February 19, 2010
According to a household survey conducted by HDB in 2008, over
eight in ten HDB flat owners find their flats “value for
money”.
The key reasons quoted are appreciation in value, good location
and proximity to facilities.
About 85 per cent of Singaporeans live in public housing built
by government agency HDB which falls under the purview of the
National Development Ministry.
“Residents attributed their pride mainly to homeownership as
they were proud of their ability to own a flat,” said an HDB
statement.
There is a pervasive public misperception that Singaporeans
really “own” their HDB flats.
The high rate of “home ownership” in Singapore has been used
repeatedly by the ruling party to trumpet its own
“accomplishments”.
In reality, Singaporeans are only leasing the flats from HDB for
a period of 99 years.
When one buys a private condominium, one has to sign a “Sales
and Purchase” agreement from the developer.
However, in the case of Build-to-Order flats, the agreement is
termed as “Agreement for Lease” which essentially means that
one is leasing the flat from HDB. (read more here)
Furthermore, the flats are subjected to many restrictions not
found in the private sector such as an ethnic quota when selling
them and a minimum five-year period of residency.
Another misperception is that the rising prices of flats helps
to “create wealth” for Singaporeans, a message drummed home
repeatedly by PAP leaders over the years.
A research done by two NUS professors NUS professors
Abeysinghe and Gu Jiaying in 2008 showed clearly that “higher
property prices, instead of creating a wealth effect, exert a
significant and negative “price effect” on consumption expenditures
leading to a fall in the average propensity to consume.” (read
article here)
As house prices go up, the increase in the value of housing
assets is accompanied by a concurrent rise in the financial
liabilities of households, in the form of higher downpayments for
purchase of residential properties and burgeoning housing
loans.
Unless one emigrates or downgrades to a smaller flat, there is
no way one can unlock the asset value inherent in the flat.
The prices of HDB flats have skyrocketed in recent years fueled
by increasing demand from immigration in the face of limited supply
of flats.
Based on the findings, it appears that many Singaporeans are
still unaware of the precarious situation they are in.
It is strange that they will find their flats “value for money”
when they can easily afford a bungalow in Australia, Canada and
elsewhere with the kind of money they are paying for them in
Singapore.
http://www.temasekreview.com/2010/02/19/8-in-10-hdb-flat-owners-find-their-flats-value-for-money/
