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

[longbow]

Indeed. HDB pricing should reflect affordability. Like they say cannot have cake and eat it.

The less fortunate should be able to buy at cost or below cost while the more affluent should be expected to pay more for 4rm, even more for 5 rm and even more for good location. In a way, the 4 and 5 rm buyers are helping subsidize the 2 and 3 rm flats.

Kind of like what society is about. You tax the rich more to help out the less fortunate.

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

Goh Meng Seng

 

[longbow]

Info from HDB

Catch the lifestyle you prefer at HDB's two new Build-To-Order (BTO) projects in Sengkang and Sembawang.

Home to 3-, 4- and 5-room Standard flats, Fernvale Ridge in Sengkang offers a tranquil setting with modern conveniences within easy reach. You are only a short stroll from Layar and Fernvale LRT stations and Fernvale Point. Besides these, you can also easily access other amenities within Sengkang such as Compass Point, Rivervale Plaza and Sengkang Sports and Recreation Centre. For motorists, expressways are just minutes away. Prices* begin at $128,000 for a 3-room flat, $216,000 for a 4-room flat and $281,000 for a 5 room flat.
At Sembawang RiverLodge, you can choose from 3- and 4-room Standard flats. An eating house, supermarket and childcare centre are conveniently located within the development. You are also within easy reach of the wide variety of lifestyle offerings in the town such as Sun Plaza, Sembawang Mart and Jelutung Harbour Park. Public transport amenities and expressways are also within easy access. Prices* start from $128,000 for a 3-room flat and $212,000 for a 4-room flat.

Apply online for your choice town by 29 Mar 2010.

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

 

[longbow]

Well I guess then it is differing point of views which is fine. I believe that new HDB flats prices have impact on resale prices while you believe that there is no impact.

My reason is this. The price of a new resale flat is more than the price of a new BTO flat in the same estate. Why? Because with BTO you have to get Q number, not sure what the view is like and wait for 3 years. With resale you get to see the actual unit and can move in right away. Hence the premium over new flats. For couples wanting to start a family 3 years is a long time.

In Sengkang a new BTO flat goes for $220K and a resale in the next block goes for $350K. That is the $130K premium for not having to wait. If we were to drop prices of new Sengkang flat to $100K would buyers still be willing to pay $350K for resale in the next block given that the premium is now $250K! I think not. The owner of resale would have to drop price to $200K before buyers would be interested.

Many Singaporeans can afford that $100K premium however the resale market has been inflated with all the new PRs who cannot go for the new flats but can only buy from resale. Cannot blame the PRs too. The influx of PRs have driven up rental prices and their calculation is if my rent is $2K a month, I might as well buy a place for $350K and hopefully make some money out of it in terms of price appreciation (at worst insead of $2K going to landlord it goes to flat payment).

I even know of some expats that are given a housing rental allowance of $5K. Company does not care where they rent. So many just pick up a resale unit and they can payup the flat in 5 years! This adds to the froth on top of the premium.

hence we see complaints from the Singaporeans wanting immediate flat.

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

 

[Goh Meng Seng]

The composition of demand is different in resale vs new flat buyers.

I am suggesting the cost price for first time new flat buyers only. Thus, it will not have any impact on upgraders.

The resale market demand consists of upgraders, singles, PRs and of course, some first time buyers. I do not have any firm data on the composition here but if first time buyers that prefer to buy resale, they would most probably from higher income group. Would they want to wait and end up in some new estates instead of a matured estate? Maybe 50% of this group would.

Thus, as I say, there will be some impact on resale market demand but the impact may not be as big as you think. Before this market subsidy pricing mechanism comes along, resale and private property markets still strive. That is the equilibrium we were having back then.

Goh Meng Seng

Well I guess then it is differing point of views which is fine. I believe that new HDB flats prices have impact on resale prices while you believe that there is no impact.

My reason is this. The price of a new resale flat is more than the price of a new BTO flat in the same estate. Why? Because with BTO you have to get Q number, not sure what the view is like and wait for 3 years. With resale you get to see the actual unit and can move in right away. Hence the premium over new flats. For couples wanting to start a family 3 years is a long time.

In Sengkang a new BTO flat goes for $220K and a resale in the next block goes for $350K. That is the $130K premium for not having to wait. If we were to drop prices of new Sengkang flat to $100K would buyers still be willing to pay $350K for resale in the next block given that the premium is now $250K! I think not. The owner of resale would have to drop price to $200K before buyers would be interested.

