<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR class=msghead><TD><TABLE border=0 cellSpacing=0 cellPadding=0><TBODY><TR class=msghead vAlign=top><TD class=msgF width="1%" noWrap align=right>From: </TD><TD class=msgFname width="68%" noWrap>rainnix <NOBR></NOBR> </TD><TD class=msgDate width="30%" noWrap align=right>Nov-11 1:25 pm </TD></TR><TR class=msghead><TD class=msgT height=20 width="1%" noWrap align=right>To: </TD><TD class=msgTname width="68%" noWrap>ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft rowSpan=4 width="1%"> </TD><TD class=wintiny noWrap align=right>41111.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt>http://nsp.sg/enhdb-50-years-affordable-struggle
HDB 50 years: From Affordable to Struggle
HDB is celebrating its 50 years of existence recently and has started a round island exhibition of its past achievements. It has even come up with a two part TV series on Channel News Asia to glorify its past achievement. For the first 20 years or so, from 1960 to 1980, HDB has done a relatively impressive job of providing cheap public housing for the majority of Singaporeans.
However, we must recognize the fact that without the Land Acquisition Act that empowered the PAP government to acquire land from many small and medium land owners at dirt cheap prices, it would not be possible for HDB to redistribute these lands in terms of cheap public housing to the masses. Without the sacrifices made by all these land owners, the PAP government would not be able to acquire up to 80% of land in Singapore at an unimaginably low prices.
Thus, it would not be complete to talk about HDB抯 achievement of housing more than 80% of Singaporeans without looking at the power given to the government via the Land Acquisition Act as well as the enormous sacrifices made by many land owners in the past. The Land Acquisition Act and HDB are the pillars of the socialist land reform tool that is aimed solve the problem of inadequate housing for the masses. The government has the privilege and power to forcefully acquire land from many land owners at dirt cheap prices but it also has the social obligation to redistribute these lands to the masses via HDB by providing cheap public housing.
The enormous amount of past PAP抯 political capital is derived from the success of such land reform effort to provide cheap public housing at REAL SUBSIDIZED prices to the masses. When the late Minister Teh Cheang Wan (who has committed suicide after corruption probe) tried to explain about affordability of the new increased prices of HDB in a news article published in Straits Time 1981, he has put up an impressive chart of the breakdowns of costing for the various HDB flats. The costing includes construction and land costs. The selling prices were based on these costing in which different amount of REAL COST SUBSIDIES were given. Most of the time, the subsidies stated were more than the land cost stated.
It is almost impossible for us to know the present costing of any HDB flats built in modern days, least REAL COST SUBSIDIES if any. The pricing mechanism of HDB抯 new flats has been changed drastically, from cost based pricing to resale market based pricing. HDB claims that it is giving 揗ARKET SUBSIDIES?when it prices the new HDB flats at a discount from the resale market prices. I guess I could also tell my customers that they are getting 揗ARKET SUBSIDIES?from me when I give them some discount on the products they buy from me, this is in spite of the fact that I am still earning a profit from the sales.
If the prices of new HDB flats are based on the resale market prices, wouldn抰 it be in the interests of HDB and the PAP government that the prices in resale market to be kept high so that they could sell their new HDB flats at higher prices?
This pricing mechanism is flawed. On the surface, it is supposedly based on 搈arket forces?but could such market force price the flats in accordance to the general affordability of the people? The answer is obviously no. Such pricing mechanism will only capture the availability of liquidity and demand that is created by population growth. It cannot represent the actual 揳ffordability?as it could not reflect real income growth as well as general inflation rate.
In recent years, the prices of the HDB resale market are heavily influenced by:
1. The increase in demand caused by the influx of foreign migrants who became Permanent Residents (PRs).
2. The excess liquidity that brought in by these PRs.
3. The shortage of new HDB flats due to HDB抯 inability to forecast accurately the demand of housing
due to the rapid population growth.
All these factors have nothing to do with the real income growth and affordability of Singaporeans. In fact, it is not difficult to realize that over time, HDB prices have outstripped income growth in the past decades.
During my father抯 generation, a family with only one income could possibly pay off its HDB mortgage loan within 10 years. For my generation, we could only pay off our HDB mortgage loans with two incomes of husband and wife. For our present and next generation, they could only afford their new HDB flat with a 30 years mortgage paid by two income earners! It is very obvious from this general observation that HDB prices have outstripped our wages at least by two times.
