Friday, 9 November 2012

Our Sg Public Housing

UPDATE  14 Jan 2014: HDB flat in Bishan sold for record $1.05m

A HDB executive maisonette in Bishan Street 13 was sold for a record S$1.05 million in December with cash-over-valuation of S$250,000, according to market data.

Located on the 20th floor of Block 190, the 150 sq m (approx. 1,615 sq ft) flat was listed on real estate portalPropertyGuru for about one month and attracted keen interest from three other buyers willing to pay over S$1.05 million, said DWG agent Thomas Hee who closed the deal.

But in the end it was sold to a young couple very familiar with the market.

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Khaw urges calm after S$1m flat price

Singaporeans should not be upset over reports that a resale flat was sold for S$1 million, said National Development Minister Khaw Boon Wan during a recent dialogue session with grassroots leaders in Sembawang, reported The Straits Times.

Mr Khaw explained that there will always be premium units offering fantastic views that will command very high prices, just like the case of the executive maisonette in Queenstown.

The sale of that unit is still on-going and is expected to hit S$1 million, with a cash-over-valuation (COV) of S$195,000.

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Housing for the single people

Singapore’s public housing policy makes a major shift to provide homes for struggling singles. Public housing, which is slowly picking itself up from a bad fall caused by a wave of foreign arrivals, has turned its attention to providing homes for struggling singles.

This vulnerable lot includes people from young professionals to the semi-skilled who are deterred from owning a home after years of working as a result of runaway property prices.

For the first time, the Housing and Development Board (HDB) – a pioneering icon that has built one million homes – is allowing singles above 35 years old to buy small, one-bedroom flats directly from the government.

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Understanding Cost Of Construction

Chip Eng Seng Contractors (1988) Pte Ltd (CESC) has been building Housing and Development Board (HDB) flats since 1982. It's typical contract scope involves the design and construction of residential buildings and the supporting parking and community facilities. CES has won many contracts from HDB in the past, and the contracted values of projects awarded in recent years provide fascinating insight about the costing of subsidised public housing:
  • Sengkang (698 units) $123 million, awarded June 2008
  • Queenstown (1,394 units) $188 million, awarded June 2008
  • Hougang (792 units) $113 million, awarded August 2011
  • Bukit Panjang (862 units) $137 million, awarded August 2012
If all the numbers are added up and divided, it looks like the average cost of construction for one HDB unit is about $150,000. Needless to say, the units are a mix of 2-room to 4-room units, with selling prices to match.

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HDB is not making money out of building homes, says National Development Minister Khaw Boon Wan
HDB is not making money out of building homes, says National Development Minister Khaw Boon Wan

National Development Minister Khaw Boon Wan has said that the government loses "hundreds of millions" of dollars when constructing public flats.

He made the point at a Our Singapore Conversation dialogue session on 25 April 2013 on housing issues.

This comes amid calls from some quarters that land costs be taken out from the pricing of public flats, to make them more affordable.

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HDB Loses $1 Billion a Year, and Why You Shouldn’t Care

HDB’s Losses: Not Surprised. Not Even a Bit

Some Singaporeans asked that land costs be excluded from HDB pricing. The answer to this was a stern no. Too much social welfare, as we all know, leads to laziness, communism, and Satan worship. Or even worse, voting for the Opposition. Besides, HDB loses a billion dollars a year as is. That’s pretty bad, right? Trouble is, that “loss” is irrelevant…as an argument or otherwise:

We’re not amazed by the loss, and we’re not moved by it either. See, we remember HDB announced losses before, in April ’08. Back then, HDB claimed a loss of $2 billion. So actually, the deficit is shrinking.

And anyway, HDB has never hidden its losses. That’s what their financial reports claim most of the time.

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HDB loses billions, but splurges on extravagant parties at MBS
Hardwarezone Forum, 23 Aug 2013
Initially, I thought that there could be some rumours but when I did a search, it is true that HDB does splurge a lot on Dinner and Dance.
DJ Daniel Ong also revealed in his Tweet that he is hosting a HDB DnD at Marina Bay Sands.
VOX (a musician band) also was hired to perform at HDB DnD event. Full story

Also read:
  1. HDB is not making money out of building homes, says National Development Minister Khaw Boon Wan - XIN MSN News
  2. HDB Loses $1 Billion a Year, and Why You Shouldn’t Care - Yahoo! Finance Singapore
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Study reveals shocking finding on public housing

A study conducted by researchers from the National University of Singapore (NUS) showed that a Singaporean household earning $5,000 in 2017 would be able to buy only a three-room flat.

