board can be very secretive indeed. Years of queries about flat construction costs yield only stonewalled silence. Even when statistics are released, key figures are often omitted, preventing the public from attempting alternative avenues of data analysis.
When the public is faced with such a dearth of data, they might reasonably expect the professionals – journalists well-versed in art of unearthing information – to redress the problem. Enter the grand old lady of the Singaporean press.
On 7 May (Friday), the Straits Times ran a story headlined “Most flats sold with low cash upfront: HDB”.
In the lede, Jessica Cheam and Esther Teo report that figures released by the Housing and Development Board (HDB) indicate that about 70 per cent of resale flat sales were done with less than $30,000 in cash over valuation (the amount paid upfront by buyers above the flat’s valuation, or COV). Given that a conscious editorial choice was made to prioritise and highlight this particular figure, it can be reasonably concluded that the Straits Times regards COVs below $30,000 as “low”.
More details emerge in subsequent paragraphs, but it is obvious why they are relegated behind the first figure. “More than half, or 54 per cent, of home buyers paid less than $25,000 cash upfront,” the report said (the actual percentage for the last two quarters, based on the table provided is actually 56 per cent).
“And about 40 per cent of flats sold in the September to March period were transacted with cash-over-valuations of below $20,000.”
The question we should ask is what provides the basis for judgement as to whether a particular COV level is “low” or “high”. The criteria are not clear, even though one might imagine it to be the underlying crux of the story.
Given that the fundamental concern for buyers in terms of public housing prices is that of affordability, perhaps that should be the primary criterion. Public sentiment reflects concern over the rising COV levels, and this in turn worries buyers as they may be forced to pay through their noses, or even be priced out of the market altogether.
But can Singaporeans who turn to the resale flat market readily part with up to $30,000 in COV? Intriguingly, the reporters seem to undermine themselves when they quote Colin Tan of Chesterton Suntec International, who said: “But at the $25,000 level, it may still be a high amount for some households.” Clearly $30,000 is not as “low” as the headline seemed to suggest.
Yet a substantial 44 per cent of buyers paid more than $25,000 cash upfront in the last two quarters. And when we compare across the two quarters, the proportion actually increased – from 43 per cent in fourth quarter 2009 to 46 per cent in the first quarter of this year.
Some in the real estate industry feel that even $20,000 in COV would already be beyond the reach of many Singaporeans. COVs that come to more than five per cent of the resale flat’s valuation would also be unaffordable for most.
As it were, Cheam and Teo made use of the $20,000 marker when they reported that about 40 per cent of resale flat sales from September 2009 to March 2010 were made with less than $20,000. That means about 60 per cent were paying over $20,000 – hardly the figure to highlight if your story is about low COVs.
Furthermore, over a quarter of buyers – 28 per cent to be precise – in the last two quarters paid over COVs of $30,000 and above. Perhaps more damningly, the proportion of buyers paying this much actually grew by four per cent in the first quarter this year to 30 per cent, up from 26 per cent in the fourth quarter of 2009.
It should be highlighted that this report arose from the HDB’s decision to release more detailed figures of COV levels for the first time. The reason for doing so, the HDB said, was that recent media stories on “extremely high COVs in areas like Bishan and Queenstown…do not provide a balanced picture.”
In essence, the HDB had been getting bad press and these set of figures were released to soften the blows.
In an email to the Straits Times, the HDB was also keen to add that “even in a market with rising COVs, there is always the flip side of transactions with lower COVs”. But as we’ve already pointed out, such statements involve an unqualified value judgement over affordability and market trends.
Whilst these additional statistics are more helpful, it does not help to resolve the problem that apparently many smaller flat buyers are complaining about, which is that the COV for smaller flats, like 3-room, are much higher than larger flats.
For example, 3-room COVs have been as high as $50,000, which is a much larger mark-up over valuation in percentage terms, than say a $10,000 COV for 5-room flats. To illustrate this problem, a $50,000 COV on a 3-room flat of $250,000 valuation is a mark-up of 20 per cent, whereas a $10,000 COV on a 5-room of $500,000 valuation is a mark up of only 2 per cent.
When I attended the “HDB Affordability” public forum last month, organised by the People’s Association Youth Movement (PAYM), one of the speakers presented statistics indicating COVs for smaller flats were much higher than those for larger flats. This was derived from recent HDB resale transaction data.
