Originally posted by SevenEleven:
[b]A Reply by HDB in Straits Time Forum 10 Jan
2007
I REFER to the letters from Mr Viktor Ye Kok Kheong and Mr Leong
Sze Hian (ST, Jan 1 and 2, respectively) pertaining to the subsidy
for new HDB flats.
First, Mr Ye asked if it is true that the Chief Valuer values all
land in Singapore using Raffles Place as the benchmark. We wish to
state that it is not so.
It is a fundamental valuation principle that lands are valued based
on the specific attributes of the site, such as location, the
permitted use of the land, and tenure.
The Chief Valuer's valuation has to be supported by comparative
land-sales evidence.
It is simply not tenable to benchmark every plot of land to Raffles
Place pricing, as this would drive property prices beyond the reach
of most Singaporeans.
For example, state land alienated by the Singapore Land Authority
for housing in Tampines will be valued taking into account the
market values of housing in Tampines, while state land for
industrial use in Tuas will take into account industrial- land
values in Tuas, etc.
Second, Mr Leong asked HDB to reveal its land and construction
costs to prove that HDB flats are subsidised. He has missed the
point.
To understand the full extent of public-housing subsidy for new HDB
flats, one should be comparing the market value of the flats with
the sale prices charged by HDB, rather than look at the input costs
of land and building.
New flats are subsidised as they are being sold at prices that are
lower than what they would otherwise fetch in the open
market.
If this subsidy is not real, why should many flat buyers choose to
buy new flats from HDB instead of resale flats in the open market
using the CPF Housing Grant?
Third, Mr Leong asserted that HDB has not kept up with the
standards of disclosure in the private sector. He is wrong.
HDB's financial statements are prepared in accordance with the
Financial Reporting Standards, audited by the Auditor-General and
tabled in Parliament for information.
HDB's standards of disclosure and governance are no less than those
required of publicly listed companies and real-estate investment
trusts in Singapore.
Overall, HDB is unable to recover the development cost of new flats
that it offers to the public, and has incurred a deficit averaging
$390 million in its home-ownership programme in the last five
years. These figures are reported in HDB's audited financial
statements, which are publicly available for inspection and
scrutiny.
Kee Lay Cheng (Ms)
Deputy Director
(Marketing & Projects)
For Director (Estate Administration & Property)
Housing & Development Board
[/b]
All i can say is that her answers are not sound.
Second, Mr Leong asked HDB to reveal its land and construction
costs to prove that HDB flats are subsidised. He has missed the
point.
It is beyond condescending to claim a person was pursuing the
wrong line of argument when one has hardly stated their own case.
Despite Mr Leong's demand that HDB 'show hand', Ms Kee deflects the
argument with a weak salvo and a poor one-line explanation that the
flats are indeed 'subsidised'; in effect simply reiterating her
earlier point, without providing new substantial evidence to back
it up.
If this subsidy is not real, why should many flat buyers choose
to buy new flats from HDB instead of resale flats in the open
market using the CPF Housing Grant?
Singaporeans will obviously go for the one option that can
provide a line of credit to avoid the maximum amount of debt.
Coupled by the fact that resale flats are always more costly than
new flats, her response completely lacks substance. Why on earth is
this even considered an answer?