Associate Professors Chia Ngee Choon and Albert Tsui made this projection in their study commissioned by the Ministry of Manpower.

The researchers made the following calculations for younger Singaporeans entering the workforce today and looking to buy an HDB flat in 2017 when they are about 30 years old:
  • Lower-middle income households at the 30th income percentile (combined monthly income of $5,100) would be able to afford a three-room flat.
  • Median-income households at the 50th income percentile (combined monthly income of $7,100) would be able to afford a four-room flat.
  • Upper-middle-income households at the 70th income percentile (combined monthly income of $9,200) would be able to afford a five-room flat.
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Something is wrong somewhere with EC scheme

‘Something is wrong somewhere’ is the kind of doubt any lay Singaporean may express, and it’s a flaw we knew all along from the moment someone decides to build fountains and presidential suites for executive condos, or sells off a Queenstown 5-room for $1 million. We don’t need to hear this coming from an authority who’s supposed to be finding and fixing the problem. If they can’t, well, then there’s ‘something wrong somewhere’ with the kind of pay they’re getting to do the job.

Yet, there’s one thing that Khaw seems to be dead confident about: That the government loses ‘hundreds of millions’ of dollars just to build HDB flats.  It explains why you never hear reports of HDB making tidy profits these days, it’s like a monk announcing that he won first prize in the lottery. Not so in the past. In 1970, someone calculated that the HDB made an ‘enormous profit’ from rental of flats and shops. In 1982 it was reported that the board made a $7 million windfall off carparks. In 2002, they made reportedly $87 million from carpark operations, half of that from fines. 

How HDB manages its finances today remains a mystery, though our ministers would love to brag about how the government is constantly in the red to justify its noble mission of ‘public housing’. I suppose with all this ‘deficit accounting’ to deal with, it’s only fair that HDB gives its staff the occasional treat, like a Dinner and Dance at MBS with Daniel Ong as MC, for example (more proof of that ever happening here). Did the government subsidise THAT as well?

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Hi Minister Khaw, I understand that you claim that HDB is losing millions every year and MOF has to subsidize HDB because of these losses in MILLIONS? 

Now can please elaborate on your statements by giving us the actual building cost and related cost for building a HDB flat, because it is hard to believe what you are saying when we don’t see the actual breakdown cost, don’t you think so?

It would be good to know every detail of this breakdown so intelligent Singaporeans can look in detail and understand what you are talking about.

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SDP’s housing plan ‘excellent’, says ex-GIC chief economist

Mr Yeoh Lam Keong

Former GIC chief economist Mr Yeoh Lam Keong has praised the SDP’s alternative housing plan for Singapore as being “of remarkably high quality and an in-depth piece of research.”

Mr Yeoh made the remarks at the launch of Housing A Nation: Holistic Policies For Affordable Homes at Quality Hotel recently. (Download the entire paper in PDF format here.)

Mr Yeoh, who is also a senior research fellow at the Institute of Policy Studies and an adviser at both the National University of Singapore and Singapore Management University, described the paper as “excellent”.

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singapore vs hk

What comes to mind when you think of Hong Kong’s housing? Dark, cramped, dingy and tiny spaces tucked away in decrepit buildings, or less dreary but equally tiny and exorbitantly-priced shoebox apartments in chopstick-like skyscrapers (pictures)? Either way, the gut feeling or general impression of most people, including yours truly, is that housing conditions in Hong Kong leave much to be desired. By comparison, housing conditions in Singapore are superior by a long shot. If we talk specifically about public housing, it is even more untenable to suggest that Hong Kong’s public housing is better than Singapore’s in any way. 

So unsurprisingly, Hong Kong’s Mingpao draws similar conclusions after comparing housing in the two cities: public housing (HDB flats/ 政府組屋) in Singapore is not just more spacious but also more affordable.  The annual supply of HDB flats matches the number of newly registered married couples; those with children can upgrade to bigger flats while the aged may monetize existing flats by selling them back to the government and downgrading to smaller ones.

I can already imagine Hongkongers green with envy. But let’s take a deeper look into the two public housing systems before we draw further conclusions.