Many Singaporeans can afford that $100K premium however the resale market has been inflated with all the new PRs who cannot go for the new flats but can only buy from resale. Cannot blame the PRs too. The influx of PRs have driven up rental prices and their calculation is if my rent is $2K a month, I might as well buy a place for $350K and hopefully make some money out of it in terms of price appreciation (at worst insead of $2K going to landlord it goes to flat payment).

I even know of some expats that are given a housing rental allowance of $5K. Company does not care where they rent. So many just pick up a resale unit and they can payup the flat in 5 years! This adds to the froth on top of the premium.

hence we see complaints from the Singaporeans wanting immediate flat.

 

[Papsmearer]

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

What u are doing is typical PAP bullshit, and any oppo here on this thread will be wise to avoid such crap. U are mixing 2 problems, and both problems are essentially separate issues. The low fertility rate can be addressed in many ways. this is not a unique problem to s'pore, other industrialised oountries have the same problem. How have they addressed it? Giving one year maternity leave while legislating the employer guarantee their old position at the old pay when then come back. Give Paternity leave with the same rules. tax write off for childcare expenses. Automatic child tax credit in the thousands of dollars. Pay mothers on maternity leave a portion of their pay every month. Notice how none of these involve real estate. In S'pore, u can ad the following. Full reimbursement of maids that are assigned tolook after children. Allowing CPF to be taken out during maternity leave so there is some money coming in. Less presurrized education system. etc.

The issue of cots of housing is different all together, and that is being discussed at lenght on this thread.

 

[Papsmearer]

The composition of demand is different in resale vs new flat buyers.

I am suggesting the cost price for first time new flat buyers only. Thus, it will not have any impact on upgraders.

The resale market demand consists of upgraders, singles, PRs and of course, some first time buyers. I do not have any firm data on the composition here but if first time buyers that prefer to buy resale, they would most probably from higher income group. Would they want to wait and end up in some new estates instead of a matured estate? Maybe 50% of this group would.

Thus, as I say, there will be some impact on resale market demand but the impact may not be as big as you think. Before this market subsidy pricing mechanism comes along, resale and private property markets still strive. That is the equilibrium we were having back then.

Goh Meng Seng

Goh, u are truly not getting it. As an oppo member, u cannot afford to alienate any segment. If you propose this, the first time homebuyers may like u and vote for u if for no other reason they may get a cheap flat when the dust is settled. But you would have disenfranchised the rest of the voters, votes that u need badly. In your mind, there will be no price drop or the negative effects are manageable, that may not be the mindset of the rest of the voters who might think their property price will fall dramatically. If you want to incorporate cheap housing into your party platform, do it for every one. I propose u adopt the following:

Determine the actual cost of each HDB flat (the HDB will have those numbers, or there are sources around that can determine that). Ignore the land component because on leases, the land does not belong to the tenants anyway. REBATE EVERYONE THE AMOUNT OF MONEY THEY OVERPAID FOR THEIR FLAT. And I mean everyone. The rebated money will be applied towards the paying down of their mortgage. If there is extra left over, than it goes to their CPF account. This will help prevent run away inflation. At the same time, start selling flats to everyone, including first time home buyers at cost. Legislate that all resale flat sellers must disclose the real cost of their flats to the buyers. that way, there is full knowledge and disclosure, and whether the buyers want to pay the extra price is up to them.

The funds to pay for the rebates will come from the national reserves. After all, the overcharging of HDB flats contributed to the accumulation of the national reserves. If there are not enough funds to pay for the rebates, the new govt. can investigate and I am sure some PAP assholes will go to jail.

Inform all PRs and new citizens that if they buy a (now at-cost) flat, and they do not move their families from their homelands to singapore and occupy this flat within 6 months of obtaining the flat, they will have to give up the flat and find accomodations elsewhere. This will discourage the speculative element of the FTs and encourage real serious people to move here.

Abandon the BTO and build a set minimum number of flats every year, say 10,000. regardless of whether the HDB thinks there is a demand for it or not.

Hope u consider something like the above.

 

[eatshitndie]

public housing, as opposed to privately-funded housing, is best based on "cost-plus", not "at cost". for anything to work and thrive in this world, we need incentives and surplus-driven motivation. even if it is not for profit, any organization would do better if there's something positive to show at the end of each financial year. the surplus can always be set aside in a reserve fund for future downturns or sudden emergencies, which the best planning can never predict. by running a cost-based entity, you're encouraging a bureaucracy that will only grow and feed itself into an untouchable, indigestible, incomprehensible imperial blob that will eventually lose its direction and original purpose. it will need a more bloated budget year after year to justify its existence. think it over, at least on the basics of your naive proposals. and if you can't even grasp the basics of what motivates people, may laksa, bryani and mee siam help you all.

