Give us HDB FLat AT COST, Not 30yrs Mortgage Enslavement

last SG · 2018-02-01T04:14:28+00:00

There are two main components of cost in pricing an apt, namely the value of land and the cost of constructing the building. As we all agreed, the govern is...

βέτά SG

Something is gravely wrong with the country when 85% of the population lives in public housing.

Another interesting fact, Hong Kongers spend 3.4% of their monthly household expenditures on utilities. If you gross up the 3.4% (based on S$200 from Singapore Power) , it would mean that the monthly household expenditures (not household income) is S$5,882.

According to the 2006 census^[1], the total Hong Kong population was 6.6 million. The breakdown by type of housing was as follows:

Subsidized sale flats listed here are not tradeable in the open market.

In 2009, 53.9% of the 2.3 million domestic households were owner-occupiers.^[2]

In 2004/2005, housing expenditures were accounting for an average of 30.6% of the average monthly household expenditures, with utilities accounting for an additional 3.4%.^[3]

http://en.wikipedia.org/wiki/Housing_in_Hong_Kong

Seowlah SG

Something is gravely wrong with the country when 85% of the population lives in public housing.

According to the 2006 census^[1], the total Hong Kong population was 6.6 million. The breakdown by type of housing was as follows:

Subsidized sale flats listed here are not tradeable in the open market.

In 2009, 53.9% of the 2.3 million domestic households were owner-occupiers.^[2]

In 2004/2005, housing expenditures were accounting for an average of 30.6% of the average monthly household expenditures, with utilities accounting for an additional 3.4%.^[3]

http://en.wikipedia.org/wiki/Housing_in_Hong_Kong

Are you saying that Hongkong housing policy is better ie Singapore should adopt the rental housing policy instead of the ownership housing policy ?

May I suggest you use the Econlit search engine to search on the research economic articles on housing policy in the different countries ?

βέτά SG

Are you saying that Hongkong housing policy is better ie Singapore should adopt the rental housing policy instead of the ownership housing policy ?

May I suggest you use the Econlit search engine to search on the research economic articles on housing policy in the different countries ?

Would you prefer to live in subsidized housing if you are poor, or attempt to buy it paying an arm and a leg?

Public housing is for poor folks to live in, not investment grade property like private housing where it's readily traded in the open market. If you want to invest in property buy private properties, not "subsidized" public housing.

I would suggest that you search the Econlit library for housing policies of different countries too.

Fatum SG

Would you prefer to live in subsidized housing if you are poor, or attempt to buy it paying an arm and a leg?

I would suggest that you search the Econlit library for housing policies of different countries too.

your utilities of $200 is a bit shocking for an HDB flat, does your mom scream at you for leaving the lights on all night ? Or have you taken a peek at your parent's monthly utilities bills before ?

based on the HDB prices listed above, the mortgage to monthly income ratio is approximately 20%, so you would prefer to pay 30% of your paycheck for the rest of your life to rent a place to stay but won't want to spend 20%, or even 30% of your paycheck to buy a place ? .......

errrrrrrrr ...............

eagle SG

now that's a good example of selective numbers play .....

Here's the yishun dew spring project

http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/FF131E246C03304A482575230034347D?OpenDocument

There are 144 two room flats - priced at $79 to $90k BEFORE AHGs

There are 216 3 room flats - priced at $120 to $146k BEFORE AHGs

There are 504 4 room flats - priced at $197 - $239k BEFORE AHGs

AHGs ranges from 5k to 40k for each household.

Taking into account that the average AHGs ranges from 20 to 30k, how, pray tell, did you arrive at the figure of over 100% profit ?

And with regards to affordability, personally, looking at the prices here, is a two or three room a stretch for you ?

Objectively speaking

144 * 90k + 216 * 145k + 504 * 235k - 864 * 20k = 162.66 mil

HDB still profit near 60 mil leh... Say land cost 10 mil, still profit 50 mil leh... Anywhere I missed out?

βέτά SG

your utilities of $200 is a bit shocking for an HDB flat, does your mom scream at you for leaving the lights on all night ? Or have you taken a peek at your parent's monthly utilities bills before ?

errrrrrrrr ...............

Your bill is less than $50?