Non-open market flats: An idea worth exploring?

Earlier this month, the Singapore Democratic Party released a housing policy paper proposing a new class of flats that it envisaged could be priced significantly lower than new Build-To-Order (BTO) flats offered by the Housing and Development Board (HDB).

This is because these "non-open market" (NOM) flats would be priced only to recover the cost of administration and construction, and not the cost of land.

The catch is that NOM flats could only be sold back to the HDB - presumably at replacement cost less the consumed lease and with little or no capital gain. NOM flats will be offered to citizens for purchase together with the BTO flats 

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Beyond Public Housing: Extending the Private Property Franchise

(This is another in a series of posts on the SDP Public Housing Plan. The series originally was begun with the intention to concentrate on the three main proposals of the SDP Public Housing Plan: affordable Non-Open Market Flats, availability via a buffer stock, and conversion to manage the transition. The series has now been extended to cover other aspects of the plan and more.)

The SDP Public Housing Plan did not touch on private property. It was a conscious decision to focus on the major problems caused by the PAP Government’s public housing policies. Now, I would like to share an idea for the private housing market. In particular, how we can extend the private property franchise by filling in the huge gap between entry level private property and public housing. This primarily serves to help the “sandwiched class”.

But before going on, I do not claim to be speaking for the SDP Public Housing Panel on this matter. However, credit goes to the panel as a whole if the proposal below is found to be good (since that is where the below idea originated), and blame should come to me if flaws are found when it is applied in the domain of private housing.

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Is HDB Apartment As Affordable As A $8 CAGB?

When I read that the Minister of National Develoment said, "BTO flats affordable for first-timers " and  "I think not enough credit is given to my ministry' with a smile, (ST Page A6 17 Nov 2012I thought, maybe just maybe, during his $8 Coronary Artery Graft Bypass operation, the surgeons might have accidentally removed Khaw Boon Wan's Buddhist heart! [Link]

"We take affordability fully into account when pricing BTO flats. New flats enjoy generous discounts off market prices" . .  . "Looking at it from the situation that we are facing today, I find these figures very reasonable."

"Resale price is beyond my control. That is set by buyer and seller. But for first-timers buying BTO flats, that is within my control and it is my job to ensure it will be affordable." (emphasis mine and italics appeared in ST). Maybe a BTO flat can be as affordable as a $8 CAGB? [Link]

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Time we had real public housing

At last, we have a party that is urging a true public housing scheme for Singapore. It has long been an embarrassment that we do not have real public housing here.

The policy paper put out recently by the Singapore Democratic Party (SDP) (link) is a bold move in this direction. Leading economist Yeoh Lam Keong called it an “excellent” paper on Tuesday, 6 November, when he was giving a talk — more about this later.

Readers may wonder about my opening paragraph. What do I mean when I say we do not have real public housing in Singapore? Doesn’t the fact that some 85 percent of Singaporeans live in Housing and Development Board flats point to its enormous success?But that’s only if one equates HDB with public housing.  The government may say so, and will pull out all stops to brainwash you into thinking it is so, but that doesn’t make it so.

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SDP proposes a class of 'non-open market' HDB flats

The Singapore Democratic Party (SDP) yesterday unveiled a housing policy paper proposing a new class of flats that they say could be priced as low as $70,000. 

These "non-open market" (NOM) flats would be priced by the Housing Board only to recover the cost of administration and construction. That is, the land that the flats are built on should not have to be paid for by flat-buyers, said the paper, launched at an event at the Quality Hotel. The SDP calculated that NOM flats could be priced at $70,000 for a two-room unit and up to $240,000 for a five-room. It said these prices would allow a family to pay off a housing loan over nine to 15 years, on payments of no more than 20 per cent of gross monthly income.

Currently, an average five-room flat costs about $380,000 and a 30-year loan can be paid off with payments at about a quarter of a median monthly household income of $5,600.

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Public Housing: Setting new benchmark

FIFTY years after launching its mass public housing at a few thousand dollars per flat, Singapore last week made the kind of history few people wanted to see.

A resale maisonette from the Housing Development Board (HDB), which still designs homes to help the broad masses, changed hands for a record one million dollars.

In principle, the rising values should have excited Singaporeans since 85% of them are property owners, but instead the news created widespread concern.

