Mah has been routinely criticised for persistent expensive public housing during periods of intense property speculation in Singapore e.g. 1996 and 2007. Recently between 2008-2009, public housing were deemed to be out of reach by average Singapore citizens. Singaporeans generally purchase a public housing flat from the state controlled Housing Development Board (HDB) or resale market. All public housing 'owners' are contractually known as flat tenants. After 2007, housing resale prices reached SG$500,000 for a 90 square feet 99-year leasehold resale flat near the suburban areas, levels unseen since the 1996 property boom. Citizens are generally displeased that they need to pay between $300,000-$500,000 to become flat tenants. There are revelations that Mah's HDB further compounded the problem by underestimating the inflationary effect caused by a liberal foreign worker policy that encouraged a huge influx of low skilled labour from Communist China, democratic India, Philippines and the pariah state, Burma.
Mah stoutly claimed public housing remains affordable and strangely declined to reveal the actual cost of building flats when questioned by members of parliament and Singaporeans who routinely pen essays demanding transparency in actual flat costs in the state controlled newspapers. Many vocal citizens perceived disclosing the actual cost of housing as a critical factor in the ongoing debate. Mah increased balloting frequency of new flats in the 1990s and inadvertently caused significant resentment when many young Singaporeans were repeatedly unsuccessfully in various flat balloting exercise after 2005. Many citizens questioned the high prices, low supply of new public flats and the static $8000 monthly income ceiling that prevented many citizens from purchasing cheaper flats direct from HDB. This caused many Singaporeans to return to the resale segment and further drive up prices of resale flats, creating a vicious cycle that inflate new flats' prices.
Mah, citing balloting results accused disgruntled citizens of cherry picking public housing units during their flat selection. Mah invoked high resale prices of in that segment as market forces determining actual value. Mah however sidestep the role of his policies that resulted in high prices based on vicious cycle of land supply, non transparent cost of new flats, and state policy that encouraged 'ownership' through tenancy using pension funds. All these factors inflate both resale and new flat prices since the formation of HDB. Mah noticeably, did not offer any significant defense for the income ceiling to purchase new flats for Singaporeans who tend to marry late. The income ceiling has stayed static at $8000 for new flats and cheaper state loans despite various price, tax hikes and escalating flat prices since 1980s.
A vigorous debate resulted when unhappy citizens reiterated that Mah's robust rebuttals merely explained the low take up rate of new flats but did not address the large number of citizens who could not even get an opportunity to select a unit and are driven to purchase more expensive flats in the resale market and contributing to the demand in that segment. In addition, many younger Singaporeans cited that banks are slow to approve loans for a couple whose combined salaries of $8000 or lesser. It appears the delays are due to perception that households who earn $8000 or less could have higher defaults for loans in the $400,000-$500,000 segment. This suggests that the $8000 ceiling has not reacted to Mah's efficient market hypothesis. Furthermore Singaporeans encountered more problems and delays in securing bank loans for more expensive resale housing after the credit crisis of 2007. That further weakened Mah's affordability claims.
Singaporeans believed that Mah's policies have distorted the resale public housing market pricing by controlling land sales and marking up selling prices of new flats based on actual sales price of resale flats and private properties using a complex formula that makes little sense without knowing the actual costs of new flats.
In addition, the HDB introduced ethic quotas to prevent racial enclaves forming in 1980s. That incidentally caused price discrimination and create market distortion for minority races who are forced to resell their flats in a smaller market segment. There was public and academic perception that the racial quota is an political response to the electorate weakness that Mah's party faced during the elections in 1980s e.g. Cheng San, Eunos. This is seemed as a move to prevent freak election results should the opposition politicians are able to canvass votes by successfully appealing to minorities. Supporters of this view pointed out that racial quota is implemented in 1980s than in early years of nation building where racial relations were more volatile and would have more impact earlier.
Mah realised while he could not revealed the cost of building flats since 1981, he could rely on the concept of 'affordability' to deflect criticisms. Hence one of the key point in the ongoing dispute is the definition of 'affordability of public housing'. Mah's definition of affordability is based on the percentage of the citizens' income. Mah claimed that if 30% of the household's income is used to service the monthly public housing debt, that meets the criteria of affordability. Therefore, Mah claims if Singaporeans accept his agency's definition of affordability, public housing remains affordable.
However online netizens and Singaporeans are quick to reveal the drawbacks of such a definition without taking into consideration the actual cost of flats and current high public housing prices. For example, a 22 year loan taken for a $400,000 public housing flat will incur a interest repayment of $200,000. This effective drained Singaporeans pension accounts and created a classic case of 'equity lock-in' with little cash for retirement. In addition, Mah's housing authority will have made consistent profits if housing costs are estimated to be less than $150,000 based on recent estimates despite Mah's claims of additional factors e.g. land costs and amenities. The interest income for 22 year HDB loans will create another source of lucrative income for the authorities.
Many netizens revealed that citizens usually repay the housing loan using their pension contributions. The median was around $600. The interest repayments and flat 'ownership' resulted in cases where citizens do not have sufficient funds when they retire at the age of 62. Furthermore, Mah withholding the actual costs of building flats could not claimed land prices and amenities played important roles in determining affordability without defining another concept of state subsidies for public housing.
