Friday, 6 September 2013

Tweaks in Our SG Housing

Highlights of PM Lee's speech: Public Housing

At the Institute of Technical Education College Central last night, Prime Minister Lee Hsien Loong said shifts to social policies in housing, health care and education will be needed

The Government will make sure every Singaporean family who is working can afford their home by keeping Build-to-Order flat prices stable, while increasing support for lower- and middle-income households.

Families who can afford to buy only two-room flats will be given a new Step-up Housing Grant (SHG) to help them upgrade to three-room flats later.

The SHG for low-income first-timers will also be extended to middle-income households, helping them to afford three-room or four-room flats.

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PM Lee's NDR promise: Every Singapore family who is working can afford their home
Prime Minister Lee Hsien Loong assures Singaporeans that houses will remain affordable, during his National Day Rally Speech. (Yahoo! File Photo)
Yahoo! Newsroom - Prime Minister Lee Hsien Loong assures Singaporeans that houses will remain affordable, during his National Day Rally Speech. (Yahoo! File Photo)

The government will continue to maintain the value of HDB flats for old age but at the same time, keep flats affordable to future flat buyers, said PM Lee during his National Day Rally speech on Sunday.

"I will make sure every Singaporean family who is working can afford their home," he said in a key cornerstone of his three-hour speech delivered from the ITE auditorium in Ang Mo Kio.

For starters, the government will make sure that families with a monthly household income of $1,000 will be able to afford a two–room Housing and Development Board (HDB) flat. The government will not reduce the prices of Build-To-Order flats but will provide more support through several financial assistance schemes -- such as the existing Additional CPF Housing Grant (AHG).

More housing grants for middle-income

Announcing the extension of the Special Housing Grant (SHG), Mr Lee reiterated in his National Day Rally that the Government was committed to making HDB flats more affordable, especially for the less well-off

Middle-income families looking to buy a four-room flat for the first time will be eligible for a housing grant that was previously eligible only for buying two-room or three-room flats, said Prime Minister Lee Hsien Loong on Sunday.

Announcing the extension of the Special Housing Grant (SHG), Mr Lee reiterated in his National Day Rally that the Government was committed to making HDB flats more affordable, especially for the less well-off.
The SHG started out in 2011 as a special subsidy for households earning $1,500 or less, but the income ceiling was raised. Even then, buyers were limited to two-room or three-room flat

With the extension, these first-time buyers can now opt for a four-room flat, and still qualify for up to $20,000 more in subsidies

ND Rally: More grants to help low, middle-income families own homes

Singapore, however, has changed much since the 1960s.

Citizens no longer live in slums and squatter settlements; home ownership rates now stand at 90 per cent instead of 9 per cent.

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BN Special: Letters to the Prime Minister: Housing
Dear Prime Minister... (Image by Ernest Goh)

As someone in my mid-20s, I am heartened to hear you promise that “every Singaporean family who is working can afford a HDB flat.”

At an age where the spectre of having to save enough for my marriage and a flat of my own looms ever larger, I feel reassured by the fact that for just $67 per month (in addition to my CPF monies), I can plausibly afford a new four-room flat in Punggol. And even if I can only afford a two-room flat at first, I am glad that grants are available for me to upgrade – to keep up with the Chans and the Tans. Coupled with measures such as a record number of new flats and higher income ceilings, things are indeed looking rosy for would-be first-time buyers such as me. Thank you, I can ‘ROM’

What’s new: Housing
  • Keep BTO prices stable but give more aid to low- and middle-income families
  • Special CPF Housing Grant to include 3R and 4R flats, and extend to middle-income families
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Revisited: A closer look at PM Lee’s National Day Rally 2013 Figures

HDB monthly mortgage repayments can be cheap – provided you have money for a lump sum downpayment, that is.

In our initial article analysing PM Lee’s assumptions regarding home financing, we looked at one possible method he could have used to get the monthly home repayment below the psychological $1000 barrier – for instance, to use a lower bank interest rate which would most certainly rise over the course of 25 years.

In this follow-up article, we explore an another way PM Lee could have gotten a nice sub-$1000 monthly mortgage repayment. After reading, you can decide for yourself which scenario better fits your own criteria.

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What does PM mean when he says HDB flat prices have been ‘delinked’?

During the recent National Day Rally speech, Prime Minister Lee Hsien Loong mentioned that the build-to-order (BTO) prices for HDB flats had been delinked from resale prices.

National Development Minister Khaw Boon Wan also claimed earlier this year, during the Budget Debate, that he had “broke convention” to delink BTO prices from resale prices since taking over the MND portfolio in 2011, in what was portrayed as bold and unprecedented move.

Since the government-controlled mainstream media often uses Sengkang as a model, we shall examine the BTO prices in Sengkang from 2009 to 2013 and the Resale Price Index provided in HDB’s website (

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OPINION: Prices of Seng Kang BTO flats magically drop up to 19% last month in time for PM Lee’s NDR speech?
TR Emeritus, 20 Aug 2013
According to Uncle Leong’s article, he discovered something interesting with regard to the recent PM Lee’s announcement of special grant to help middle-income Singaporeans to buy their HDB flats, at NDR 2013 (‘NDR Speech: ‘Significant Shift’ or more ‘Pay And Pay’?‘).

