<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>Sep 5, 2009
AFFORDABILITY OF HOMES
</TR><!-- headline one : start --><TR>Do the criteria reflect reality?
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->I REFER to Monday's letter by the Housing Board, 'How HDB keeps it affordable'.
The HDB states that flat prices are determined by willing buyers and willing sellers. In land-scarce Singapore, the notion of 'willing buyer, willing seller' has little practical meaning.
Suppose I want to buy a flat in Ang Mo Kio to live close to my parents but the HDB is not building any new flats there. I have no choice but to buy from Ang Mo Kio resellers.
Suppose too, I need to set up a family now and cannot wait for the build-to- order scheme to kick in, what choice do I have but to buy from the resale market?
So 'willing buyer, willing seller' is not a realistic picture of what is happening now.
If there are sufficient new flats available for people to choose from, where and when they like, who would be 'willing' to buy from the resale market?
Thus, the notion of 'willing' buyers stems from the reality that the HDB is not building enough new flats where Singaporeans want them.
The reply also stated that the market value of flats is determined by professional valuers. Is this realistic either?
Valuers base their valuations on recent transactions, which is as good as being determined by 'willing buyer, willing seller', with all its associated problems I have described.
In explaining how it arrives at its criteria for supplying new flats, it would be helpful if the HDB could detail how it takes into account the number of immigrants Singapore has admitted, as well as the number of marriages over the period in question.
The inclusion of these statistics will help answer the question of whether supply can meet demand, which Monday's reply did not address.
The HDB uses the international affordability benchmark to rationalise affordability and concludes that homes are priced reasonably.
The international poverty line is commonly defined as US$1 (S$1.44) per day. If Singaporeans earned US$10 per day, would we consider Singaporeans to be well above poverty levels?
Clearly, US$10 per day is extreme poverty by Singapore standards, yet it is well above the international poverty line.
A more realistic benchmark would be to use international city rankings of house price-to-income ratio which is an affordability measure similar to the one used by the HDB.
As the accompanying table illustrates, Singapore has one of the priciest property markets in the world, relative to income - even dearer than Tokyo, Toronto and New York.
Ng Kok Lim
AFFORDABILITY OF HOMES
</TR><!-- headline one : start --><TR>Do the criteria reflect reality?
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->I REFER to Monday's letter by the Housing Board, 'How HDB keeps it affordable'.
The HDB states that flat prices are determined by willing buyers and willing sellers. In land-scarce Singapore, the notion of 'willing buyer, willing seller' has little practical meaning.
Suppose I want to buy a flat in Ang Mo Kio to live close to my parents but the HDB is not building any new flats there. I have no choice but to buy from Ang Mo Kio resellers.
Suppose too, I need to set up a family now and cannot wait for the build-to- order scheme to kick in, what choice do I have but to buy from the resale market?
So 'willing buyer, willing seller' is not a realistic picture of what is happening now.
If there are sufficient new flats available for people to choose from, where and when they like, who would be 'willing' to buy from the resale market?
Thus, the notion of 'willing' buyers stems from the reality that the HDB is not building enough new flats where Singaporeans want them.
The reply also stated that the market value of flats is determined by professional valuers. Is this realistic either?
Valuers base their valuations on recent transactions, which is as good as being determined by 'willing buyer, willing seller', with all its associated problems I have described.
In explaining how it arrives at its criteria for supplying new flats, it would be helpful if the HDB could detail how it takes into account the number of immigrants Singapore has admitted, as well as the number of marriages over the period in question.
The inclusion of these statistics will help answer the question of whether supply can meet demand, which Monday's reply did not address.
The HDB uses the international affordability benchmark to rationalise affordability and concludes that homes are priced reasonably.
The international poverty line is commonly defined as US$1 (S$1.44) per day. If Singaporeans earned US$10 per day, would we consider Singaporeans to be well above poverty levels?
Clearly, US$10 per day is extreme poverty by Singapore standards, yet it is well above the international poverty line.
A more realistic benchmark would be to use international city rankings of house price-to-income ratio which is an affordability measure similar to the one used by the HDB.
As the accompanying table illustrates, Singapore has one of the priciest property markets in the world, relative to income - even dearer than Tokyo, Toronto and New York.
Ng Kok Lim
