Wednesday, April 07, 2010

Affordable housing

Read this article in the blog: Diary of a Singapore Mind

My comment:
The problem has reach a stage which is difficult to solve. Housing price is too high. People are unclear about how to treat housing - is it an investment or a cost of living? One party blames the other party.

My preferred approach is to create a new type of housing based on controlled price, i.e. cost plus. This can be adjusted with inflation and reduced by depreciation. Give people a choice whether they wish to treat housing as an investment (i.e. based on the current market pricing) or as a cost of living (i.e. based on the controlled pricing).


Anonymous said...

MBT should come clean in this matter. Anyway, people are going to raise this question again during Election.

Anonymous said...

Reply to Anonymous @ 9:39 AM

"MBT should come clean in this matter." I admire your optimism.

I think housing or whatever issue for that matter will be a non-issue come election. Why? Because majority of the voters are just like Clover, the carthorse, in Animal Farm. Characteristtic of Clover - Unquestioningly loyal to the rebellion, though even she has doubts at times.

Below is an abstraction from the Animal Farm which summed up the mentality of the majority of the voters in Singapore.

"..... An assembly of all the animals in the yard is now called. Napoleon, who now rarely leaves the farmhouse, and is never without his escort of dogs, stands before them. At a signal, the dogs charge into the crowd and drag four of the more troublesome pigs before Napoleon. At the same time, three of the dogs attach Boxer. Boxer easily fends them off. The miserable pigs are forced to confess to having been in league with Snowball, and are murdered on the spot by the dogs. Other animals come forward to confess various crimes against the farm, and each in turn is slaughtered.
These are the first killings of other animals since the rebellion. The animals creep away from the meeting. Boxer, in trying to understand why this has happened, resolves that the only possible solution is to work harder. Clover, not as strong but more intelligent, has deep misgivings about what she has seen, but she cannot put them into words. She remains faithful to Napoleon, but deep down she knows that this state of affairs was not what they fought for in the rebellion....."


Anonymous said...

Though I agree current price of HDB are high, I do not wish to see prices of HDB stagnant or depreciate. Should there be no investment value in a HDB, I would rent and invest in other financial products but the risk cannot be easily controlled, from my own experience. Social problems may occur.

The price of HDB is more real for young couples just starting out. Existing HDB owners have no reasons to complain.

For new couples, HDB may
1.reprice new HDB based on on median price of brand new HDB of past 5 years in the area.
2.more grant
3. More units allocated to first time buyers in the; SERs residents may free up units in mature estate should they be allowed to choose to stay in a different or less expensive estate. Normally, SERs residents are seniors and may wish pay less but still keep a house instead of resell their SERs chance to investors.
4.HDB may allocate 3 selections dates consecutively at any one mail. One date for one estate. THe buyer will weigh their chances against their estates. This will have less wait time and more planning in advance. THe last anxiety a young couple should feel is not in control and no options.

First time buyers may want note that first home always not perfect so there will be room for improvement!

Hope first time buyers have more luck!

Anonymous said...

How did mah bow tan get into parliament in the first place?

As a minister for housing and development, he doesn't seem to have a clue on how to solve the problems on the ground. The housing issue is getting out of hand. The prices must come down or else a lot of young people will not be able to own flats.

One way to control the price is to restrict HDBs to Singaporeans only. Then HDB must control the prices, say, the price increase cannot be more than 10% each year, regardless who sold the unit.

Anonymous said...

Unfortunately, the Genie is already out of the bottle.

The suggestion to have a new category of housing that is based on controlled prices will not work. It will ultimately distort the prices in the rest of the housing market as it will draw away buyers from the non-controlled segment to the cheaper, price controlled segment. Reduced number of buyers in non-price controlled segment, same number of units available for sale means prices will come down.

Doing anything now that will cause the price of housing to drop whether sudden or controlled descent - will no doubt cause lots of unhappiness among people who have already bought a house - 98% of Singaporean households? For any government to deliberately cause housing price deflation - that would be political suicide.

The best that one can hope for is that the price rises can be limited to a small amount (<2% perhaps) year on year. No person already owning a house and up to their necks in mortgages will want to see prices decline.

Anonymous said...

The average price for new HDB flats should be pegged to the annual salary (e.g. 5 years) of the targeted residents.

For example :
if the 40 percentile, 55 percentile and 70 percentile of Singaporean annual salary is 20k, 35k and 50k respectively, then the average price for a new

3-room flat should be = 5 x 20k = 100k
4-room flat should be = 5 x 35k = 175k
5-room flat should be = 5 x 50k = 250k

The above prices may be adjusted (plus or minus 20% ) due to the location of the flats.

Wayne said...

To: Anonymous@April 07, 2010 3:57 PM

If I remember correctly, this example you gave was what Mr Tan mentioned some time back, during the time of the 50s/ 60s, when civil servants are allowed to only purchase flats priced below 5 times their annual salaries. This is a good idea.

My opinion is, key thing is to educate people to be contented with the very first flat they purchase in their names, i.e usually the matrimonial flat. However, it seems even young people nowadays are so locked into making money out of their flats that nothing else matters. I am of the view that the primary housing should NEVER EVER be treated as an INVESTMENT. The roof over one's head must never be speculated! It is afterall a basic need.

Assuming if everyone goes by the ideal mindset that they stay in their first flat thoughout their lives and servicing a mortgage rate of 2.6% for 30 years, there will never be a "bubble" like what is seen recently. And when the personal or family finances stabilizes, then a second or third property can be bought as an investment.

Anonymous said...

Goh Meng Seng of the NSP has been campaigning for HDB housing reform. 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.

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.

sgcynic said...

Read how an opposition scholar debunks Mah Bow Tan's bluff that incomes rise in tandem with HDB prices.

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