Give us HDB flats AT COST, not 30 yrs Mortgage Enslavement!

[jixiaolan]

question:

what about those people who bought their hdb flat on bank loan?

if price of new hdb flats are lowered (whether gradually or otherwise),
won't the banks call in for loan top-ups?

sadly, i think the govt has created something that can only go up - and a bubble must certainly come in a matter of time.

Price will not collapse overnight bearing in mind that it will take 3 years to build and another 5 years to be eligible to sell them in the resale market. Moreover, the amount of units available to resell in the market after 8 years will only constitute a very small percentage to the overall resale market. Hence, the price decrease if any will be gradual and will not cause panic selling in the resale market especially so when hdb is a basic public housing. Allowing young family to purchase their first house at a realistically affordable price based on cost pricing is prudent especially in view of highly volatile economic cycles which affect jobs prospect and stability.

 

[elephanto]

My area 30-year-old 3-room non-corner selling S$300k. Faint.

You must be living in Class 1 mature Estate area like Bt Merah, Marine Parade or Bishan or near CBD, Bras Basah Complex/Waterloo types of HDB ....

leaving 60 yr on remaining lease, 300k is absurd ... maybe asking, but dunno which robert will seal it & make it a new benchmark...

Very worrisome, this is highly unsustainable ...

If got crystal ball, before crash better quickly sell, hold on to cash & rent ... may work out to be more worthwhile ....

But no crystal ball leh ....

 

[aurvandil]

The last time MBT was asked, he told the HDB to shut out any request for information. Do not expect the PAPies to give you anything that can be used against them. Stop being naive.

You will get nothing. It is as simple as that. Stop deluding yourself. And if the sun turns blue and you do get something from them, expect to get nothing useful. Wake up people. This is the PAP you are talking about.

Many people have been saying that the NCMP scheme is useless and the opposition politicans who go in via the NCMP scheme cannot do anything.

I think this would be a good example of what an NCMP can do. It is one thing to "pretend you didn't hear" a member of public who writes in to the HDB.

It is quite another thing to refuse to answer a question like this when asked in Parliament. Minister Wong does not usually entertain requests to release breakdowns of PRs outside of Parliament. However if you read Hansard, you can find that that he does release just information when it is asked in Parliament.

Recently Goh Meng Seng has been pestering Minister Tharman on how he managed to get his $460k which the PAP is supposed to be giving to low cost families. So far no reply. If this was asked to Minister Tharman directly in Parliament via an NCMP, it would be quite hard for Minister Tharman to "siam".

Before making big changes and proposing bold plans, I believe that we should gather all of the information first. For this purpose, I think the NCMP scheme will have a very useful function in Oppostion politics.

 

[ChaoPappyPoodle]

Many people have been saying that the NCMP scheme is useless and the opposition politicans who go in via the NCMP scheme cannot do anything.

I think this would be a good example of what an NCMP can do. It is one thing to "pretend you didn't hear" a member of public who writes in to the HDB.

It is quite another thing to refuse to answer a question like this when asked in Parliament. Minister Wong does not usually entertain requests to release breakdowns of PRs outside of Parliament. However if you read Hansard, you can find that that he does release just information when it is asked in Parliament.

Recently Goh Meng Seng has been pestering Minister Tharman on how he managed to get his $460k which the PAP is supposed to be giving to low cost families. So far no reply. If this was asked to Minister Tharman directly in Parliament via an NCMP, it would be quite hard for Minister Tharman to "siam".

Before making big changes and proposing bold plans, I believe that we should gather all of the information first. For this purpose, I think the NCMP scheme will have a very useful function in Oppostion politics.

I don't mean to be nasty but
1- How old are you?
2- How long have you been following SG politics closely
3- Do you know that NCMPs cannot vote in parliament?
4- Do you know that PAP MPs who put forth questions to query a minintry's policies eventually votes together with his other party mates?
5- Do you know what a party whip is?

 

[Papsmearer]

I am talking about the norm of 12000 new flats each year. It represents about 1.3% of total HDB flats.

Goh Meng Seng

Goh, the total number of flats are NOT on the market every year. 1 million represents the total number of flats, not what is available for sale. The vast majority are not looking to sell, and so the flats that actually trading hands a year is maybe no more than 50,000 a year, of which 12,000 would represent a significant amount. Not 1%.

