<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>High property prices affect us all
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->I REFER to the timely article last Saturday, 'How affordable are HDB flats?'.
The HDB flat pricing issue first appeared in Forum five years ago. HDB's responses throughout have been mere statements, without the detailed numbers it has. Our public bodies must be transparent.
In its Pinnacle@Duxton project launched in 2004, the awarded tender price of $279 million by Chip Eng Seng to build 1,848 units translates to a $150,000 construction cost per unit.
Recently, HDB relaunched 428 unsold units at a price range of $457,000 to $646,000, some $200,000 above initial launch prices.
The large number of units in this 50-storey project occupy a small plot of land. Thus the per-unit share of the additional land cost and other related costs cannot be that substantial to explain the huge difference between its $150,000 construction cost and final selling price.
This issue concerns even those who wish to upgrade to private property. Sky-high HDB flat prices will naturally push up private property prices.
The broader issue is that land-scarce Singapore must have proper policies to promote an 'orderly' property market that is supported by economic growth, real demand and especially rising incomes. Such a market with gradual capital appreciation will benefit many Singaporeans from each successive generation.
A 'speculative' property market of sky-high prices is largely driven by speculators out to make a quick buck by 'flipping a property'. But when the property bubble finally bursts, both speculators and genuine home owners will be hurt by falling property values.
During the 1994 property bull run, prices of both private and HDB properties rocketed at 30 per cent per annum for three years in a row. But when have the economy and salaries grown at such a rate?
The recent 2007 property bull run lasted only nine months, cut short by the US sub-prime housing bubble turning into a worldwide financial crisis that has brought recession to Singapore. But during those nine months, the average freehold property value in the East Coast area nearly doubled from $750 psf to around $1,400 psf.
A property may generally be an appreciating asset, but it can also end up a millstone around one's neck. High property prices can affect the average Singaporean as follows:
As a homebuyer. Is it wise to sink so much of one's hard-earned income in a property, with little left to meet your children's upbringing and your old-age health-care and retirement needs?
As an employee. If your employer has to pay high office rent out of its operating budget, can it afford to pay you a better salary, increments and bonuses?
As a consumer. If a shopkeeper or supermarket operator has to pay high commercial rent, will it not charge you higher prices for goods and services?
Finally, two pertinent questions for HDB heartlanders:
Are there not more important things in life, such as good health, close family ties and well brought-up children, than this addiction to HDB upgrading and 'my HDB flat is worth a lot'?
Should you die suddenly, can you take your high-valuation upgraded HDB flat with you?
See Leong Kit
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->I REFER to the timely article last Saturday, 'How affordable are HDB flats?'.
The HDB flat pricing issue first appeared in Forum five years ago. HDB's responses throughout have been mere statements, without the detailed numbers it has. Our public bodies must be transparent.
In its Pinnacle@Duxton project launched in 2004, the awarded tender price of $279 million by Chip Eng Seng to build 1,848 units translates to a $150,000 construction cost per unit.
Recently, HDB relaunched 428 unsold units at a price range of $457,000 to $646,000, some $200,000 above initial launch prices.
The large number of units in this 50-storey project occupy a small plot of land. Thus the per-unit share of the additional land cost and other related costs cannot be that substantial to explain the huge difference between its $150,000 construction cost and final selling price.
This issue concerns even those who wish to upgrade to private property. Sky-high HDB flat prices will naturally push up private property prices.
The broader issue is that land-scarce Singapore must have proper policies to promote an 'orderly' property market that is supported by economic growth, real demand and especially rising incomes. Such a market with gradual capital appreciation will benefit many Singaporeans from each successive generation.
A 'speculative' property market of sky-high prices is largely driven by speculators out to make a quick buck by 'flipping a property'. But when the property bubble finally bursts, both speculators and genuine home owners will be hurt by falling property values.
During the 1994 property bull run, prices of both private and HDB properties rocketed at 30 per cent per annum for three years in a row. But when have the economy and salaries grown at such a rate?
The recent 2007 property bull run lasted only nine months, cut short by the US sub-prime housing bubble turning into a worldwide financial crisis that has brought recession to Singapore. But during those nine months, the average freehold property value in the East Coast area nearly doubled from $750 psf to around $1,400 psf.
A property may generally be an appreciating asset, but it can also end up a millstone around one's neck. High property prices can affect the average Singaporean as follows:
As a homebuyer. Is it wise to sink so much of one's hard-earned income in a property, with little left to meet your children's upbringing and your old-age health-care and retirement needs?
As an employee. If your employer has to pay high office rent out of its operating budget, can it afford to pay you a better salary, increments and bonuses?
As a consumer. If a shopkeeper or supermarket operator has to pay high commercial rent, will it not charge you higher prices for goods and services?
Finally, two pertinent questions for HDB heartlanders:
Are there not more important things in life, such as good health, close family ties and well brought-up children, than this addiction to HDB upgrading and 'my HDB flat is worth a lot'?
Should you die suddenly, can you take your high-valuation upgraded HDB flat with you?
See Leong Kit