Minister Mah Bow Tan whose Ministry in charge of HDB has tried very hard to prove the affordability of HDB by using all sorts of statistics. It has used an inherently bias Median Household Income of HDB flat applicants as well as statistical data comparison between income growth and HDB resale price growth for the period of 1999 to 2009. This comparison is totally inadequate. We should look at the comparison of income versus HDB resale prices for the period of 1990 till 2009 instead. This is the most appropriate comparison because the PAP government started its 揂sset Enhancement Scheme?in early 1990s.
Although the data is incomplete due to the lack of data for the period from 1991 to 1994, but it is very obvious to us that the HDB Resale Price Index has outstripped Median Household Income growth by 200%. I shall also quote the analysis from Lucky Tan抯 blog:
1. From 1990 to 2009, RPI rose to 442 (442% of the base year) but household income rose only to 211 (211% of the base year) i.e. income rose at roughly half the rate property rose over a 20 year period. The RPI was only 34.1 in 1990, today it is 154 i.e. a HDB flat today is 4.5 times the price 20 years ago but household income is only 2.1 times.
2. You will notice the big jump from 1990 to 1995 when the RPI rose from 34.1 to 101.9. That jump occurred just after CPF was liberalised for housing in 1991. During that period household income only went up by 36% but HDB price almost tripled. CPF basically went from funding retirement to funding
home purchases.
The conclusion is very obvious. Due to the fact that HDB prices have outstripped income growth for the past 20 years, it is inevitable that we will be shortage of funds for retirement since almost all of our CPF funds are being used to pay the 30 years mortgage for our flats.
Minister Mah Bow Tan and PAP leaders have not denied the fact that with the present HDB prices which need a 30 years mortgage payment, Singaporeans would have shortage of retirement funds in CPF. CPF would have failed its mission in providing savings for comfortable retirement of most Singaporeans. In fact, Minister Mah has suggested a way out of this situation: Monetize your HDB flats to finance your retirement. It is a very nice sounding way of saying you need to sell off your flats for your retirement!
It is really a cruel suggestion to all hard working Singaporeans who have worked so hard for more than 30 years of their life to sell their flats and lower their quality of live for their retirement just because the cheapest HDB housing in town during their time has sucked up almost all of their CPF contributions which left little for their retirement.
HDB has started out as a good socialist tool for land reform and redistribution. However it seems that half way down the road, it has totally diverted from its original humble but important objective of providing cheap public housing.
It has developed into a monster that overpriced basic housing which results in it cannibalizing on Singaporeans?retirement funds. If we do not stop the PAP government抯 Minister Mah from perpetuating this policy direction of high HDB prices, we would be supporting his plan to get Singaporeans to sell off their HDB flats for retirement in future!
Is this some big achievement for HDB to brag about for its 50 years existence?
Mr Goh Meng Seng
General Secretary
National Solidarity Party
</TD></TR></TBODY></TABLE>
HDB 50 years: From Affordable to Struggle
HDB is celebrating its 50 years of existence recently and has started a round island exhibition of its past achievements. It has even come up with a two part TV series on Channel News Asia to glorify its past achievement. For the first 20 years or so, from 1960 to 1980, HDB has done a relatively impressive job of providing cheap public housing for the majority of Singaporeans.
However, we must recognize the fact that without the Land Acquisition Act that empowered the PAP government to acquire land from many small and medium land owners at dirt cheap prices, it would not be possible for HDB to redistribute these lands in terms of cheap public housing to the masses. Without the sacrifices made by all these land owners, the PAP government would not be able to acquire up to 80% of land in Singapore at an unimaginably low prices.
Thus, it would not be complete to talk about HDB抯 achievement of housing more than 80% of Singaporeans without looking at the power given to the government via the Land Acquisition Act as well as the enormous sacrifices made by many land owners in the past. The Land Acquisition Act and HDB are the pillars of the socialist land reform tool that is aimed solve the problem of inadequate housing for the masses. The government has the privilege and power to forcefully acquire land from many land owners at dirt cheap prices but it also has the social obligation to redistribute these lands to the masses via HDB by providing cheap public housing.
The enormous amount of past PAP抯 political capital is derived from the success of such land reform effort to provide cheap public housing at REAL SUBSIDIZED prices to the masses. When the late Minister Teh Cheang Wan (who has committed suicide after corruption probe) tried to explain about affordability of the new increased prices of HDB in a news article published in Straits Time 1981, he has put up an impressive chart of the breakdowns of costing for the various HDB flats. The costing includes construction and land costs. The selling prices were based on these costing in which different amount of REAL COST SUBSIDIES were given. Most of the time, the subsidies stated were more than the land cost stated.