A public housing is a place to live, if you are paying less in terms of mortgage payments as compared to the rental. Doesn't it make more sense to rent than to buy? Sorry I am not some Finance guru dealing in stochastic finance, so don't confuse me.

Ultimately with public housing it still belongs to HDB not YOU, as most folks like to be confused with.

eagle SG

Your bill is less than $50?

Ultimately with public housing it still belongs to HDB not YOU, as most folks like to be confused with.

if you are paying less in terms of mortgage payments as compared to the rental. Doesn't it make more sense to rent than to buy?

No leh, it makes more sense to buy than to rent. You pay less for mortgage leh... Plus if you sell, assuming house prices remain the same, you lose only the costs of mortgage. Rental, you will never get back the whole sum.

I'm not some finance guru dealing in stochastic finance also, don't try to confuse me leh...

Ultimately with public housing it still belongs to HDB not YOU, as most folks like to be confused with.

Land in Singapore ultimately belongs to the government as well, not us, as most folks like to be confused with too.

βέτά SG

What is the politically correct definition of public housing?

1) A government entity set up to sell public housing to the abled / less abled and earning a hefty profit in the process.

2) A government entity set up to sell public housing to the poor at less than the cost of building.

Seowlah SG

Would you prefer to live in subsidized housing if you are poor, or attempt to buy it paying an arm and a leg?

I would suggest that you search the Econlit library for housing policies of different countries too.

There is a rental housing market in Singapore ie the 1 or 2 room rental houses provided by the HDB and the rooms rented out by HDB ownership for the poor.

For the poor, the HDB has provided them opportunities to upgrade to ownership when they are financially better ie HDB has provided them substantial subsidies to buy 3 room HDB flats.

It is logical that the money used for the paying the rent is better used to be paying for the instalments for a HDB flat with financial assistance from HDB and prudent choice on the size of the HDB flat bought based on one's financial ability.

By the way, Econlit is a database of research economic articles that are published in world economic journals and these articles are written by world leading economists and these articles are based on well researched data and analysis, not the articles in Wikipaedia that are contributed by some individuals who might or might not have the professional expertise.

βέτά SG

I'm not some finance guru dealing in stochastic finance also, don't try to confuse me leh...

So you telling me, that if you pay $100 for mortgage and $50 for rental.

You'd rather pay $100 for mortgage?

βέτά SG

There is a rental housing market in Singapore ie the 1 or 2 room rental houses provided by the HDB and the rooms rented out by HDB ownershe for the poor.

For the poor, the HDB has provided them opportunities to upgrade to ownership when they are financially better ie HDB has provided them substantial subsidies to buy 3 room HDB flats.

So the rest of those living in 3 rooms and above are not poor?

Then why public housing?

There is a stark difference between Singapore's definition of public housing and the rest of the world.

eagle SG

So you telling me, that if you pay $100 for mortgage and $50 for rental.

You'd rather pay $100 for mortgage?

You said this leh:

if you are paying less in terms of mortgage payments as compared to the rental.

Not more in terms of mortgage payments leh.

You trying to tell me $100 is less than $50?

eagle SG

Btw, I rather pay $100 for mortgage than $50 for rental.

The $50 will forever be gone, but for the $100, assuming 10% interest rate, $90 is still mine.

I'm not some finance guru dealing in stochastic finance hor, don't try to confuse me again leh...

βέτά SG

You said this leh:

Not more in terms of mortgage payments leh.

You trying to tell me $100 is less than $50?

Sorry, I muddled the sentence.

My fault.

Should be.

If you are paying less, in terms of rental compared to mortgage payments.

goh meng seng SG

Fatum,

I hope this will be my last reply to you. You ask what is the "affordable price" for a 4 room flat if I think $200K is too much to pay?

I am sorry to say that you have missed the point totally. It is not about a static price stated now and then. As I have said, you are buying your 4 room flat at $200K basically because people like me are making noise and challenging Minister Mah. HDB reacted and lower the price. Yes, HDB, as the monopoly of the new HDB flat market, has the total power of manipulating the prices.