Therefore, what we need is the break-down of the statistics for COVs into different flat types. Such a break-down of the data, may also confirm anecdoctal evidence that most of the zero COV transactions were for larger flats, and that almost all smaller flat transactions have COVs.
Without such information, it may be difficult to ascertain how significant and widespread is the COV issue, particularly for buyers of smaller flats who may have a greater difficulty in being able to afford the higher COV.
Although the median COV has risen at a slower pace by $1,000 to $25,000, it is still rising. This compounds the affordability issue for buyers, as HDB resale prices have increased again the last quarter to another record high.
After adding the cost of furnishing and fittings, some buyers may not be able to afford a resale flat at all.
Apart from looking at affordability, another way to justify the value judgement over whether a COV level is “high” or “low” is to compare the spot COV levels – perhaps the spot mean or median COV – with historical trends, such as five-year averages. If the statistics indicate a slide in COV levels, or fall below historical averages, then there would be a demonstrable case for saying that they are “low”.
But as the report indicates, this data was the first-ever released of detailed figures on COV levels by the HDB. The numbers necessary for a more quantitative analysis are not in the public domain.
The story concludes with quotes from a woman who bought with her husband a three-room flat without any COV – in fact, they paid $10,000 less than the valuation. There are two problems with this example. Firstly, it is anecdotal evidence. How reflective is this one couple of the general sentiment of buyers in the resale flat market is unclear, and indeed can only be pure speculation. Secondly, the couple concerned found their flat after “months of hunting for a good bargain”. Not everyone can afford to wait for long periods in the hope of securing a good deal.
The issue of COVs, should not be a case of the HDB continuing to provide selective data disclosure time and again, to show that the COV problem is not as bad as many people or the media say it is – such as saying that of the 58 out of the 37,000 resale transactions that had COVs above $70,000, only eight involved permanent residents (PRs).
Citing just only the top less-than-0.2 per cent of total resale transactions would not representative at all of the issue. Therefore, what we need is the median COV paid by Singaporeans compared to PRs.
As to only 1 in 5 resale flats were purchased by PRs, we also need the break-down for different flat types, as many seem to have the perception that a disproportionately larger number of smaller flats are being purchased by PRs.
The COV issue may be affecting Singaporeans much more than PRs, as PRs may generally have more cash to pay for COV. This is due to the fact that as foreigners (before they became PRs), their entire salary was in cash as they did not have to contribute to the Central Provident Fund (CPF). Even after becoming PRs, their CPF contribution rate is lower than Singaporeans for the first two years.
It appears that the crux of the story is derived from an HDB press release. But since the release is not available on the HDB website, we are not able to provide our own analysis of the data. It is also not clear if the spin placed on the numbers were fed by the HDB, or the result of the Straits Times reporters doing their own number crunching and exercising their own journalistic judgements.
Either way, the Straits Times was ultimately content to play along with the HDB, weaving a positive story from the numbers when those numbers provide several areas of concern. And as we’ve shown above, there are plenty more questions to be asked of the HDB, and more data on the resale flat market to be sought out.
Perhaps another poser to put forth is why were the reporters content to report the data as it is? Where was the sleuthing and snooping?
——————–
By: Leong Sze Hian & Wong Chun Han
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“as PRs may generally have more cash to pay for COV”
so they can pay an overall higher price?
These PRs are really dumb…
I don’t understand why TOC is always bringing back this PR and CPF, it does not make sense.
I think that with the “COV” people have forgotten the most important issue: the V”.
The COV is just greed and bad CPF policy meeting at cafe and having a chat.
The V is a tsumani mistake.
> Most apt description of Straits Times by former S’pore Chief Minister David Marshall:
“…PAP bootlickers, running dogs and poor prostitutes…”
> Most apt Internet nicknames for PAP controlled/manipulated Mainstream Media:
Straits Times — PAP Times; State Times; Crooked Times; Snake Times; SHIT Times
Channel NewsAsia — MediaCORPSE TV; MediaCOCK TV
Straits Times is not a newspaper to begin with. It’s a daily PAP newsletter.