It is almost impossible for us to know the present costing of any HDB flats built in modern days, least REAL COST SUBSIDIES if any. The pricing mechanism of HDB抯 new flats has been changed drastically, from cost based pricing to resale market based pricing. HDB claims that it is giving 揗ARKET SUBSIDIES?when it prices the new HDB flats at a discount from the resale market prices. I guess I could also tell my customers that they are getting 揗ARKET SUBSIDIES?from me when I give them some discount on the products they buy from me, this is in spite of the fact that I am still earning a profit from the sales.
If the prices of new HDB flats are based on the resale market prices, wouldn抰 it be in the interests of HDB and the PAP government that the prices in resale market to be kept high so that they could sell their new HDB flats at higher prices?
This pricing mechanism is flawed. On the surface, it is supposedly based on 搈arket forces?but could such market force price the flats in accordance to the general affordability of the people? The answer is obviously no. Such pricing mechanism will only capture the availability of liquidity and demand that is created by population growth. It cannot represent the actual 揳ffordability?as it could not reflect real income growth as well as general inflation rate.
In recent years, the prices of the HDB resale market are heavily influenced by:
1. The increase in demand caused by the influx of foreign migrants who became Permanent Residents (PRs).
2. The excess liquidity that brought in by these PRs.
3. The shortage of new HDB flats due to HDB抯 inability to forecast accurately the demand of housing
due to the rapid population growth.
All these factors have nothing to do with the real income growth and affordability of Singaporeans. In fact, it is not difficult to realize that over time, HDB prices have outstripped income growth in the past decades.
During my father抯 generation, a family with only one income could possibly pay off its HDB mortgage loan within 10 years. For my generation, we could only pay off our HDB mortgage loans with two incomes of husband and wife. For our present and next generation, they could only afford their new HDB flat with a 30 years mortgage paid by two income earners! It is very obvious from this general observation that HDB prices have outstripped our wages at least by two times.
Minister Mah Bow Tan whose Ministry in charge of HDB has tried very hard to prove the affordability of HDB by using all sorts of statistics. It has used an inherently bias Median Household Income of HDB flat applicants as well as statistical data comparison between income growth and HDB resale price growth for the period of 1999 to 2009. This comparison is totally inadequate. We should look at the comparison of income versus HDB resale prices for the period of 1990 till 2009 instead. This is the most appropriate comparison because the PAP government started its 揂sset Enhancement Scheme?in early 1990s.
Although the data is incomplete due to the lack of data for the period from 1991 to 1994, but it is very obvious to us that the HDB Resale Price Index has outstripped Median Household Income growth by 200%. I shall also quote the analysis from Lucky Tan抯 blog:
1. From 1990 to 2009, RPI rose to 442 (442% of the base year) but household income rose only to 211 (211% of the base year) i.e. income rose at roughly half the rate property rose over a 20 year period. The RPI was only 34.1 in 1990, today it is 154 i.e. a HDB flat today is 4.5 times the price 20 years ago but household income is only 2.1 times.
2. You will notice the big jump from 1990 to 1995 when the RPI rose from 34.1 to 101.9. That jump occurred just after CPF was liberalised for housing in 1991. During that period household income only went up by 36% but HDB price almost tripled. CPF basically went from funding retirement to funding
home purchases.
The conclusion is very obvious. Due to the fact that HDB prices have outstripped income growth for the past 20 years, it is inevitable that we will be shortage of funds for retirement since almost all of our CPF funds are being used to pay the 30 years mortgage for our flats.
Minister Mah Bow Tan and PAP leaders have not denied the fact that with the present HDB prices which need a 30 years mortgage payment, Singaporeans would have shortage of retirement funds in CPF. CPF would have failed its mission in providing savings for comfortable retirement of most Singaporeans. In fact, Minister Mah has suggested a way out of this situation: Monetize your HDB flats to finance your retirement. It is a very nice sounding way of saying you need to sell off your flats for your retirement!
It is really a cruel suggestion to all hard working Singaporeans who have worked so hard for more than 30 years of their life to sell their flats and lower their quality of live for their retirement just because the cheapest HDB housing in town during their time has sucked up almost all of their CPF contributions which left little for their retirement.
HDB has started out as a good socialist tool for land reform and redistribution. However it seems that half way down the road, it has totally diverted from its original humble but important objective of providing cheap public housing.
It has developed into a monster that overpriced basic housing which results in it cannibalizing on Singaporeans?retirement funds. If we do not stop the PAP government抯 Minister Mah from perpetuating this policy direction of high HDB prices, we would be supporting his plan to get Singaporeans to sell off their HDB flats for retirement in future!
Is this some big achievement for HDB to brag about for its 50 years existence?
Mr Goh Meng Seng
General Secretary
National Solidarity Party
</TD></TR></TBODY></TABLE>
:oIo:
