How Is Owning an HDB Flat an Asset?

[Nice-Gook]

This is not the main reason why HDB rental is not as good as that during the peak. It is because private rentals are coming down as the property demand has cooled. More units are coming out as they are going to TOP. Private rentals coming down, those who have been staying private moving to HDB will switch back slowly to private market. This vacuum will create lowering rents for HDB. It is also this influx of tenants previously that created a surge in HDB rents.

Disagree.The HDB rental market and private property rental market cannot be compared.It is like comparing apples and oranges.Though as rental market perce in toto is comparable.As a comparasion between the consumption of meat products versus veggie products.

What is meant here is there is hardly much flow between those who rent private apartments and HDB.There are some but not significant.

I know of a case where a PR bought a HDB and renting it out and staying in a private apartment with security guard and swimming pool for the same amount he receives as rent from his HDB.

 

[Nice-Gook]

the ppl today aren't really that stupid, the home is a place to rest, it need not be too big, so can play hide & seek or catching inside the house. young couples with not much cash in hand also do their math before buying HDB.

the optimal choice is to go for a decent 3rm flat, so they need not stretch themselves too much for the loans, n can save more cash for children upbringing & education after some yrs.

but now, combined income of more than 4K means they die die must buy 4rm or above. which means, ppl kena forced to stretch their loans to more than 10yrs. those who marginally exceed the 4k limit have to subject themselves to more yrs of loan, 20yrs or maybe 25yrs. so, the problem just snowball from there.

There is another dimension here.While talking to an old timer who had raised nine children once told me.There is a world of difference between childhood growing up in a pent up housing and those growing up in a house with garden and lawn.Though not necessarily rich.

That is why the EQ level of a Malaysian Chinese who grew up in Malaysia who later are working here are way way high.Yah Yah yah,one would point out to our limited land space.But ah,look at the way HDB is built compared with a private aprtment .HDB goes all the way to create small cubicles so as to differenciate between 4 rooms and 5 rooms.And in some areas,the actual space of a 4 room is actually bigger than a 5 room.

The diffrenciation is necessary for PAP to jack up the prices.Just look at the amount of space outside a HDB that is wasted.

 

[silverfox@]

Disagree.The HDB rental market and private property rental market cannot be compared.It is like comparing apples and oranges.Though as rental market perce in toto is comparable.As a comparasion between the consumption of meat products versus veggie products.

What is meant here is there is hardly much flow between those who rent private apartments and HDB.There are some but not significant.

I know of a case where a PR bought a HDB and renting it out and staying in a private apartment with security guard and swimming pool for the same amount he receives as rent from his HDB.

If you disagree, can you please tell us what is the main reason that caused HDB rentals to shoot up greatly in the 2nd half of year 2007?

Where does this sudden influx of HDB tenants come from?

Previously 3-rm flat is about $800, it shot up to $1200
5-rm flat from $1400 shot up to $1800 close to even $2000.

fyi, private condo 2rm shot up by at least 50%. From $1600 increase to $2400. 3rm from $1800 shot up to $3000

 

[zhihau]

young couples with not much cash in hand also do their math before buying HDB.

after doing my maths, i don't even dare to get married in Singapore

 

[tonychat]

There is another dimension here.While talking to an old timer who had raised nine children once told me.There is a world of difference between childhood growing up in a pent up housing and those growing up in a house with garden and lawn.Though not necessarily rich.

So sinkies are produce from apartments, no wonder so many sinkies in sikieland.

 

[zhihau]

That is why the EQ level of a Malaysian Chinese who grew up in Malaysia who later are working here are way way high.

so that explains why there's a higher number of people suffering from myopia here in Singapore? :p:p:p

 

[SIFU]

So sinkies are produce from apartments, no wonder so many sinkies in sikieland.

talk what lan cheow??

what a lame reply from thai loser pimp..:oIo:

 

[Nice-Gook]

If you disagree, can you please tell us what is the main reason that caused HDB rentals to shoot up greatly in the 2nd half of year 2007?

Where does this sudden influx of HDB tenants come from?

Previously 3-rm flat is about $800, it shot up to $1200
5-rm flat from $1400 shot up to $1800 close to even $2000.

fyi, private condo 2rm shot up by at least 50%. From $1600 increase to $2400. 3rm from $1800 shot up to $3000

<style></style>First you should understand the basics.Rephrased its called the number game.Ever wonder why PAP is getting into businesses such as gambling,public transportation,public housing,NTUC and etc etc.And not selling Gucci or any other high end retailing ?......Simple! the first provides the numbers.The more the merrier.

That's how the HDB and its rental works.The large influx of foreign workers creates a huge demand for rental space.I mean cheaper rental space.That's where it becomes viable for people to invest in an HDB pigeon hole.