“Not everyone can afford to wait for long periods in the hope of securing a good deal.” Yep, entitlement mentality again: Must be good, must be cheap, must be now or I will complain.
Is it worth even to pay $20k COV for a flat of 99 yr leasehold ? The minister even got guts to tell you to sell flat for retirement.Then where are we going to stay ? Sembawang Park?? Then the stupid minister will tell you,you already profited $220,000 and you can’t stay at the park.VOTE THE PAP OUT!VOTE IN SDP,RP,NSP,SDA,WP,USD and indepentdent party.Teach PAP a lesson.
IF ST is not bias in reporting, cow fly and cat can bark. I never believe in their reporting.
Even if I read those reports, I would not take it seriously.
I can monitor price of the housing for some time, read forums and asking around to get information hence draw my own conclusion. Both MBT and ST have long lost their creditability…
The V in COV stands for valuation, which refers to the bank estimate of what the property is worth. Ideally, all properties should be sold near this figure, and only about half should be above valuation.
Yah, $25k is a lot of money. Would take me yonks to save this amt.
One statement that could easily be (dis)proven by the available data is Mr. Mah Bow Tan’s claim that PR’s and foreigners do not affect resale flat prices because they only form 20% of the resale transactions.
I vaguely recall that at one point someone quoted a statistic that only 7(?) of some 50(?) transactions of $70K above COV were made by non-Singaporeans.
I want to see a breakdown of the percentage of non-Singaporeans in each COV bracket. ie. How many non-Singaporeans paid < $10K, how many paid < $15K etc.
This will demonstrate whether the median COV paid by the non-Singaporeans is higher or lower than the Singaporeans. If it is higher, then obviously they are driving up prices. The HDB has this data, but will not release it.
The bottom line is Singapore need a two-party political system then these half-past six reporters/journalists will be more professional in their jobs. Then the editorial staff can look for another job for betraying their fellow country men!
Charles,
The only person who does not make sense is YOU!!
The ease of getting S’pore PR is making a huge mockery of S’pore.
The govt (aka PAP) will not release statistics that potentially put them a a bad light.
That is why until today, they dare not make public the unemployment rate for S’pore citizens.
Lower CoV could mean higher valuation which means CPF (your money) is paying for the excess. This is not the end. The appreciation of the S$ has attracted more inflow of money which means the banks are flushed with cash, meaning property prices might be pushed higher. Banks already said that deposit interests will drop further. More misery. Those who can afford to buy a property face a risk of bursting bubble in a few years, those who cannot afford sit to see their money diminishing in the bank.
MBT says its afforable and the ST editor says he does not want to print CSJ’s letters….and says their credibility is at stake: what credibility…these mambo jumbo numbers….
Singapore is becoming like some African Nations….well done PAP. Going back to roots.
Already there is not enough for retirement and with these overprice flats which banks wont even take as mortage wats the pt of high cov. good luck for those committed.
Never count on PAP mouthpiece for true information until the put their integrity in place first. I think they still have a long way to achieve this given their pathetic 133th ranking in the world.
While we complain about high COVs, does anyone realise it is fellow Singaporeans that are profiting from it?
For second-time upgraders, it’s a happy merry-go-round.
I pay high COV, but i get high COV for my existing house. So high COV or not, it does not affect me.
For first-time buyers, they are at the losing end. But they can buy from HDB their first flat (without COV) and then get into the whole COV game after that.
Essentially, the real people affected are the non-singaporeans who have to fork out the cold hard cash.
I don’t really understand why Singaporeans are complaining- Is it because they feel they are entitled keep the COV for their existing house but not pay it for the next house?
Plus, it’s a private buyer-seller thing.
if Mr Tan Ah Kow demands 100k COV, before he is willing to sell, who is anyone to stop him?
Just like shopping, if a shop is too expensive, then go elsewhere to buy loh. I think it’s silly to complain and expect the govt to force Mr Tan Ah Kow to lower his asking price.
IMO, the govt’s obligation is to provide an affordable baseline option- meaning it should make sure there is at least one cheap option provided directly by HDB.- i.e. direct sales from HDB. ( i think it’s not doing well in that aspect, but that is a different issue).
The govt role is NOT to make EVERY single option on the market affordable. If you want a swimming pool or a tennis court, you got to pay extra. Similarly if you want a HDB near MRT, in a mature estate etc, you will have to pay more for it. If Mr Tan has a house that is attractive and asking for that premium, who is the govt to force him to reduce his asking price?
