Is our HDB flats sold to us at a "cheap price" ?
The Government will pass legislations to take over land from
private ownership, and pay compensation at about ONE-TENTH of the
Open Market Value.
After "selling" the land to HDB at a supposedly "subsidised" price
(which is more then 100 times the amount paid as compensation), the
HDB flats are then built on this land.
HDB should be enjoying a huge economy of scale in the HDB flat
building program, yet the HDB flats are sold at a price that is far
higher then a similar size unit of private homes built in Malaysia
- with land prices based on commercial values at no subsidised
costings, nor the building program having the economies of scale
similar to HDB; (and without considering the difference in the
exchange rates) .
Someone will argue that land is plentiful and cheap in Malaysia,
however, HDB flats are build on land that have been taken over at a
fraction of the open market valuation of land in Singapore.
The value of land sold in Singapore is generally influenced by the
Government, through URA's periodical release of land parcels for
sale to the public and private sectors.
Land prices have reached astronomical proportions, to the extent
that for the prices to climb down to more realistic values, it will
undermine the bank loans of previous mortgages, and will affect the
general accounting valuations of all assets of individuals and
corporations in Singapore.
So the "wonderful lie of a castle in the sky" is perpetuated, till
another economic crisis comes along, and the banks will panic over
the artificially high values of homes in Singapore.
If HDB is building and selling homes at a cheap price, one only
need to see their annual report to note the substantial revenues
and CASH reserves - with excess and unused cash being returned to
the Government Treasury, and making its way to the GIC and Temasek
Holdings for their overseas financial adventures in multi-billion
dollar investments.
