January 29, 2010 - Temasek Review
Written by Our
Correspondent
After months of denial, National Development Minister Mah Bow
Tan has finally acknowledged that “the rising HDB resale flat
prices have raised fresh concerns.”
The prices of resale flats has increased by 8.2 per cent in 2009
when Singapore was still mired by depression, contributed largely
by a limited supply of new flats and rising demand fueled by the
relentless influx of foreigners.
Latest figures released by the HDB showed that cash upfront paid
by buyers for resale flats, known as cash-over-valuation or COV,
doubled to $24,000 in the fourth quarter from the previous
quarter.
Despite rising frustration, resentment and anger on the ground
over the increase prices of public housing in Singapore, Mr Mah and
other HDB officials continue to insist that they are “affordable”
to ordinary Singaporeans.
Mr Mah even chided first time home buyers for being “choosy” and
said that “the onus is on Singaporeans to play their part by buying
a home within their means.”
Quoting the affordability benchmark of 30 per cent used
frequently by HDB to show that HDB flats remain affordable to
ordinary Singaporeans, Mr Mah said a family with a monthly
income of $3,000 can buy a flat worth up to $250,000 and spend only
30 per cent of their income every month on the mortgage.
“Similarly, a family with a monthly income of $4,000 can
afford to buy a new flat worth up to $333,000 without spending more
than 30 per cent a month on the mortgage. This means they can
comfortably buy any of the flats offered in the latest BTO projects
this month,” he added.
However, Mr Mah fails to take into account the bank interest
rates and inflation over the years which will lead eventually to
the family spending more than 30 per cent of their monthly income
on the mortgage.
Furthermore, after depleting their entire CPF for these
over-priced 99-year leasehold HDB flats, they will have little or
no savings left for their retirement.
Though he admitted eventually he was “caught off guard” by the
continued increase in prices, he failed to acknowledge the severity
of the problem.
Singaporeans who are still harboring hope that Mr Mah will bring
down the prices of HDB flats are going to be disappointed.
Echoing the stance of Prime Minister Lee Hsien Loong, Mr Mah
said the Government should not ‘interfere in the resale market’ and
should let it ’set its own price’.
Instead, HDB will review its rules and policies to ’see if
there’re any rules that are encouraging or allowing people to
speculate on HDB flats’.
The outcome of the review will be released in a few months’ time
and by then the prices will have increased even more at the present
rate it is going.
Mr Mah reiterated that the HDB is monitoring demand carefully
and is planning to roll out 7,000 new flats in the first half of
this year, and about 12,000 for 2010.
“If there is even stronger demand than that, of course HDB will
built even more,” he said.
As the flats will take about 3 to 4 years to be completely, they
are unlikely to meet the immediate demand now.
In fact, they should be built well before between the years 2006
– 2008 to prepare for the expected increase in demand due to the
rising number of foreigners coming to work and live in
Singapore.
For some inexplicable reasons, only slightly more than 11,000
new flats were built during these three years or about 4,000 a
year:
