Despite widespread public unhappiness at the sky-rocketing
prices of HDB flats, PAP candidate for Tampines GRC Mah Bow Tan
continues to insist that they remain ‘affordable’ to the majority
of Singaporeans.
Under Mr Mah’s watch, the prices of HDB flats have nearly
doubled since 2006, thereby pricing many ordinary Singaporeans,
especially young couples from the public housing market.
In a rebuttal to the opposition’s criticisms that Singaporeans
are ’stuck’ with a thirty year bank loan for their HDB flats, Mr
Mah wrote that “it is not the length of the loan but the percentage
of monthly income repayable to the housing loan that matters. ”
He said the length of the loan is up to the home buyer and
suggests young people take up a loan which is 30 to 35 percent of
their monthly income to ensure that the length of the tenure, the
interest rates and loan repayment are within their means.
“But if people are not happy with the 30-year loan for
whatever reason, they can always take a smaller loan,” he
added.
Mr Mah also said a longer loan actually helps people to ‘pay
less’:
“Most people who do that, for cash flow reasons (and)
never really go the whole 30 years. After 10 years, 15 years, they
sell off, and that’s it. They make a profit … keep the profit, and
then they use that to upgrade.”
It is strange that Mr Mah uses the percentage of monthly income
to assess housing affordability while a different benchmark – the
median multiple is used in the rest of the world.
The Demographia International Housing Affordability Survey uses
the “Median Multiple” (median house price divided by median annual
household income) to assess housing affordability.
The Median Multiple is widely used for evaluating urban markets,
for example being recommended by the World Bank and the United
Nation. It is an easily understood indicator of the structural
health of residential markets and facilitates meaningful housing
affordability comparisons.
In recent decades, the Median Multiple has been remarkably
similar among the nations surveyed, with median house prices
generally being 3.0 or less times median household incomes where
demand and supply are balanced.
Using the Median Multiple as a benchmark, all HDB flats
including BTO flats will command a median multiple of more than
3.0, meaning that they are unaffordable to ordinary Singaporeans.
(read more here)
Though Mr Mah admitted that he is likely to lose ’some votes’
over the housing issue, PAP de facto leader Lee Kuan Yew proclaimed
Tampines GRC a ’safe’ seat during a recent visit there.
“Tampines voters must be DAFT to cast a protest vote
against Mah Bow Tan,” Lee had told the state media during
a press conference in April last year.
With Lee Kuan Yew promising to import another 900,000 foreign
workers on work permits and perhaps many more on S and E passes
into Singapore, Singaporeans should brace another price hike in HDB
flats which show no signs of abating in spite of a series of
‘cooling measures’ introduced.
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