 

[longbow]

I cannot agree with you more. But I feel that within this cost plus philosophy we should use some of the surplus to subsidize the bottom 15 percent who really need the help. NO free housing but pay $300 to $400 a month mortagage payment towards your 2 rm flat. I like the idea of owners putting skin into the game.

Given the cost of living/housing in Singapore there will be that bottom 15% that will require heavier subsidies, failing which they will be in subsidied rental flats.

public housing, as opposed to privately-funded housing, is best based on "cost-plus", not "at cost". for anything to work and thrive in this world, we need incentives and surplus-driven motivation. even if it is not for profit, any organization would do better if there's something positive to show at the end of each financial year. the surplus can always be set aside in a reserve fund for future downturns or sudden emergencies, which the best planning can never predict. by running a cost-based entity, you're encouraging a bureaucracy that will only grow and feed itself into an untouchable, indigestible, incomprehensible imperial blob that will eventually lose its direction and original purpose. it will need a more bloated budget year after year to justify its existence. think it over, at least on the basics of your naive proposals. and if you can't even grasp the basics of what motivates people, may laksa, bryani and mee siam help you all.

 

[longbow]

Wah lau cannot have retrospective application lah. Then the owner who paid $30K for his flat which cost $25K would only get back $5K while the person who paid $300K would get back $100K if his flat cost $200K. What about flats in whoch HDB sold for loss? Owner must pay back?

Also Land has a value even if it is under a lease.

Goh, u are truly not getting it. As an oppo member, u cannot afford to alienate any segment. If you propose this, the first time homebuyers may like u and vote for u if for no other reason they may get a cheap flat when the dust is settled. But you would have disenfranchised the rest of the voters, votes that u need badly. In your mind, there will be no price drop or the negative effects are manageable, that may not be the mindset of the rest of the voters who might think their property price will fall dramatically. If you want to incorporate cheap housing into your party platform, do it for every one. I propose u adopt the following:

Determine the actual cost of each HDB flat (the HDB will have those numbers, or there are sources around that can determine that). Ignore the land component because on leases, the land does not belong to the tenants anyway. REBATE EVERYONE THE AMOUNT OF MONEY THEY OVERPAID FOR THEIR FLAT. And I mean everyone. The rebated money will be applied towards the paying down of their mortgage. If there is extra left over, than it goes to their CPF account. This will help prevent run away inflation. At the same time, start selling flats to everyone, including first time home buyers at cost. Legislate that all resale flat sellers must disclose the real cost of their flats to the buyers. that way, there is full knowledge and disclosure, and whether the buyers want to pay the extra price is up to them.

The funds to pay for the rebates will come from the national reserves. After all, the overcharging of HDB flats contributed to the accumulation of the national reserves. If there are not enough funds to pay for the rebates, the new govt. can investigate and I am sure some PAP assholes will go to jail.

Inform all PRs and new citizens that if they buy a (now at-cost) flat, and they do not move their families from their homelands to singapore and occupy this flat within 6 months of obtaining the flat, they will have to give up the flat and find accomodations elsewhere. This will discourage the speculative element of the FTs and encourage real serious people to move here.

Abandon the BTO and build a set minimum number of flats every year, say 10,000. regardless of whether the HDB thinks there is a demand for it or not.

Hope u consider something like the above.

 

[Papsmearer]

public housing, as opposed to privately-funded housing, is best based on "cost-plus", not "at cost". for anything to work and thrive in this world, we need incentives and surplus-driven motivation. even if it is not for profit, any organization would do better if there's something positive to show at the end of each financial year. the surplus can always be set aside in a reserve fund for future downturns or sudden emergencies, which the best planning can never predict. by running a cost-based entity, you're encouraging a bureaucracy that will only grow and feed itself into an untouchable, indigestible, incomprehensible imperial blob that will eventually lose its direction and original purpose. it will need a more bloated budget year after year to justify its existence. think it over, at least on the basics of your naive proposals. and if you can't even grasp the basics of what motivates people, may laksa, bryani and mee siam help you all.

I am not sure what u are saying here. Anything that is public is by its very definition non profit hence "at cost". Of course, every public org in the world has its bureaucracy and has varying degrees of bloatedness. Its whether there is political will and political oversight that prevents it from getting out of hand. U can't just privatise everything.