In Mar this year, HDB launched new BTO units at Sengkang, called Compassvale Cape [Link].
The prices of 4-room HDB flat at this launch range from $284,000 – $361,000 with a typical pricing of $320,000.

Four months later in Jul, which is just last month, 1 month from PM Lee’s National Day Rally, HDB launched another new BTO project at Sengkang, called Fernvale Riverwalk [Link] at a much reduced price

The prices of 4-room HDB flat at this launch now range from $251,000 – $324,000 with a typical pricing of $285,000. This typical pricing was exactly the one used in PM Lee’s example in his NDR speech (‘PM’s housing examples at NDR show HDB flats not affordable‘)

Taking the typical pricings as benchmarks (i.e, $320,000 for a 4-room flat at Compassvale Cape vs $285,000 for a similar one at Fernvale Riverwalk), how is it that within a time frame of 4 months, prices of BTO flats in the same area can drop 11%? 

If we were to take a typical price of $210,000 for a 3-room flat at Compassvale Cape vs $170,000 for a similar one at Fernvale Riverwalk, the drop in pricing would be even more significant – at 19% (The $170,000 pricing for a 3-room flat at Fernvale Riverwalk was also exactly the one used by PM Lee in his NDR speech)! 

Was the sudden reduction in price over a 4 month period tied to NDR held in this month so that PM Lee could make a good illustration? Or perhaps it was only a coincidence?
Uncle Leong asked, “Didn’t somebody say that BTO prices have stabilised since taking over the job?"

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Affordability Questioned

The question on every body's mind after Sunday night: By how much will premiums go up? The answer is already written on the wall: As much as they can get away with it.

Health Minister Gan Kim Yong issued the vacuous assurance, that premiums under the new Medishield Life scheme will be affordable. A vacuous truth is a truth that is devoid of content because it asserts something about all members of a class that is empty - they haven't even figured out the numbers yet. With the next breath intake, he said the Government will subsidise the premiums for those  who cannot afford them. Maybe we missed something here, why are subsidies needed at all if the premiums are truly affordable?

You've seen this line with "affordable" housing. On this point, the 25 year repayment schedule for a 4-room flat indicated by the PM implies an  Affordability Ratio (AR) of 5.9 (household income $4000, 4-room flat at $285,000 BTO price). The Demographia International Housing Affordability Survey 2013 defines affordability as 3.0 and under, i.e. you should be able to pay off the mortgage with 3 years' total annual income. According to the report, surveys indicate that many households are having children later, or not at all, because housing conducive to raising children is unaffordable. Next to the nefarious stop-at-two campaign, housing unaffordability has to be key to a declining population. Father and son may tell you different, but truth always prevails.

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A closer look at PM Lee’s National Day Rally 2013 figures

We investigate the numbers presented during the National Day Rally 2013 and what they mean.

This year’s National Day Rally, the Prime Minister touched on a variety of topics close to the hearts of Singaporeans. He highlighted matters like the planned restructuring of the Primary School Leaving Examination (PSLE) grades classification system, changes to remove ‘discrimination’ from the MediShield Plan (which is long overdue, in our humble opinion) and other more prosaic matters like a new airport terminal (which despite the best efforts of mainstream media to hype up, no one really cares about).

The issue that sparked our interest though, was housing. In particular, the Prime Minister (PM) declared that HDB flats are now extremely affordable thanks to the policies and efforts of his government and cited some ‘back of the napkin’ calculations to support his claim.

Revisited: A closer look at PM Lee’s National Day Rally 2013 Figures

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A disillusioned Singaporean says PM Lee needs to resign: Housing

YOG & Garden by the Bay were epic failures and inexcusable waste of taxpayers money, now Gardens at the Airport? They might as well transplant the iconic old Kallang Airport aka PA HQ onto Changi Airport to safe taxpayers money! Pinkie really thinks money grow on tree is it?

“Affordable” HDB - This is where I can safely conclude you are stupid. Take the 2 room flat for example, do you know much is the initial deposit and how long will it take a $1000 earner to raise it? What is affordable when you have to take a 25 year debt? You are encouraging irresponsible parents to take up huge loans and pass on the debt over to their children.

Playing with skewed statistics do not work on Singaporeans with less than half a brain. How much profit is the HDB earning through BTO flats after construction costs? What about the profit earned in interests from Singporeans holding mortgage loans through HDB? You are right when you said you are a housing agent, because like one, your salary is funded partly through Buyer’s Stamp Duty and annual property taxes. And your monthly financial projections that concludes how “affordable” HDB is?

That is amateurish; voters like me are simply aghast at your $4000-salary-for-4-rm-flat joke. You should either leave the job of telling incomplete truth to the Straits Times, or resign to be a full time stand-up comedian in US making jokes about China [Source].

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PM’s housing examples at NDR show HDB flats not affordable

He gave the following examples to illustrate his point, using BTO prices of Sengkang flats

At the National Day Rally yesterday (18 Aug), PM Lee announced that the Special Housing Grant which is currently available to low-income households for the purchase of 2- and 3-room HDB flats will now be extended to middle-income households to buy 4-room flats as well (‘PM: I promise every working family can afford a home‘).

The government will make sure every Singaporean family that is gainfully employed can afford a home, he said.

A common measure of housing affordability is to take the price of the house divided by the household’s annual income. It is known as the Price-to-Annual Income Ratio or Affordability Ratio (AR).

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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?