 

[Papsmearer]

Found this in SLA website:

http://www.sla.gov.sg/htm/new/new2005/new0251.htm

This is the closest I could get, land cost for a condo project with plot ratio of 3.

Plot ratio is 3. Successful tender price is $2615. Divide this by 3, we get about $871.

It means that for a typical 4 room flat of 93sqm, the land cost should be $8100. Add up construction cost of $120000, it will be about $201K. Please bear in mind that this is in terms of commercial pricing of land. You be the judge of how much we should pay for the land.

In 1981, the assumed land cost for HDB was $15K, claiming a 50% discount from market price. (the size of a 4 room flat was bigger then) So if we apply the same logic, land cost for HDB should be about $40K, making total cost for a 4 room flat at $160K. Our young couples are paying $240K top $300K for it now...

Goh Meng Seng

Goh, your calculation is not accurate. If you apportion the land costs to each unit of flats that the HDB builds, it will add no more than $50 to the price. The cost of the land to the HDB is ridiculously low. They obtain the land by expropriating it, and paying historical book value for it. A piece of land with say a market value of $1 million can and have been bought by the HDB for $20,000. If they proceed to build 300 units on this piece of land, u can see how low the land portion would be. $20,000 divide by 300.

 

[Papsmearer]

In situations where we cannot get actual mkt price use of PV of land rent for 99 years can be a good indicator. But of course the interest rate factor makes a huge difference - I am using 3% since HDB loan is 2.6%.

No doubt that HDB is buying land at market value.

And big question is whether the Gov should sell us land at discount or free? My point of view is that Gov should stop saying it is a subsidy but say it is selling at discount to market (not that they are losing money but that they are making less profit). I believe that land prices should be sold at small discount (20%) to market value.

as I had mentioned - no need for radical revamp - just peg all future price increases to rate of inflation or even workers salary and make effort to increase worker's productivity (no more import of FT to push GDP but increase GDP through productivity). If we can maintain a 3 to 5% wage growth on top of inflation and if HDB prices are pegged to inflation, affordabilty should not be an issue 5 to 10 years down the horizon.

The HDB is not buying land at market value. It never has and never will. When it was directly buying land for itself, it was always at historical book value, and in fact, land was not bought but expropriated. Now, the SLA sells land to the HDB at suipposedly market value, but in fact, its an accounting gimmick as both entities are owned by the govt. The SLA now owns the expropriated land. By selling it to the HDB at so call market prices, it has allowed HDB to declare a loss.

 

[Goh Meng Seng]

Goh, the total number of flats are NOT on the market every year. 1 million represents the total number of flats, not what is available for sale. The vast majority are not looking to sell, and so the flats that actually trading hands a year is maybe no more than 50,000 a year, of which 12,000 would represent a significant amount. Not 1%.

You see, that is the point. Most people are not going to sell their flats, whether prices go up or down. The feeling of high value for their flats would be merely "feel good" effect. Secondly, the market is segmented, meaning the impact on the resale and private market would be limited and contained.

Goh Meng Seng

 

[kingrant]

1) Use moral persuasion to 'force' banks not to ask for top ups.
2) Use reserves to repay those that have overpaid, over cost. Amounts can be paid to banks or individuals - need to work out the best way to do this.
3) There is always a solution to any problem. Brave decisions must be made. The good thing is that we have our reserves to help us out of the problem. And without the PAP in power, parliament can actually legislate laws that help the people.

Sorry, but not to burst yr balloon:

1) you must be joking! banks have the least/zilch morals as proven by the global financial crisis;

2) I strongly disagree with using reserves to bail these people out. I have a share -no matter how teensy - and I don't want to use the reserves for this purpose. They may have bought their units to speculate. If they make money, will they have returned to everybody via reserves?

3) It's not a brave solution, but a foolhardy scheme. No elected President will approve that.

 

[elephanto]

I don't mean to be nasty but
1- How old are you?
2- How long have you been following SG politics closely
3- Do you know that NCMPs cannot vote in parliament? CAN VOTE on all motions except for $ Bills & Vote of Confidence Bills
4- Do you know that PAP MPs who put forth questions to query a minintry's policies eventually votes together with his other party mates?
5- Do you know what a party whip is?