 

[eatshitndie]

I am not sure what u are saying here. Anything that is public is by its very definition non profit hence "at cost". Of course, every public org in the world has its bureaucracy and has varying degrees of bloatedness. Its whether there is political will and political oversight that prevents it from getting out of hand. U can't just privatise everything.

there are private non-profit entities, and there are public non-profit entities. non-profit does not equate to "at cost". most well-run not-for-profit entities will teach you about running with a surplus and having a positive cash flow. there's nothing preventing a not-for-profit entity to operate like a well-oiled, well-executed, surplus-incurring enterprise. in fact, such best-run entities on the planet today will tell you the incentives for being on top are tied directly to surpluses, and rewards and bonuses awarded from these surpluses are given to personnel who participated and contributed to the performance. and what the feck is "cost" anyway? cost does not always comprise the basic cost of material, land and labor. there's cost of inventory, overhead, tax (not included if tax-exempt), debt, lawsuits and liability, ammortization, etc. it will need a whole year to discuss accounting standards and methods, pre-tax and post-tax if applicable. instead of throwing smoke and twisting mirrors here with simplistic swipes of some grand numbers, it's better for all if you blokes set the fundamental accounting concepts in (their rightful) place like some did (longbow has more of this to offer i think) before shooting from the proverbial hip. otherwise, in total agreement with you, some would-be politicians stand a chance of disenfranchising many who think with their pockets by grandstanding a not-so-well-thought-out vote gathering miscue.

 

[eatshitndie]

I cannot agree with you more. But I feel that within this cost plus philosophy we should use some of the surplus to subsidize the bottom 15 percent who really need the help. NO free housing but pay $300 to $400 a month mortagage payment towards your 2 rm flat. I like the idea of owners putting skin into the game.

Given the cost of living/housing in Singapore there will be that bottom 15% that will require heavier subsidies, failing which they will be in subsidied rental flats.

sg is well known in the world to operate with a surplus, even if it's a public entity. the problem with these mini empires in sg is wise surplus management. they keep hoarding surpluses more than they dish out to balance market forces and tame the beast so to speak. it would be better if the surplus are kept (silo'ed) within the coffers of the said entity, so the officers or highly motivated management can manage the funds independently and solely for the survival and smooth operation of the outfit. otherwise, if there is no surplus and they keep borrowing funds or getting bailouts from state reserves, banks or the treasury, bad habits beget bad habits, poor execution begets poor execution, and very soon it will spiral into a black hole of no return. (so much for the california and u.s. examples. ) it is a problem if sg pools all surpluses from such public entities and hoards them in a single fund or reserve, managed by a singularity with multiple appetities. (again, the california and u.s. examples come to mind. ) it will not only get hoarded, it will be raided! and none of that money will go back into surplus-generating entities. these entities will then be left dry to fend for themselves, and what's the easy way out before begging for rescue funds? raise prices. and yes, buyers need to deposit their respective pound of flesh in such an investment and share the love.

 

[Glaringly]

.

My reason is this. The price of a new resale flat is more than the price of a new BTO flat in the same estate. Why? Because with BTO you have to get Q number, not sure what the view is like and wait for 3 years. With resale you get to see the actual unit and can move in right away. Hence the premium over new flats. For couples wanting to start a family 3 years is a long time.

In Sengkang a new BTO flat goes for $220K and a resale in the next block goes for $350K. That is the $130K premium for not having to wait. If we were to drop prices of new Sengkang flat to $100K would buyers still be willing to pay $350K for resale in the next block given that the premium is now $250K! I think not. The owner of resale would have to drop price to $200K before buyers would be interested.

You are basing on the premise of all New Flats selling at cost?

If we are base on the idea of 2 different market segments where 50% of new flats are cater to the new segment. And assuming in the new segment, there is no possibilities of capital gains, how does it then affect the current resale market, where you still have the other 50% of new flats feeding it?

I can only see positives, win win situation.

 

[aurvandil]

So far in this discussion, there have been a large number of interesting ideas of how we can better improve the pricing of HDB flats. IMHO, the problems with many of these ideas are:

1) They try to achieve other objectives than providing affordable housing and thus run into unwanted consequences.

2) They benefit one group at the expense of others (e.g. existing HDB owners vs new HDB owners).

The following is my proposal of how we can improve the pricing of HDB flats. As it will be a big radical change, we should do this AFTER the data/ methodology on how much it costs to build HDB flats has been released.

My proposal is :

1) Adopt a secure Internet auction on INDIVIDUAL HDB units. Buyers would choose the unit they are interested in and bid for it.

2) The reserve price of the auction would be construction cost price (minus land cost) of the HDB flat. The bidding for the flats would start at the reserve price. The data/methodology to determine the construction cost price would be published on the HDB web site.

3) To prevent abuse, bidders would need to make a deposit (e.g. $10,000) before they can bid. During the auction, bidders can amend their bids. If the bidder is successful but wishes to subsequently withdraw, the deposit will be forfeited.