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The resale housing market has kicked off the fourth quarter on an upbeat note, with both prices of non-landed private homes and Housing and Development Board flats rising last month from the third quarter, data yesterday from the Singapore Real Estate Exchange (SRX) showed. 

The average per square foot price for resale private residential property throughout the island was S$1,209 last month, up 4.3 per cent from the third-quarter average of S$1,159, according to the SRX, a consortium of 11 leading property agencies including DWG, ERA and PropNex.

Homes in the Rest of Central Region (RCR) led the gain with a 4.5-per-cent increase over the third quarter, followed by those in the Outside Central Region (OCR), which saw a 4.2-per-cent rise. The Core Central Region (CCR) showed a 1.8-per-cent increase.

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Preventing the relentless escalation of HDB prices

The focus is now on housing and on what can be done to moderate the price of public housing, and not only that but to make it affordable and available to singles.  The following are my suggestions as to how the relentless price escalation of HDB flats may be prevented:

Revert to Registration for Flat System
This system ensures that flats are built according to the number of applicants on its waiting list. HDB discarded this system in early 2000s because the former National Development Minister, Mah Bow Tan, was spooked when there were 31,000 unsold flats after the Asian Financial Crisis in the mid-90s. It was deemed that the RFS was an unreliable system, as it was unable to gauge if there was genuine demand, or if there was a commitment to buy. Now, the problem is not one of demand, but of supply. If we reverted to RFS, we may be better able to correct this problem and so stabilise the price of public housing.

Increase Minimum Occupation Period
Increase the minimum occupation period to 10 years for HDB flats bought directly from HDB (and Resale Flat under CPF Housing Grant Scheme). The minimum occupation period for Resale Flats bought without CPF Housing Grant can remain at 5 years.

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SDP's NOM : Finding solutions for the housing problem

UPDATE: I have written in the post that I believe the scheme is implementable if it is restricted to limit demand and if a key problem of allocation is solved. To the credit of the authors of the proposal, they did not overlook this allocation problem.

The solution takes the form of an auction scheme known as VCG ( Annex C of the proposal). If you win a bid for a highly sought after location, you pay a premium over a 'reserve' - this premium is not returned in the cash buy-back. So you can only breakeven or lose money under the NOM scheme. While a competitive mechanism is introduced, prices can still be contained if you  restrict who can take part in the auction.

 Since you can only lose and cannot make a profit from the scheme, I don't see the advantages of this scheme over some variant of a subsidized rental scheme which is easier to administer and move people out of the scheme when they strike it rich and no longer need subsidies anymore.

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Get the basics of public housing right

Former Minister Mentor Lee Kuan Yew said public housing has to keep up with the rising aspirations of Singaporeans and that the facilities and design of older estates should also not fall behind newer ones.

We must get the basics right first. Public housing, first and foremost, must be affordable to young couples as well as older singles. To this end, the SDP has called for a drastic revamp of the housing system to allow this group to purchase flats at their cost price of construction in a specialized non-open market.

The current system of allowing home prices to escalate well beyond the average level of affordability of Singaporeans and then saddling young families with huge mortgage debt that last for up to 30 years, is simply not acceptable 

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Housing choices alone do not ensure enough CPF for retirement

It doesn’t matter whether the decisions are based on sound numbers and good statistics. What matters is that the government alone decides, and the people have no choice but to accept it, because the law dictates that they must save for retirement in their CPF account, and thereafter invest their CPF in a compulsory annuity scheme run by the government. There is no choice for Singaporeans.

As the cost of living goes up and the price of HDB flats go up unchecked, Singaporeans must buy smaller and smaller flats. To tell Singaporeans that they must be prudent in their choices is sheer hypocrisy if those choices have already been mangled through flawed government policies.

Only a radical overhaul of public housing and the recognition that public housing is a form of essential consumption rather than a form of investment would make things better for Singaporeans.

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LKY gets kicked in the balls

“I’ve seen their property values going up, five times, 10 times, 15 times, 20 times,” our MSM reported him as saying recently.

This is what the SDP said in response, “Yes, and what for? To feel rich? Under the SDP Plan, Singaporeans don’t just have to feel rich. They can have their NOM flats and not be indebted for the rest of their lives. They can have financial security and lead fulfilling lives.”