RW
For first-time buyers, they are at the losing end. But they can buy from HDB their first flat (without COV) and then get into the whole COV game after that.
1. Not for singles
2. Not for couples who do not want to wait 3-5 years just to get married
3. Not for couples with bad luck that always fail balloting or end up with flat they don’t like despite using up nearly their life savings.
-
Frankly though, my gripe is not with COV. It is a reasonable bidding for flats. The problem is it is added into the valuation process which inflates the prices of flats, new or resale.
COV again.Why are we against high COV?Are we forced to buy?If you are the seller,do you want to sell below market?Pls lah,if you are forced by circumstances to sell your house ,will you not hope to sell as much as possible?I will be asking my agent to get me the highest COV as a seller.Because who know ,I will have to rent a house and have to see my landlord’s face in future.
Dun think only as a buyer.Think further ahead,think think think but again,dun think that I am a Pappies or MBT carrier.He does not helped me in my plea for help.I was not even given a chance to say hello to him .Dun think I work for HDB.I was fined $150 parking within a month at my HDB carpark for not renewing my season carpark even I displayed valid coupon.As long as I go back they will fine me.I hate their inflexibility .But that does not mean that I should protest and support anything people say.We must be fair.We must think of the bigger picture.Not point forcing them to reveal this and that.These are top secrets and they cannot reveal as and when anyone want them to reveal.You can vent your anger on me.But please use simple english.
Sorry typing error,ealier agaonkia is me ,agongkia
dont understand? it’s ok, everything are in these web pages, all explained previously, just slowly read it through. unlike mainstream media, there’s no deliberate misrepresentation of statistics etc. and you can ask all the questions you want. take your time.
PAP sues you for painting an incomplete picture because it distorts. I think all ST readers should sue ST for painting an incomplete picture on news article too as they not just distort, they did not report full facts!
Let’s start a class action against ST!
http://imcms2.mediacorp.sg/CMSFileserver/documents/006/PDF/20100513/1305HNP003.pdf
in today newspaper today, yet another piece comes off the striptease – the homeless people balakrishnan tries to blot out from our consciousness is back, in increasing numbers. just 3 months alone it is so many.
“Media publicity has created greater community awareness of this issue” – MCYS spokesperson
Ah, the behemoth speaks, after repeated queries were unanswered. I wonder if their “media publicity” refers to Al Jazeera or the New Media, and “community awareness” refers to people like us who don’t buy the official line lock stock and barrel.
amazing how easy or hard it is to hide or disguise information nowadays compared to the past.
The ST has lost its credibility a long time ago. Yet it has the cheek to seek
apology from CSJ for accusing them just that.
CSJ wasn’t accusing them but stating a fact!
looks like government land sales isn’t selling enough such that even developer companies cannot tahan them.
“It’s a little difficult for them to go for en bloc (sales) because some of the prices are very high. As a result, they will turn to land sales – and if the Government does not sell enough of such land, it will affect their businesses,” said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.
all the government requires as minimum bid is like less than $9mil yet because they deliberately do not release enough parcels, their minimum bid is quite rubbish, because the few companies will bid like in this case up to $16mil. you can say your minimum requirement is COE of $100 but if you release only 2 COEs a month, it won’t remain at $100.
so from first antagonising buyers, now they antagonise businessmen. what next? election time?
from http://lushhomemedia.com/
PR’s and FT’s and FW’s are not force to buy resale hdb flats.
Repeat, “NOT FORCE TO BUY” but should any of them buy, is because they know or someone has deceived them to “BUY” thinking the market will go higher, thereby, make a “killing”.
By buying, they have “knowingly” inflated the housing prices for hdb flats.
Please bear in “mind”, should the market fall, repeat “FALL”,
“DO NOT THINK THE GOV OR SINGAPOREANS WILL BAIL YOU OUT”
Repeat, “DO NOT THINK THE GOV OR SINGAPOREANS WILL BAIL YOU OUT”
i think the point of the SzeHian and ChunHan here was that the Straits Times reporter Jessica Cheam and Esther Teo were playing around with their words to present a politically correct picture of the housing prices. Just by looking at the data alone, you can see that a more neutral reporting style would have given readers a different impression altogether.