4) HDB would publish all data on the bids so that people making this important decision can study the data and make an informed decision.

By adopting an auction mechanism, we resolve many of the problems of the existing pricing system. The main benefits are:

1) People who want choice units (high floor, morning sun, good feng shui) can get them by paying more.

2) People who are not so well off, can obtain a less favorable unit at a price close to the cost price of the HDB flat.

3) Getting the place which you are going to live in for the next 30 years will no longer be based on a lucky draw.

4) The land price will be more accurately and fairly priced. HDB flats near highly prized amenities like MRT will attract higher bids. Conversely HDB units in “ulu” locations will be attract lower bids to reflect the lower value of the flats.

5) The price of existing HDB flats will not collapse.

6) Taxpayers will not face higher taxes as the system is revenue neutral.

7) PAP can stop blaming Singaporeans for being “choosey” as the unpopular flats will be priced at the correct level to clear them from the HDB inventory.

 

[elephanto]

So far in this discussion, there have been a large number of interesting ideas ....
1) Adopt a secure Internet auction on INDIVIDUAL HDB units. Buyers would choose the unit they are interested in and bid for it.
.....
3) To prevent abuse, bidders would need to make a deposit (e.g. $10,000) before they can bid.

Nice try.

Concerns:-
1) In spite of appearances, are Sporeans that IT-savvy & ready for mass market ebay type of bidding ? I don't think so.
2) Massive server & bandwidth to prevent crash .... ok lah tis is lesser issue
3) Like the COE experience, open bidding sometimes doesn't ensure freeplay of DD & SS. All kinds of scams can happen
4) In the pursuit of equity, helping the less well-to-do, a bidding system seems not the best means to the above progressive ends ....

No wonder it is easier & more populist to simply yell 'VOTE THE PAPPIES OUT' from the rooftop every now & then !

 

[aurvandil]

Nice try.

Concerns:-
1) In spite of appearances, are Sporeans that IT-savvy & ready for mass market ebay type of bidding ? I don't think so.
2) Massive server & bandwidth to prevent crash .... ok lah tis is lesser issue
3) Like the COE experience, open bidding sometimes doesn't ensure freeplay of DD & SS. All kinds of scams can happen
4) In the pursuit of equity, helping the less well-to-do, a bidding system seems not the best means to the above progressive ends ....

No wonder it is easier & more populist to simply yell 'VOTE THE PAPPIES OUT' from the rooftop every now & then !

Let's not be so ambitious here. I am not saying it is the best or the perfect system. It is however much better than Mr Mah

1) Flashing you a number
2) Refusing to tell you how he got it
3) Using strange statistics to convince you it is affordable
4) Scolding you for being "choosey" for not buying his unpopular flats

 

[cheekenpie]

You wan cost price? they will reduce min salary cap to 5k per household.

You wan cost price? they will control resale prices (no more COV)

You wan cost price? bto will take 7 yrs to build

You wan cost price? once own HDB cannot by private

How to win??

 

[elephanto]

Let's not be so ambitious here. I am not saying it is the best or the perfect system. It is however much better than Mr Mah

T O T A L L Y A G R E E !
That's why I said nice try, everyone should chip in with ideas & let the cream float to the top (hopefully .... it may also lead to quarrels & name-calling )...

Anyway, I think Cash Over Valuation should be outlawed as it was once frowned upon in the past by HDB circa 1993/1994. Then, people sign resale docs at HDB at a certain price, then privately under-table another cash amount. Now, COV seems to be 'open'? Then valueers might as well treat the transacted price as the market price ! Call a spade a spade ?

What is this monstrous concept called COV ? Does it not play an equally guilty role in adding to the inflasted HDB resale prices ?

 

[Zombie]

I am suggesting the cost price for first time new flat buyers only.

Essentially, you are not segmenting the markets because you did not suggest product differentiations.

Whatever the name (cost price) you call it, you are just asking for Very Big Ang Pao Monies (subsidies/grants) to first time new flat buyers.

All the other voters who are not getting the monies in the near future, will not be happy.

Try telling them to see long-term.. and they will tell you to wait for next election.

 

[Zombie]

If we are base on the idea of 2 different market segments where 50% of new flats are cater to the new segment. And assuming in the new segment, there is no possibilities of capital gains, how does it then affect the current resale market, where you still have the other 50% of new flats feeding it?

This is what I called earlier, a slum district.

Cheap location with cheap housing and cheap after-sales maintenance... for the people who want to pay it cheap and will not get any profit out of it....

totally separated from the other flats.... ie product differentiation.

The value of other flats will not be affected much.

This one can work, but you will be branded cheap if you stay in it.

How many people like it?