No comment about about SDP’s plans (this is what ST reported “experts” say): thinking about it. But it sure got great PR people team. Maybe PAP or govt should offer them jobs? MP Baey should recruit them for his firm? Can’t be good for H&R’s local and Asean practice that SDP is running rings round PAP and govt? The Dark Side can offer serious money, unlike the SDP. Unless of course, the rumours of CIA funding are not true. An SDP groupie assures me that CIA funding rumours are juz rumours. SDP as poor as Anglican church mice. Catholic church mice got serious money, what with Tony Tan (the president, not Hazel Poa’s hubbie) and George Yeo as members. Goes without saying that Methodist mice got $. Think Ng Eng Hen and wife (SingHeath CEO), and TJS’s in-laws.

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Where is the problem?

The basic in problem solving is to identify the problem, acknowledge the problem, then works towards removing or overcoming the problem. If all else fails, just avoid the problem or pretend that there is no problem.

The SDP has worked very hard, putting a team of professionals together to try to solve the high property price problem. They have come out with a very detailed proposal called Non Open Market Scheme to solve the problem that is on everyone’s mind. Actually I am wrong to say this. It is only in the minds of those who see high prices as a problem. Some are jubilant and celebrating the high prices. Where got problem?

LKY had said that his party has delivered the goodies to the people, built and sold housing at cost or below cost, and the people are now happily enjoying the high value of their properties, inflated 5x, 10x or even 20x. Such a great achievement, to make the people so rich cannot be a problem. It is something admirable to brag about.

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SDP invites Minister Khaw to discuss housing policy

The Singapore Democrats have sent an invitation to Minister for National Development, Mr Khaw Boon Wan, to discuss the future of public housing in Singapore.

The SDP launched its housing policy on Sunday in which we proposed a new Non-Open Market (NOM) scheme where flats are sold at cost to Singaporeans. Read the paper here.

Public housing in Singapore has become a major issue as prices have risen beyond the means of the average Singaporean.

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SDP's Non-Open Market flats: Experts give their take

On Sunday, the Singapore Democratic Party (SDP) released a paper proposing a radical change in the public housing system.

Chief among their suggestions is building a new class of 99-year lease flats called Non Open Market (NOM) flats. These would be sold at prices that do not factor in land cost, and can only be sold back to the Housing Board.

Existing HDB flats would be known as Open Market (OM) flats and can be sold on the open market.

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SDP proposes dual property market system
Yahoo! News Singapore, 4 Nov 2012

The Singapore Democratic Party has proposed the creation of two separate housing markets to keep property prices in check while increasing the supply of cheaper flats.

During a press conference at the Quality Hotel at Balestier on Sunday, SDP secretary-general Dr Chee Soon Juan launched the party’s 37-page housing manifesto, the result of “months of intense study and debate”. Criticising the current housing policy as a “huge profit-making enterprise”, he said the party’s newly proposed plan hopes to “fix the mess” created by previous housing ministers.

Key to the plan is the introduction of a “Non-Open Market” (NOM) – which will see new public housing being built and sold by the HDB at far lower prices than the status quo. Homes built under this scheme can only be sold back to the HDB, preventing profiteering and thus keeping prices affordable. Full story

  1. The plan was to give everybody a home AT COST OR BELOW COST: ex-MM Lee Kuan Yew
  2. Housing Minister Khaw remains nonchalant as public housing prices record new high in Q3
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SDP proposes ‘non-open market’ flats to help reduce new HDB prices

The Singapore Democratic Party (SDP) launched its version of national housing policy plan, ‘Housing A Nation: Holistic Policies For Affordable Homes‘, at the Quality Hotel yesterday (4 Nov). In the paper, it calls for a new Non-Open Market, or NOM, scheme in public housing to help reduce prices of HDB flats. Under the scheme, a segment of new HDB flats will be priced at cost minus the land “cost” that is currently factored into HDB prices. That is, flats will be priced only to recover the cost of administration, material and construction.

Under this scheme, it is estimated that flats could be priced as low as $70,000 for 2-room flats to $240,000 for 5-room flats.

Hence, the land that the flats are built on should not have to be paid for by flat-buyers. After all, the landowners were willing to let the Govt acquired their land for pittance without a fight, all for the sake of nation building so as to benefit Singaporeans. We should honour the wishes of these landowners who have gracefully sacrificed their valued possessions for us (ST article, ‘Land acquisition – for the sake of nation building‘, 3 Dec 2010) [1] 

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SDP responds to Lee Kuan Yew on housing

Mr Lee Kuan Yew said on Sunday that public housing in Singapore “has to keep up with the rising aspirations of Singaporeans.” On this point, he is absolutely right.