You are nasty to anyone who (1) has common sense & go for evolutionary & progressive reform/change (2) do not rave 'VOTE PAPPIES OUT NOW!'

For this purpose, I think the NCMP scheme will have a very useful function in Oppostion politics.

I second the point you are making.
Asking for relevant info to be publicized is vital for an informed citizenry.
People who discount all these are the myopic brats who rather starve than have half a loaf. This the mentality that drives some into terrorism when they can no longer deal with their misery & seething hatred.

Sorry, but not to burst yr balloon:

1) you must be joking! banks have the least/zilch morals as proven by the global financial crisis;

2) I strongly disagree with using reserves to bail these people out. I have a share -no matter how teensy - and I don't want to use the reserves for this purpose. They may have bought their units to speculate. If they make money, will they have returned to everybody via reserves?

3) It's not a brave solution, but a foolhardy scheme. No elected President will approve that.

very gallant of you & I share your view. But unfortunately the subject claimed he has placed us under IGNORE so I gather he won't be educated not that he is teacheable in any case.....

 

[coolguy]

I support Mr Goh.
A very clear line has to be drawn between affordable housing for the middle and low income group versus the housing for investment motives.
It has to stop now.
If not,a national crisis similiar to the US credit crisis will occur should the bubble burst one day.
By then the scenario will be just as the some of you descirbed here.

 

[aurvandil]

If got crystal ball, before crash better quickly sell, hold on to cash & rent ... may work out to be more worthwhile ....

But no crystal ball leh ....

No need crystal ball. Just watch TV. When you see

1) Developers advertising like mad
2) Offering all kinds of gimmicks (absorb the recently imposed sellers's stamp duty)
3) Trying desperately to give the impression on TV that the market is still going up

You know units not really moving and market has more ore less reached the top.

 

[laidback]

I say we keep the present formula of pricing HDB flats to ensure housing market stability and to protect the asset values of current HDBs, but to introduce a new way of reducing the debt burden of young Singaporeans at the same time. This solution will also help address the falling Total Fertility Rate amongst young couples.

My solution is to give a cash grant to first time buyers who bears children while servicing their HDB loan.

Say for instance they buy a high end 500,000 4 room BTO flat in Dawson:

First child they bear: GOVT pays out S$60,000 to their outstanding HDB loan
Second child: S$80,000
Third child: S$100,000

No complicated eligibility rules, same rules as those who qualify to purchase HDB direct with household income below 8,000.

I would rather taxpayers monies be given to young SINGAPOREAN couples to grow our native Singaporean population then to pay for FT education, healthcare subsidies, subsidized rentals and so on.

Increased revenue streams from the casinos can also be channelled into good moral causes like this

 

[Goh Meng Seng]

Haha, this is an interesting idea.

Goh Meng Seng

I say we keep the present formula of pricing HDB flats to ensure housing market stability and to protect the asset values of current HDBs, but to introduce a new way of reducing the debt burden of young Singaporeans at the same time. This solution will also help address the falling Total Fertility Rate amongst young couples.

My solution is to give a cash grant to first time buyers who bears children while servicing their HDB loan.

Say for instance they buy a high end 500,000 4 room BTO flat in Dawson:

First child they bear: GOVT pays out S$60,000 to their outstanding HDB loan
Second child: S$80,000
Third child: S$100,000

No complicated eligibility rules, same rules as those who qualify to purchase HDB direct with household income below 8,000.

I would rather taxpayers monies be given to young SINGAPOREAN couples to grow our native Singaporean population then to pay for FT education, healthcare subsidies, subsidized rentals and so on.

Increased revenue streams from the casinos can also be channelled into good moral causes like this

 

[longbow]

I was refering to HDB buying land from SLA.

Actually it is pointless to determine what is cost of land for Gov. A lot of the land that they have came with independence (FOC so should they give it for FOC?) and a lot came with expropriation. But gone are the days where they can just take your land for peanuts. I believe that nowadays they pay you market value.