Now I finally understand why my mother-in-law, who can piece together a few words of English, told me “the newspapers say price got come down”.
such journalistic talents we have in Straits Times…yucks
The sacrifice and dedicated effort for the People and newsreaders who pay and pay every single day for their masterpieces means that their contribution to society has a serious impact after 50 years.
A very effective machinery given the dominance of the medias.
My foreigner colleagues came to singapore only for 1 month. She sings the praises of singapore whenever she got the chance.
I asked, hey how do you come to know so much about singaopre in such a short time here?
She replied “i learn from the news”.
fievel13 May 2010
i think the point of the SzeHian and ChunHan here was that the Straits Times reporter Jessica Cheam and Esther Teo were playing around with their words to present a politically correct picture of the housing prices.
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I do not think you can even call that kind of writing ‘politically correct’. that is because it is totally not correct. it is a falsehood,and it takes a lot of stretching to be able to transform those published numbers into those words of english interpretation, such that this move was a very calculated move with a very pointed motive in mind.
we need to look further the next step – where did the motive originate from,and why do they still think we are susceptible to such a tactic. they have not learnt from the last time mah bow tan the minister failed to pass off his graph as fact and had to issue an explanation to patch and excuse off the misinterpretation that these things don’t succeed so easily any more.the internet is a collective mind and even if one person like your mother-in-law got fooled, the son-in-law is also surfing the net.
do you think the reporters involved will dare to issue a clarification or would they hope this gets swept under the carpet?
RW,
To me, the issue here is not about high COVs. Markets move up and down and there were times were flats were undervalued even. I agree that we cannot be egocentric and complain just because prices go up.
BUT, having said that I believe that the government must shoulder the responsibility of keeping public housing congruent with median household income. As many bloggers proven, there is a increasing discrepancy between the two.This is especially true for the lower income group as its their only source of shelter.
The government’s job is to serve its people and NOT defend their policies at all cost. Thus they should not
1) artificially inflate public housing prices by keeping supply low despite the fact that they have plans to boost our population years ago. Is it a policy oversight or profit driven mentality? None of us will ever know.
2) keep maintaining that flats are affordable when prices are at all time highs. At the end of the day if we make a commitment to a flat, we face the consequence when the market fall. But is it responsible to keep telling its citizens especially the lower educated and income group that it’s affordable even to the extend that we can monetize our flats for retirement?
I sense complacency among the ranks, and that worries me. If the government really cares for its people, it should be more transparent in its policies like revealing its building cost for public housing and be forthcoming in addressing the rise in cost of living.
ENGAGE NOT DEFEND.
1) artificially inflate public housing prices by keeping supply low despite the fact that they have plans to boost our population years ago. Is it a policy oversight or profit driven mentality? None of us will ever know.
in the end we found out who let mas selamat out, didn’t we? or at least we found out what they want to let us know.
maybe in this case, it will be the same.
Can i comfom that there has never been a single propaganda whatsoever?
yes / no?
lobo76,
Gd point.. i never thought about that.
But maybe you can argue that cutting the wait and choosing the dream house is a frill. They are given the opportunity to buy a house cheaply without COV, but they gave it up due to various reasons. It doesn’t change the fact that they are given the option in the first place.
The one i will agree more with is the singles- who have no option till 35.
Nabs,
I guess we are on the same page on COV then. :)
For the base price of HDB flats, I fully agree that it is high.
But of course, one can argue that high or low is a matter of relative standards. Spending an average of 20-30% of the monthly income for the next 30 years- in some cities (not suburbs), that can be considered high or low.
I will probably separate govt’s responsibility by the two different housing markets- direct sale from HDB and resale.
I agree as the govt, they have a key responsibility in making sure there is a cheap, no frills housing option available for those who cannot afford it. It is like hospitals- you have class a-c wards. The core thing- medical attention does not change. It’s all the prephery things like tv, aircon that is charged more.