But that is besides the point. What we are talking about is a system of pricing, not about what is the "right price" for different times. I am talking about a sustainable pricing mechanism that is fair to Singaporeans. A market discount pricing system which is practised now is not the appropriate system as I have mentioned, PAP has the social obligation to provide cheap and basic public housing for the masses. In the past, PAP government has the proper pricing mechanism, that is based on COST PRICE of the flat. They have even given a REAL SUBSIDY based on that COST PRICE. They have fulfilled their deal on the Land Redistribution contract.

So far, HDB has REFUSED to publish the COST PRICE of building each flats. But we have established the COST PRICE by some other means. It comes to about $120K (excluding land price) for a 4 room flat. Please note that this include the building of road networks and carparks for the whole surrounding as a project. For carparks, HDB continues to get revenue by means of collecting monthly car park fees.

The Cost Plus pricing, as someone has called it, is a more stable and sustainable pricing mechanism. It will be shielded from the fluctuation in pricing due to liquidity availability or sudden surge in population due to some policy mismanagement. The inflation (or increase in prices) of new HDB flats will be solely pegged at the inflation of construction cost which is linked to general economic growth. This would mean that this it is more closely linked to wage growth as well. This could be determined by examine the HDB prices back in 1981 compared to present prices based on cost price, then comparing it to the real earning of citizens. A 4 room HDB back in 1981 would cost about $40K to $60K. If based on this cost plus pricing, the 4 room flat now would be around $140K. This would be about 2-3 times of the 1981 prices. Real earnings for workers has grown about 2-3 times as well for the similar period. You can check this out from Lucky Tan's blog:

http://singaporemind.blogspot.com/2010/04/mah-bow-tan-we-dont-fudge-numbers-part.html#links

This would be a fairer pricing mechanism that suits the social role of the government. Don't you think so? I am not even asking PAP government to give REAL SUBSIDY at cost price. I am merely asking PAP government to be responsible and honor their part of the social contract.

I would not expect HDB to be in the position to control Resale market. It is a many sellers many buyers market. I wouldn't force PAP government to do something that is not within their power or means. Just leave Resale market as it is.

Goh Meng Seng

βέτά SG

Btw, I rather pay $100 for mortgage than $50 for rental.

The $50 will forever be gone, but for the $100, assuming 10% interest rate, $90 is still mine.

I'm not some finance guru dealing in stochastic finance hor, don't try to confuse me again leh...

$90 is perceived to be yours, but ultimately HDB will repossess the flat when the time is up.

A choice is given to you, either you top up and get a new flat or they pay you less than the market value.

But you lose interest in your mortgage payments.

eagle SG

Ahh.... Mr Goh... now I see your point... clear now... Thanks for sharing...

eagle SG

$90 is perceived to be yours, but ultimately HDB will repossess the flat when the time is up.

A choice is given to you, either you top up and get a new flat or they pay you less than the market value.

But you lose interest in your mortgage payments.

When the time is up?

Hmmm... Buy flat at 30 yrs old, 99 year lease...
So 99 + 30 = 129

Wow! The time will be up when I'm 129 yrs old!

Fatum SG

Objectively speaking

144 * 90k + 216 * 145k + 504 * 235k - 864 * 20k = 162.66 mil

HDB still profit near 60 mil leh... Say land cost 10 mil, still profit 50 mil leh... Anywhere I missed out?

that is true enough, but what if we look at things at an even more macro level ?

Let's remember that the HDB is not concerned with the building of new HDB flats alone. They are also operating in the resale market through subsidies for home seekers.

For each new couple that choses to purchase a resale flat, 30 to 40k of subsidies are granted to them as well, plus, potentially up to another 40k of AHGs is applicable to them as well. Where do you suppose the HDB gets the money from ?

Just as new flat buyers like us are subsidizing the purchase of smaller units by other home owners, we are also subsidizing the purchase of resale flats by other people.Jiak ter, per gau, eat pig, pay dog, make sense ? fair ?

Fatum SG

Fatum,

I hope this will be my last reply to you. You ask what is the "affordable price" for a 4 room flat if I think $200K is too much to pay?

http://singaporemind.blogspot.com/2010/04/mah-bow-tan-we-dont-fudge-numbers-part.html#links

Goh Meng Seng

as per my reply to eagle.

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