The whole point is should they give land for free to build HDB? IS HDB land in Sengkang vs Toa Payoh vs Bukit Merah worth the same = $0 if cost to Gov was $0?

Of course not. They should recognize land at market value but given that HDBs are "subsidized housing" account for it by applying the subsidy.

The HDB is not buying land at market value. It never has and never will. When it was directly buying land for itself, it was always at historical book value, and in fact, land was not bought but expropriated. Now, the SLA sells land to the HDB at suipposedly market value, but in fact, its an accounting gimmick as both entities are owned by the govt. The SLA now owns the expropriated land. By selling it to the HDB at so call market prices, it has allowed HDB to declare a loss.

 

[longbow]

I would be a very unhappy shareholder if $ was used for moral persuasion. I want my dividend. After that I may chose to give it to chairty but that is another matter.

Sorry, but not to burst yr balloon:

1) you must be joking! banks have the least/zilch morals as proven by the global financial crisis;

2) I strongly disagree with using reserves to bail these people out. I have a share -no matter how teensy - and I don't want to use the reserves for this purpose. They may have bought their units to speculate. If they make money, will they have returned to everybody via reserves?

3) It's not a brave solution, but a foolhardy scheme. No elected President will approve that.

 

[longbow]

They just listed Snegkang BTO.

3 rm $128K 4 rm $216K Sounds ok to me. Based on building cost of about $163K per flat looks like their 3rm is close to cost or below costs - even after factoring in land.

For the 3rm at $128K I apply the $40K grant = $88K. THAT IS BELOW COST!



Elections are around the corner.

 

[longbow]

You seem not to realize that private and public (HDB) prop market are linked. So if HDB drop in prices (huge drop as per your plan) resale and pte prop will follow suit. Indeed, the banks will ask for TOP up and that will create a recession. So does not matter if HDB flats are financed using HDB loans - pte condo market and many HDB resales use commercial bank loans.

Point is:

1) Make new flats affordable for new buyers while maintain asset prices. Pointless to calculate number of years to pay using salary at the start. Most Singaporeans make more money the more they work. So initially it might be 30 years but if we recalculate again in 10 years things are different. That is why we see so many people sell their flat in 5 years and upgrade to condo. Their income has increased!

2) Those that cannot afford subsidise more but they must still have skin in game. No such thing as free flat. As it is the recent Sengkang BTO 3 rm is probably selling at below building and land costs


3) Focus on increasing salary and productivity.

Most HDB flats are financed by HDB.

The valuation of old flats is based on resale market.

Yes, you are right. If we do not take steps to stop the runaway prices in the long run, if there is a major crash, many more people will be affected. It will take generations before we could clear up this mess created by PAP.

Goh Meng Seng

 

[Goh Meng Seng]

Well, it takes just a little bit of political competition to kick some butts there.

Goh Meng Seng

They just listed Snegkang BTO.

3 rm $128K 4 rm $216K Sounds ok to me. Based on building cost of about $163K per flat looks like their 3rm is close to cost or below costs - even after factoring in land.

For the 3rm at $128K I apply the $40K grant = $88K. THAT IS BELOW COST!



Elections are around the corner.

 

[Goh Meng Seng]

As I and some other people here have explained, due to the market segmentation, the impact on the resale and private markets will be minimum.

Well, the range of indicative prices are still high, with 3 room flat at $171K and 4 room flat at $271K

Goh Meng Seng

You seem not to realize that private and public (HDB) prop market are linked. So if HDB drop in prices (huge drop as per your plan) resale and pte prop will follow suit. Indeed, the banks will ask for TOP up and that will create a recession. So does not matter if HDB flats are financed using HDB loans - pte condo market and many HDB resales use commercial bank loans.

Point is:

1) Make new flats affordable for new buyers while maintain asset prices. Pointless to calculate number of years to pay using salary at the start. Most Singaporeans make more money the more they work. So initially it might be 30 years but if we recalculate again in 10 years things are different. That is why we see so many people sell their flat in 5 years and upgrade to condo. Their income has increased!

2) Those that cannot afford subsidise more but they must still have skin in game. No such thing as free flat. As it is the recent Sengkang BTO 3 rm is probably selling at below building and land costs


3) Focus on increasing salary and productivity.