Many people blame FTs for coming here and jacking up the prices of the HDB flats. I am no lovers of FTs, but in this case, they are only the scape goat of the PAP. The real reason behind the increase in price is simply because the HDB is a monopoly and they can charge anything they want. And they want to and need to make a large profit to help offset all the GIC and Temasek losses.
People use anecdotal evidence to say the large influx of FTs caused all these problems. The HDB is less than forthcoming with statistics to back this up, and really, they will not do it anyway. It is acknowledge that FTs now comprised 36% of the Singapore population. But did they really cause the upsurge in HDB prices? Lets examine the composition of these FTs.
According to Wong Kan Seng, there are 1.3 million non residents living here. In other words, these people are not PRs and they are not citizens, they are just transients. These people do not qualify to buy a HDB flat, whether it is resale or new. So, we forget about them.
According to the DPM from 2000 -2008, an average annual number of about 44,000 FTs were granted PRs. Now of these 44,000 FTs per year, not all have the desire to purchase HDB flats. Indeed, many of the 44,000 are children of parents who obtained PRs. Most do not have the means to purchase HDB flats due to the lower wages they accept. In addition, if they are single, they do not qualify under the HDB family unit rule, and cannot buy anyway. The PRs that are paid well will buy a private a condo which has much less restrictions. In fact, PRs are not allowed to buy new HDB flats anyway. In order to buy a new flat, u have to be a citizen or one the applicants needs to be a PR. The ICA annual report indicates that only 22,000 people were granted citizenships in 2008, 16,000 in 2007 and 13,900 in 2006. Again whether these new citizens have the desire, financial ability, family unit or any other eligibility requirement to purchase is really in doubt. Did some of them buy HDB flats, sure they did. But in the numbers to cause a such a price increase, not likely. My estimate that new PRs/Citizens accounted for maybe 3000 flats a year, both new and resale.
Why than the increase in price? From 1981 to 1985, HDB build an average of 37,800 flats every year. From 1986 to 1990, they build an average of 24,000 units a year. From 1991 to 1995, they build an average of 19,800 units. From 1996-2000, they build an average of 31,600 flats a year. From 2001 to 2005, they build an average of only 11,000 flats a year. In 2006, only 2733 flats were build and in 2007, only 5063 flats were build. This begs the question of why so few flats were build. How can multi million dollar ministers be so myopic that a paltry 5000 flats be build in a year. U can see the trend was to deliberately build fewer flats every year. Of these 5063 flats build, not all are for sale, as the HDB builds flats to rent also. So, the percentage actually for sale is lower than these already low numbers. Even if there were no FTs allowed into S'pore the number of flats build cannot keep up with the natural population growth.
The wholesale growth in FTs exacerbated the situation. Here, we have 1.3 million non residents running around, they cannot buy flats, but they need a place to live. True, some of them are housed in company dorms, but others have to rent. Rental prices have jumped sky high as a result of this demand. Many Singaporeans, NOT FTs, viewed this an an opportunity to profit by purchasing more than one flat. They might for example purchase a private condo and than a HDB flat, renting out the flat for high rents to cover their mortgages. In other words, they are speculating. The HDB also contributes to this because now, with the deliberate shortage they have caused, the resale market is going through the roof, and hence justify their price increase in new flats. They know the the influx of FTs were on its way. They were told the PRs and Citizens would increase every year, yet they build so few units.
So, I think the blame on FTs is wholely misplaced. An examination of what statistics there is indicate the combination of HDB and citizen/PR speculators are to blame. The HDB and the Minister for National Development Mah Bow Tan (who overseas the HDB), need to explain how on earth they can build so few units given such a large advance warning of the govt's. FT policy.
People use anecdotal evidence to say the large influx of FTs caused all these problems. The HDB is less than forthcoming with statistics to back this up, and really, they will not do it anyway. It is acknowledge that FTs now comprised 36% of the Singapore population. But did they really cause the upsurge in HDB prices? Lets examine the composition of these FTs.
According to Wong Kan Seng, there are 1.3 million non residents living here. In other words, these people are not PRs and they are not citizens, they are just transients. These people do not qualify to buy a HDB flat, whether it is resale or new. So, we forget about them.
According to the DPM from 2000 -2008, an average annual number of about 44,000 FTs were granted PRs. Now of these 44,000 FTs per year, not all have the desire to purchase HDB flats. Indeed, many of the 44,000 are children of parents who obtained PRs. Most do not have the means to purchase HDB flats due to the lower wages they accept. In addition, if they are single, they do not qualify under the HDB family unit rule, and cannot buy anyway. The PRs that are paid well will buy a private a condo which has much less restrictions. In fact, PRs are not allowed to buy new HDB flats anyway. In order to buy a new flat, u have to be a citizen or one the applicants needs to be a PR. The ICA annual report indicates that only 22,000 people were granted citizenships in 2008, 16,000 in 2007 and 13,900 in 2006. Again whether these new citizens have the desire, financial ability, family unit or any other eligibility requirement to purchase is really in doubt. Did some of them buy HDB flats, sure they did. But in the numbers to cause a such a price increase, not likely. My estimate that new PRs/Citizens accounted for maybe 3000 flats a year, both new and resale.
Why than the increase in price? From 1981 to 1985, HDB build an average of 37,800 flats every year. From 1986 to 1990, they build an average of 24,000 units a year. From 1991 to 1995, they build an average of 19,800 units. From 1996-2000, they build an average of 31,600 flats a year. From 2001 to 2005, they build an average of only 11,000 flats a year. In 2006, only 2733 flats were build and in 2007, only 5063 flats were build. This begs the question of why so few flats were build. How can multi million dollar ministers be so myopic that a paltry 5000 flats be build in a year. U can see the trend was to deliberately build fewer flats every year. Of these 5063 flats build, not all are for sale, as the HDB builds flats to rent also. So, the percentage actually for sale is lower than these already low numbers. Even if there were no FTs allowed into S'pore the number of flats build cannot keep up with the natural population growth.
The wholesale growth in FTs exacerbated the situation. Here, we have 1.3 million non residents running around, they cannot buy flats, but they need a place to live. True, some of them are housed in company dorms, but others have to rent. Rental prices have jumped sky high as a result of this demand. Many Singaporeans, NOT FTs, viewed this an an opportunity to profit by purchasing more than one flat. They might for example purchase a private condo and than a HDB flat, renting out the flat for high rents to cover their mortgages. In other words, they are speculating. The HDB also contributes to this because now, with the deliberate shortage they have caused, the resale market is going through the roof, and hence justify their price increase in new flats. They know the the influx of FTs were on its way. They were told the PRs and Citizens would increase every year, yet they build so few units.
So, I think the blame on FTs is wholely misplaced. An examination of what statistics there is indicate the combination of HDB and citizen/PR speculators are to blame. The HDB and the Minister for National Development Mah Bow Tan (who overseas the HDB), need to explain how on earth they can build so few units given such a large advance warning of the govt's. FT policy.
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