Having read some of the blogs, it reminded me of the day years ago when I applied for a HDB flat. The year was 1984 after nearly ten years of saving aged 33 and planning to settle down. Those were the days where we do not have the additional complication of FT competing for the limited housing that were available.Even then, getting a “home” of your own was no easy task. Obviously housing issues are more complicated and cost are going up relentlessly.The normal concerns were location e.g. near to parent home and affortability. After years of waiting, I finally give up and buy a one way ticket to England. However, this only add additional problems as a citizen of a Commanwealth country I was not entitled to work or live here. To solve the problem I enroled myself on a BSC course using the limited qualification I had acheived.(GCS “O” level) It was hard work trying keep up with the studies but with typical Singies persistence and hard work I graduated with my BSc engineering. Life truely changed after that but not in Singapore. Even armed with a degree, and my modest ambition of joining the SAF, I was finding it hard to land a humble job.The way the government behave had not changed one iota over the years.So for self survival, I return to UK and worked in hotel kichen and finally months later landed a job as Engineer in an International company.Life certainly get allot harder in Singapore and one thing that have not change is the ruling party- PAP. To change Singapore we must change the ruling party and let new leaders take over with new ideas.in UK they have a new coalition govrernment between two political parties.
time and again, HDB tries to make an excuse for not having more BTO launches – that there is no real demand. they show beautiful statistics about how first timers did not choose when their turn is up in the queue. when the make it convoluted enough, mothers-in-law start to believe them.
mothers-in-law, to commemorate Mother’s Day, here’s an analogy even you can understand: Boon Lay Meadow
http://www.h88.com.sg/article/Applications+for+Fernvale+Palms+and+Boon+Lay+Meadow+BTO+close+today/
I want to sell 1200 flats so I set up a stall.
4336 of you queue up in front of me in various priorities (first timers get to stand in front etc)
I reserve 95% (1140 flats) for first timers.
When you step up in line to choose, some of you chicken out, perhaps balking at the price I’m asking. Some of you are resigned to my price and buy anyway. So as the line approaches my stall, the chickened-out guys step aside, shake their heads, walk away, maybe hope a bit, whisper a prayer. HDB accuses 33% first-timers of dropping out on 1st day (376 people). The others who are resigned pass me their cheques and I give them a flat which I have left available from my list. I therefore sell about 824 flats on the first day alone.
Two days later, the queue has shorted a little. 3136 guys are still standing in the queue since yesterday – it hasn’t reached their turn yet. I have 376 flats left. HDB accuses another 7% of first timers of dropping out on this 2nd day (79 guys). I sell 297 flats today. I’m down to 79 flats.
On the 3rd day, 2760 angry people face me in the queue eyeing my 79 flats. My turn to chicken out and I throw 79 flats at them and run. 2681 people did not even get a chance to talk to me or smell a flat.
I have no more flats. 3136 people still have no flats. 1200 got a flat, most of them on the first day, the remainder mostly on the second – they could not wait any more – three days is too long – the price keeps getting revised upwards – they think the system is stupid but they have no choice. 455 people had cold feet and wanted to think it over.
Dear Mother-in-law, does this story sound to you like there is sufficient supply? You must agree with HDB, we have enough and we are releasing fast enough.
Happy Mother’s Day.
RW 13 May 2010
The one i will agree more with is the singles- who have no option till 35.
iirc, at 35, singles are only allowed to buy resale. They still can’t get the ‘cheap’ flats.
BTO
13 May 2010
time and again, HDB tries to make an excuse…
how come the flats got sold in 3 days? I thought they said there was no demand and 33% rejections? Does your example take into account 33% rejections?
If your example has 33% rejections, how can it still be sold out in 3 days? Aren’t the two facts related and isn’t the 33% rejection rate showing no demand? That’s the information I gathered from the Straits Times.
that is precisely the trick behind such a justification.the percentage of people rejecting on the first day is a totally different matter from how many are truly interested in it,how many are willing to commit to such a 30-year eternity debt in just a space of a few hours.
the only, single, reason why hdb uses such a line to justify itself – it’s because they ran out, literally ran out, of real reasons to justify. therefore they were forced to come out with this unrelated statistic to try to pass off as a related fact.
it is sneaky but i have to admit it was brilliant.whoever the scholar was to think of such an excuse ought to be promoted – he would make a very good spindoctor. he managed to fool so many people with a totally irrelevant reason.
your mother-in-law got fooled, didn’t she?
$25k is like the amount needed for a local 4-year uni course