Unfortunately, the skyrocketing prices have left an entire generation of younger Singaporeans see their aspirations go up in smoke. This is why the SDP idea of NOM flats would better meet the aspirations of the people. NOM flats are sold at cost and are a fraction compared to the prices currently sold by the HDB.

With capital freed up from heavy housing loans, Singaporeans have the financial capacity to do what they really want to do – start a business, save for the children’s education, make the much needed renovations to their flats, and so on. They cannot do all these if all their money is tied up in their HDB flat.

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Ex-MM Lee: I’ve seen property values going up 5x, 10x, 15x, 20x

Ex-Minister Mentor Lee Kuan Yew said public housing has to keep up with the rising aspirations of Singaporeans and that the facilities and design of older estates should also not fall behind newer ones.

Mr Lee was speaking at a tree planting event at Havelock View yesterday (4 Nov). He said the standard of living has improved and public housing must keep up with rising aspirations.

Older estates have benefited from a range of programmes such as the Lift Upgrading Programme (LUP) and the Neighbourhood Renewal Programme (NRP) 

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Public housing must keep up with rising aspirations of people

Former Minister Mentor Lee Kuan Yew said public housing has to keep up with the rising aspirations of Singaporeans and that the facilities and design of older estates should also not fall behind newer ones. - LKY on HDB.  CNA, with video

I started this campaign 50 years ago in the 1960s, I saw Hong Kong – concrete and tarmac, no trees, no grass, nothing. I decided we will not be like that. We became different, trees everywhere, opens spaces with grass, children’s playground and a clean and safe environment,” Mr Lee said. …

“Everybody owns their own homes and the value of their homes go up as development takes place. Some are unwise enough to sell their homes, thinking they can buy another one, they then find they can’t and have to rent a flat.

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Recently SDP has launched and introduced its Housing Policy Paper. While I applaud SDP's effort to work on such policy paper, I would have to make it clear that its proposal doesn't make sense to me. 

Some may think that what SDP has proposed is "similar" to mine when it uses "cost plus" (minus land cost) pricing mechanism but this is not true at all. I did make reference to "cost plus" pricing during last General Elections but I did not elaborate on the finer details because that was intentionally left for the debate with Mr Mah Bow Tan that I have challenged him to attend. Of course he has side stepped and the rest is history. 

Let me revisit the issue of Housing policy, the last piece of puzzle that I have not put up during last GE. 

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Home buyers showing less interest in DBSS flats?

Public housing flats built under the Design, Build and Sell Scheme (DBSS) appear to have fallen out of favour with home buyers in recent months.

There are about 1,000 units of unsold DBSS flats and sales could slow as a result of the large pipeline of new Build-To-Order flats (BTO) and executive condominiums (EC), according to analysts.

Units at The Premiere @ Tampines were hot property when they were launched for sale in 2006, but sales of similar DBSS units have not been as brisk in the past year.

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Khaw urges calm after S$1m flat price

Singaporeans should not be upset over reports that a resale flat was sold for S$1 million, said National Development Minister Khaw Boon Wan during a recent dialogue session with grassroots leaders in Sembawang, reported The Straits Times.

Mr Khaw explained that there will always be premium units offering fantastic views that will command very high prices, just like the case of the executive maisonette in Queenstown.

The sale of that unit is still on-going and is expected to hit S$1 million, with a cash-over-valuation (COV) of S$195,000.

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Singapore’s public housing flat prices up 2 pct in Q3

Singapore’s public housing flat resale prices rose by a record 2 percent in the third quarter compared with last quarter, the city-state’s Housing and Development Board (HDB) released its flash estimate on Monday.

It was the fastest rise this year ever since Q3 in 2011. According to earlier official data, the resale prices rose by 1.3 percent in this Q2, following the 0.6 percent climb in Q1.

The HDB has recently further ramped up public housing flat supply by announcing on last Thursday that its government-built new flat supply for this year will be increased by 2,000 units to 27,000, in order to meet housing demand, especially from first- time home buyers. 

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Buying a BTO Flat? It’s All in the Timing!