Sure,there were also a great number of influx of expatriates.But the number lies in the greater number of PRC workers who can only afford to pay between $150 to$250 per pax.And do not mind sharing with another 2 or so.This is the strength of owning an obscenely overpriced HDB.If you take this away.the prices of HDB must collapse.

You should recall a similar situation when the sudden influx of people from HK during the 90s spiraled the prices of HDB upwards.Particularly Hougang.Than the Hongkies speculated and dumped their HDB units and left the locals to pick up the pieces.Followed by negative asset value of HDB ownership.

 

[Nice-Gook]

so that explains why there's a higher number of people suffering from myopia here in Singapore? :p:p:p

Try to grow your potted plant pouring hot water.You would know what I meant

 

[Porfirio Rubirosa]

This appears to be part of "The Political Economy" aspect that Alfred Oehlers alluded to in his article "Corruption: The peculiarities of Singapore"

Your approach and arguments are based on affordable public housing that you see in developed and progressive countries. HDB under the PAP took on that route initially. Things have changed since.

HDB and the entire public housing is now a very important political tool. Too important for market forces or social issues to take over. PAP votes come from the heartland and they are able to tweak things better under HDB rather than outside. Grassroots, town councils, racial quotas, precint monitoring, demographic planning all have political connotations that cannot be ignored. PAP Kindergartens, Old Folks clubs, Trade union offices are now well and truly anchored in HDB run premises.

In the first 2 decades, it was said that the "Rental Control Act" kept the PAP in power. It is now HDB.

 

[The_Latest_H]

<style></style>First you should understand the basics.Rephrased its called the number game.Ever wonder why PAP is getting into businesses such as gambling,public transportation,public housing,NTUC and etc etc.And not selling Gucci or any other high end retailing ?......Simple! the first provides the numbers.The more the merrier.

That's how the HDB and its rental works.The large influx of foreign workers creates a huge demand for rental space.I mean cheaper rental space.That's where it becomes viable for people to invest in an HDB pigeon hole.

Sure,there were also a great number of influx of expatriates.But the number lies in the greater number of PRC workers who can only afford to pay between $150 to$250 per pax.And do not mind sharing with another 2 or so.This is the strength of owning an obscenely overpriced HDB.If you take this away.the prices of HDB must collapse.

You should recall a similar situation when the sudden influx of people from HK during the 90s spiraled the prices of HDB upwards.Particularly Hougang.Than the Hongkies speculated and dumped their HDB units and left the locals to pick up the pieces.Followed by negative asset value of HDB ownership.

That's why it makes sense to impose a quota on how many flats can be leased and sold to foreigners. A quota on foreign workers and immigrants will also help dampen unnecessarily speculation and price inflation.

 

[Nice-Gook]

That's why it makes sense to impose a quota on how many flats can be leased and sold to foreigners. A quota on foreign workers and immigrants will also help dampen unnecessarily speculation and price inflation.

It is easier said than done.That begets another question.Who indeed is a foreigner !.....Do we really consider the Chinese across the causeway as a foreigner?Herein lies the dilema.

It is an open secret that Malaysian Chinese for years are gambling with HDB..It is an investment for rental returns only for them.With the rental proceeds they finance their future back at home in Bolehland.

How would you stop this abuse?

 

[ManBearPig62]

Housing valuations are done by HDB panels of valuers.
In the past, valuation is done by valuers not from HDB panel of valuers.

What happens is valuation of the flats are artificially inflated by valuers, agents, house sellers, house buyers, in order to con more CPF money and cash. This is what we called going around the system for own benefits. Everyone wants to do it.

In the end, only valuation of flats can be done by HDB panel of valuers to prevent this collaboration.

this doesnt make sense at all. in any monetary transaction there is a winner and a loser... and in the example you gave the loser is the buyer, who pays the inflated price dictated by the other party. if a buyer is that stupid to accept such a price he only has himself to blame, when he has the entire market to choose from.

it would be much better to let the invisible hand sort things out rather than opt for heavy-handed government intervention.

even if every seller inflates prices so that buyers don't have a choice, if HDB keeps the price of new flats near cost, and the valuation of 2nd hand flats exceeds the price of a new flat, why would anyone want to buy it? unless the location is really that great. even then a buyer would think twice before committing to such a deal.

care to explain in greater detail?

 

[Nice-Gook]

this doesnt make sense at all. in any monetary transaction there is a winner and a loser... and in the example you gave the loser is the buyer, who pays the inflated price dictated by the other party. if a buyer is that stupid to accept such a price he only has himself to blame, when he has the entire market to choose from.

it would be much better to let the invisible hand sort things out rather than opt for heavy-handed government intervention.

even if every seller inflates prices so that buyers don't have a choice, if HDB keeps the price of new flats near cost, and the valuation of 2nd hand flats exceeds the price of a new flat, why would anyone want to buy it? unless the location is really that great. even then a buyer would think twice before committing to such a deal.

care to explain in greater detail?

