The HDB now sets the price for new flats based on the market for resale flats. But, the market for resale flat is subject to temporary supply and demand factors and speculation. It is also fueled by greed and fear, and iinformation can be manipulated by property agents at the expense of the consumers.
It would be better for HDB to set the benchmark for the pricing of their flats. The prices can be set at a multipole of the annual earnings of the ordinary workers. If earnings increase, the prices can move up. If it falls, the price can stay stagnant until the earnings recover.
HDB should publish the prices of all the available flats in advance, to set the benchmark not only for new flats but also for resale flats. The prices of individual units can vary according to location, floor level, facing and distance to MRT station and amenities, but the average should price reflect the average wage level. If there is strong demand for a specific unit, the unit can be balloted.
This transparency and pricing policy will remove the fear of escalating prices. The stability of the prices, albeit reflecting the average earnings, will remove the speculation of capital owners and property agents. If there is increased demand, HDB can build more flats. In the meantime, those on the waiting list can rent their accommodation or stay with their parents.
It will be a more transparent and fairer market, and will actually reflect the true market forces.
Tan Kin Lian
HDB should note that the prices for 3-room & 4-room re-sale flats have "appreciated" out of proportion, and as a result erode the income of the lower income bracket.
ReplyDeleteIf new 3 and 4-room HDB flats are priced based on re-sale market prices, it will escalate further. Hence, the lower income bracket is always badly hit.
With immigrants coming in to join this bracket seeing it is more worthwhile to purchase 3 and 4-room flats for greater "capital appreciation", the speculation will aggravate. In a way this will spiral upwards and pushed up even re-sale prices of 5-room flats.
This sudden "appreciation" is not going to materialise into better living standard for them.
HDB just want to earn more profit :(
ReplyDeleteBut they still dare to tell us HDB flats are affordable!
ReplyDeleteIf I am not wrong, if a couple earn $8,000, then their CPF contribution is most likely to be capped (due to their high salary), and hence end up they may need to fork out monthly cash to pay HDB loans. Debt for 30 yrs!!! And after 30 yrs later, CPF is empty.
SHINGZ!
I am a layman in this topic. From my prospective, is it not a straight forward cost and selling price.
ReplyDeleteCost is how much HDB spent to build that flat. This should include the cost of the surrounding & building the carpark, overhead.
Selling price is how much are selling to the public.
So if Selling price-cost = -ve, then there is subsidy to cover that.
I wonder for so many years, the picture is still not clear. Maybe they have something to hide.
In terms of HDB building costs, you can check the GeBiz website for the awarded tenders. On average, recent cost to build a HDB flat is about $110K to $130K -- this is including for all surrounding amenities, carparks, gardens, playgrounds etc. Land cost is separate; you need to check HDB annual report to see the actual numbers and to estimate for a particular HDB precinct. But I don't count land cost, becoz it is just accounting number -- left pocket go to right pocket. SLA "selling" to HDB. Another reason not to include land cost is becoz HDB flat is a public good -- you DO NOT own the HDB flat -- this is spelled out clearly in the HDB Deed. HDB buyer do not have strata title rights, unlike even 99-yr leasehold condo owners.
ReplyDeleteAs for new HDB pricing, well, LHL was talking nonsense again recently when he said govt cannot control resale HDB prices. But new HDB flats are priced according to resale prices! So his hidden message is saying that govt also cannot control new HDB flat prices!
Interesting to see if the selling px of HDB could be pegged to the buyers' salary...
ReplyDeleteMany years ago when Mr Chiam See Tong questioned about the high selling price of HDB flats, Government defended that besides the building costs, HDB selling price also have to include infrastructure costs and, epecially, land cost. But land cost can be subjective and depend on what is the valuation method used. Government can use one valuation method when buying land (in cases of forced land acquisition) and selling land, say, to HDB to build flats. So, Goevernment at that time maintained that it did not aim to make profit from selling HDB flats.
ReplyDeleteNow, Government's new pricing method for HDB flats stresses on subsidy i.e. how much lower than the resale market price. It does not want to talk about profit and always highlight the subsidy.
Despite the high prices, many people still applying for new flats. Governement likes to use this as an argument that price is still affordable. But many applicants are worried that prices are going up so they don't want to wait. Many of them would think that prices will go up, hence, just sell it off when they can't afford it in future. If the price drop in future, they will have to sell it at a lost or can't pay their monthly installment, Singapore would have our "sub-prime" problem.
CCL
It is a no brainer that our HDB flats are not subsidized. How did I arrive at this conclusion? Simple! There are many houses with free hold land in first world countries with big gardens, yes, gardens because there are two of them, one front and one back, with double storey big bedrooms etc selling at less than the price of our average 4 room flat. If houses with free hold land in first world countries can sell for less then how can HDB flat with 99 year lease with just a space in the sky sharing the lease land with 50 others and costing more, say Pinnacle@Duxton, be subsidized?
ReplyDeleteMy bro-in-law just sold his 4rm mid floor HDB resale flat at JW on the 1st day of his open house, making a tidy profit of 120k for 2years or 60k for 1year!
ReplyDeleteHe was surprised by the overwhelming response from the prospective buyers and property agents (total 20 group of them) as his flat is not near to any MRT stations with no lift stopping at his floor.
HDB resale flats really "appreciate" faster than condo now due to less new HDB flats being built over the recent years and more PRs and new citizens now?
Why our dear "forecaster" didn't "forecast" it before the shortage of public housing becomes worst now? Did he "add" value in this case or just "act" value? How can he justify his $3m pay for just "acting" value?
Wow! The elephant hunters are out in force today.
ReplyDeleteWe have spotted yet another giant elephant in Singapore!
The forecaster is influenced by his own environment. Everyday having a feast so forecast Golden Period. Anyway, he now forecasts that if the one responsible for this shortage of HDB flats cannot defend himself then he deserve to lose. No more bailouts.
ReplyDeleteForecast is as good as talk and talk is cheap but his pay is not cheap!
ReplyDeleteIf forecast for the sake of forecast might as well don't forecast at all and we promise we won't complain him about getting high pay for doing nothing.
We promise to give him his due "credit" in the form of $$ and more $$$ and a state funeral if he wants it though Ong Teng Cheong didn't have one when he passed away.
Remember the government's definition of subsidy. So long the price is lower than the re-sale price, it is a market subsidy. Anyone who knows economy theory, please help us to understand this?
ReplyDeleteGood to see, nice to touch,once broken , considered sold. Good to forecast, right or wrong, I still get my millions every year.
ReplyDelete