There’s always a hue and cry about how expensive BTO flats are. They’re great in concept, and it’s easy to justify their price. The problem is, once all the great arguments are done, BTO flats are still pushing the limits of your budget. And don’t expect the sellers to bend over backward; they know just how much they can squeeze out of a sale. Well, the trick to getting one is timing, according to Mr. Propwise: When is the Best Time to Buy a New BTO Flat?

In one of my previous blogs, I wrote about why I thought HDB flats could be made cheaper for first time buyers. Serendipitously, the DBSS debacle occurred shortly after my blog was published and the public outcry over the S$880,000 price tag for a new DBSS flat seemed to reinforce the point that many Singaporeans are presently frustrated at how expensive public housing has become. In view of that, I thought it would be timely for me to write a blog to explore the pricing mechanism for new BTO flats and talk about when would be a good time to buy new flats. 

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Why Some S’poreans Prefer Resale Flats to New Flats

Shopping for resale flats is like shopping for a Mac. Listen as salesmen explain, according to extraterrestrial logic, how it’s “actually not that expensive”. Since our ears are filled with enough bull dung, I’m going come right out and say this: We know when our purchase is over-priced. Okay? There’s no need to spin. We’re not buying because we’re gullible morons, we have our reasons. And in this article, I’ll explore the ones behind buying resale:

In Singapore, everyone has a choice. You want expensive, more expensive, or too expensive?

The biggest attraction of resale flats? They’re in mature estates. These are places like Bedok, where building more flats is about as viable as starting a rice farm in your bathroom.

And mature estates are desirable. By virtue of being older, they have more supermarkets, provision stores, coffee shops, etc. This is different from places like Woodlands, which is a prime location for the next Survivor series. 

HDB flats seem to be priced many times my annual income. How can I afford one?

"HDB offers a wide variety of flat types in both standard and premium designs in various areas across Singapore at different times of the year. You should be able to find a suitable flat priced within your means.

Some measures of housing affordability use the Home Price-Income ratio (HPI), where a figure of 6, for instance, would indicate that the property being purchased is priced at six times the buyer’s current annual income.

There is no international consensus on what figure signifies whether a property is affordable or not. In some leading international cities, such as Hong Kong or London, the HPI could be quite high, with some sources putting the HPI for Hong Kong in the double digits. In other countries, in areas away from centres of population or economic activity, the HPI could be lower. 

PRC new citizen buys million-dollar HDB

Following reports of a Bishan maisonette sold for S$980,000, a resale executive maisonette at Mei Ling Street in Queenstown has topped the record for being the first public housing unit to reach the million-dollar mark, according to The Business Times.

The buyer and seller have already agreed on the price but the first appointment with the Housing and Development Board (HDB) has yet to take place, said Lee Sze Teck, Senior Manager for Research and Consultancy at DWG, the agency brokering the deal.

It is understood that the naturalised Singaporean buyer and her China citizen father paid a cash premium of S$195,000 for the unit near Queenstown MRT station. Its size has not been revealed. 

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HUDC flat in Shunfu Road sold at record price

The HUDC estate in Shunfu is undergoing privatisation at the moment

Another new record in the property market surfaced today.

A maisonette along Shunfu Road was sold in July for S$1.28 million to a Singaporean – creating a new record for a HUDC flat.

Introduced in the 1970s, for those in the middle-income bracket who could not afford private property, HUDC flats are well known to be spacious. The government stopped building them in the late 1980s. 

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HDB selling new 3-room flats in Kallang/Whampoa for $795,000?


  1. HDB flat prices rose to record high in Q3
  2. Khaw Boon Wan: Singaporeans should not be upset over HDB flat sold for S$1 million - Property Guru
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HDB resale prices hit all-time high

The HDB Resale Price Index (RPI) rose two percent to a new record high of 197.9, according to the housing board’s flash estimates for the third quarter of 2012.

“The HDB resale price index is now at its historical peak as this increase of two percent is the highest in the last four quarters (since 3Q11, when the price index grew by 3.8 percent).

This is somewhat unexpected as the increase came with the onset of a greater supply of BTO (Build-to-Order) flats since 2011 and the moderation of HDB resale prices in the first two quarters of this year,” said Mohamed Ismail, CEO of PropNex Realty. 

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Housing Grants – Do They Really Help Singaporeans?

With reference to Grant for Low-Income Housholds Enhanced, see here and here.