I am sure you must be talking of free market.HDB is a monopoly.Both in supply and demand situation...Demand too,! you may ask.Sure! by tweeking other policies such as that of MOM and etc.; HDB can play around with the demand situation too.

So you see,HDB is indeed a political animal and not a free enterprise.

Now,valuation is a tool employed by the HDB to beat up the prices.And each valuation takes into account of the previous cash component paid by the previous buyer.For example if your neighbour for some reason had sold his flat to a buyer who was willing to pay a $100K above the valuation say for some sentimental reason.By virture of that your unit too increases by $100K if a new vluation is taken.Now,would you call that a valuation?

Now,suppose if say your old ailing uncle wants to stay near you,he is than forced to pay another $100k extra.Does that answer your question of why would anyone willing to pay this sort of ridiculous amount for a fucken HDB?

 

[ManBearPig62]

hi nice-gook, you are saying that valuation of the surrounding flats, and previous valuations affects the valuation of a flat? if true, that's interesting... i didn't know that.

anyway i totally understand what you're saying, i don't agree with all the policy tweaking.

my initial question was to silverfox... because he claimed, and i quote, "What happens is valuation of the flats are artificially inflated by valuers, agents, house sellers, house buyers, in order to con more CPF money and cash. This is what we called going around the system for own benefits."

but the buyer is the end loser in this deal... because he pays the extra that goes into the other parties' pockets... so why should the buyer take part?

unless in a few years time the buyer then becomes a seller and the cycle repeats... which is what i think he is getting at... right?

this wouldn't happen in a free market due to the existence of alternative housing and the ability to independently set prices. so get screwed by the government or by your own human greed, you choose...

 

[ManBearPig62]

actually i've quite enjoyed this thread, there have been many interesting points raised...

it seems there are some similarities between the local situation and the subprime in the US... people tying up most of their capital in their properties, buying properties at inflated prices beyond their means etc.

the govt cannot reduce resale HDB prices since this would wipe out the collateral value of existing flats, effectively screwing people who for some reason or another (illness etc) can't pay their mortgage.

they can't price new HDB flats at near cost either, or else no one would buy resale HDB flats.

but constantly increasing prices is not a solution either... its merely passing the buck to the next generation and hoping the problem will go away. to be frank, there's nothing else they can do.

there will come a day when the problem will become too big to ignore and the social consequences will be catastrophic. we are already seeing young people refusing to get married and procreate simply because they cannot afford it. and taking on 25 or 30 year loans in one's mid twenties cannot be called prudent financial planning by any measure.

feel free to correct my understanding if i've got it wrong.

 

[ManBearPig62]

I am sure you must be talking of free market.HDB is a monopoly.Both in supply and demand situation...Demand too,! you may ask.Sure! by tweeking other policies such as that of MOM and etc.; HDB can play around with the demand situation too.

by letting in tons of foreigners to increase demand for flats... i guess.

 

[0939]

after doing my maths, i don't even dare to get married in Singapore

What has marriage got to do with HDB.

 

[zhihau]

What has marriage got to do with HDB.

because singles can't take a 99 year lease unless they are over 35 =)

 

[silverfox@]

my initial question was to silverfox... because he claimed, and i quote, "What happens is valuation of the flats are artificially inflated by valuers, agents, house sellers, house buyers, in order to con more CPF money and cash. This is what we called going around the system for own benefits."

but the buyer is the end loser in this deal... because he pays the extra that goes into the other parties' pockets... so why should the buyer take part?

I must use figures to illustrate. This was what being highlighted in the press last time.

Example HDB supposed valuation for a 3rm flat is $180K.

Buyer owe money, no cash, only have a lot of money in CPF. .
Seller want to sell, after selling, part of proceeds go into CPF, but rest are into CASH.

So everyone sit down, Buyer only want to solve his current cash crisis, so they arranged for an inflated valuation of $230K.

This extra $50K supposedly comes from CPF of Buyer to redeem the HDB from Seller. So after deducting all costs, seller get back at least $50K in cash. So seller will give back $40K to buyer. he take $10K extra as the valuation could only get him $180K.
This situation creates a win-win situation for everyone except CPF. :p
The buyer who get $40K can settle his debt, pay off the agent some kopi money, etc. And the buyer instead of paying ah long huge interests, now only owes CPF with loans pegged at 2.6%.

I may not illustrate in detail but this is roughly how the old scheme works and a lot of people did that. Some agents were even jailed for this when CPF discovered.