The Additional CPF Housing Grant (AHG) and Enhanced Grant Scheme, introduced in March 2006, is meant to help citizen families with a steady household income to buy their first subsidised HDB flat. Supposedly, the Grant is to reduce the monthly installment for the buyer.

I was a property agent. From what I observed, buyers who took these housing grants will usually sell their flat at a loss with no money coming out from their sale. The longer they wait to sell their flat, the bigger their paper loss from their CPF account. 

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Property Prices in Singapore – The Gordian Knot?

The influx of immigrants which would only fuel demand for property

The Gordian Knot was fabled to be tied by Gordius, the King of ancient kingdom of Phrygia. The knot was an intricate knot that has no ends exposed. It was a knot that was impossible to untie and a prophecy hung over the knot that whoever could untie the Gordian Knot will come “ to rule the world.”

“HDB resale prices rise 2% to record high in Q3” grabbed the headlines of mainstream newspaper recently and has in a way became the Gordian Knot of Singapore – a terribly complicated issue that requires resolution. However the property prices issue seemed to be tricky to resolve.

With the recent reports on million-dollar HDB apartments in the resale markets and the prices of BTOs, the escalation of property prices towards astronomical heights seemed unstoppable. Median Cash-over-valuation has also risen by 12% over the last quarter and that was a good proxy on the strong demand for resale HDB property. The adjustment of prices to sensible affordability is impossible. 

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Affordable Housing

The Housing and Development Board (HDB) has a two-fold problem, built more flats and make them more affordable. First one is easy, and suits the appetite of the GDP growth junkies to a T. More flats for sale mean more money in the state coffers – just think of the contribution from the mysterious “reserves” portion of the pricing policy.

The good news is that $75,000 will now actually buy you a brand new flat (cheaper than those affordable $100K units), if you can contend with 35 sq metres in a non-mature estate. That’s HDB nomenclature for an ulu part of the island which may lack certain amenities like schools, supermarkets, clinics, hawker centres, as well as sports and recreational facilities. On the plus side, the relatively remote locations may suit those planning a discreet afternoon tryst with a female IT sales executive. Just imagine, if they deliver on the $60,000 housing grant, a studio flat will cost only $15,000.

Before you rush out to nominate the HDB for a humanitarian award in finally reducing the entry level for basic accommodation, read on.

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HDB flats didn’t shrink, says Khaw

The government is also watching the trend of 'shoebox units' built by private developers and will step in if need be

Contrary to what many people think, the Housing and Development Board has not shrunk the sizes of flats, Minister for National Development Khaw Boon Wan said.

Speaking to participants of a forum on Wednesday (2 May), Mr Khaw said the sizes of apartments have remained unchanged for the last 15 years, The Straits Times reported.

The paper said HDB figures show that since the mid-90s, the size of a four-room flat has remained at 90 square metres.

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HDB four-room flat sizes, 1996 to 2011

Per the Straits Times, National Development Minister Khaw Boon Wan said on Wednesday that Housing and Development Board flats have not shrunk in recent years, and that flat sizes have remained unchanged for the past 15 years.

According to the ST: A four-room flat, for instance, has remained at 90 sq m since the mid-90s, HDB figures show. HDB has also said that the amount of living space per person has risen, as the number of people in an average household has dropped.

The ST reporter, Jessica Cheam, later wrote this on her Facebook page: A few people have asked me if it’s really true that #HDB flats have not shrunk in the past 15 years. And why it doesn’t match a previous report I wrote in Nov last year on the same issue. I’ve doublechecked with HDB and both reports are right – Minister Khaw is accurate in saying the flat size hasn’t changed in the past 15 years because the mid-90s was the last time that HDB changed flat sizes.

900k for HDB

Looks like 3 HDB units just got sold at the $900k mark and the psychological barrier of $1m is inching closer. Many analyst give their 2 cents to say it is an exception and unique circumstances, rather than the norm, ya da ya da.

Regardless, it looks set that $1m is probably going to be hit in the next 1-2 years. Wonder if it is fair to become millionaires from government subsidized public housing.

Anyhow, who is going to be the 3 famous people? Huh, what are you talking about? 

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The woes of DBSS residents
Planning For Singapore’s Future
Tweaks in Our SG Housing
Further steps to cool Singapore property market
Housing Woes
Our Sg Public Housing
Our Sg Properties
Affordable Housing
Prices of HDB resale flats rise, but can new HDB flats be cheaper?