Some Singaporeans criticised the 'flat ownership' scheme because it merely provide monetary security for banks and housing authority to repossess the flat if the public housing tenants default their loan repayments. Furthermore high flat prices is little utility to ensure Singaporeans have adequate savings in their pension accounts until they sell their flats upon retirement. Mah suggested retirees resell their tenancy lease in return for a modest monthly repayment but this scheme remains unpopular because many citizens realised that HDB enjoyed significant discount while 'repurchasing' the tenancy lease from citizens.
In additional, other vocal citizens revealed the concept of 'expensive flat ownership' is flawed because contractual terms used in public housing contracts contradicted citizens' perception of flat ownership. The housing contracts that citizens sign relegate them as tenants whom merely purchase 99-leasehold tenancy rights to live in the flats. At the time of writing, this debate is still ongoing and Mah recently conceded in a 2009 interview he was taken by surprised by public housing prices moving northward during a global credit crisis despite his considerable intellectual prowess.
Mah stoutly claimed public housing remains affordable and strangely declined to reveal the actual cost of building flats when questioned by members of parliament and Singaporeans who routinely pen essays demanding transparency in actual flat costs in the state controlled newspapers. Many vocal citizens perceived disclosing the actual cost of housing as a critical factor in the ongoing debate. Mah increased balloting frequency of new flats in the 1990s and inadvertently caused significant resentment when many young Singaporeans were repeatedly unsuccessfully in various flat balloting exercise after 2005. Many citizens questioned the high prices, low supply of new public flats and the static $8000 monthly income ceiling that prevented many citizens from purchasing cheaper flats direct from HDB. This caused many Singaporeans to return to the resale segment and further drive up prices of resale flats, creating a vicious cycle that inflate new flats' prices.
Mah, citing balloting results accused disgruntled citizens of cherry picking public housing units during their flat selection. Mah invoked high resale prices of in that segment as market forces determining actual value. Mah however sidestep the role of his policies that resulted in high prices based on vicious cycle of land supply, non transparent cost of new flats, and state policy that encouraged 'ownership' through tenancy using pension funds. All these factors inflate both resale and new flat prices since the formation of HDB. Mah noticeably, did not offer any significant defense for the income ceiling to purchase new flats for Singaporeans who tend to marry late. The income ceiling has stayed static at $8000 for new flats and cheaper state loans despite various price, tax hikes and escalating flat prices since 1980s.
A vigorous debate resulted when unhappy citizens reiterated that Mah's robust rebuttals merely explained the low take up rate of new flats but did not address the large number of citizens who could not even get an opportunity to select a unit and are driven to purchase more expensive flats in the resale market and contributing to the demand in that segment. In addition, many younger Singaporeans cited that banks are slow to approve loans for a couple whose combined salaries of $8000 or lesser. It appears the delays are due to perception that households who earn $8000 or less could have higher defaults for loans in the $400,000-$500,000 segment. This suggests that the $8000 ceiling has not reacted to Mah's efficient market hypothesis. Furthermore Singaporeans encountered more problems and delays in securing bank loans for more expensive resale housing after the credit crisis of 2007. That further weakened Mah's affordability claims.
Singaporeans believed that Mah's policies have distorted the resale public housing market pricing by controlling land sales and marking up selling prices of new flats based on actual sales price of resale flats and private properties using a complex formula that makes little sense without knowing the actual costs of new flats.
In addition, the HDB introduced ethic quotas to prevent racial enclaves forming in 1980s. That incidentally caused price discrimination and create market distortion for minority races who are forced to resell their flats in a smaller market segment. There was public and academic perception that the racial quota is an political response to the electorate weakness that Mah's party faced during the elections in 1980s e.g. Cheng San, Eunos. This is seemed as a move to prevent freak election results should the opposition politicians are able to canvass votes by successfully appealing to minorities. Supporters of this view pointed out that racial quota is implemented in 1980s than in early years of nation building where racial relations were more volatile and would have more impact earlier.
Mah realised while he could not revealed the cost of building flats since 1981, he could rely on the concept of 'affordability' to deflect criticisms. Hence one of the key point in the ongoing dispute is the definition of 'affordability of public housing'. Mah's definition of affordability is based on the percentage of the citizens' income. Mah claimed that if 30% of the household's income is used to service the monthly public housing debt, that meets the criteria of affordability. Therefore, Mah claims if Singaporeans accept his agency's definition of affordability, public housing remains affordable.
However online netizens and Singaporeans are quick to reveal the drawbacks of such a definition without taking into consideration the actual cost of flats and current high public housing prices. For example, a 22 year loan taken for a $400,000 public housing flat will incur a interest repayment of $200,000. This effective drained Singaporeans pension accounts and created a classic case of 'equity lock-in' with little cash for retirement. In addition, Mah's housing authority will have made consistent profits if housing costs are estimated to be less than $150,000 based on recent estimates despite Mah's claims of additional factors e.g. land costs and amenities. The interest income for 22 year HDB loans will create another source of lucrative income for the authorities.
Many netizens revealed that citizens usually repay the housing loan using their pension contributions. The median was around $600. The interest repayments and flat 'ownership' resulted in cases where citizens do not have sufficient funds when they retire at the age of 62. Furthermore, Mah withholding the actual costs of building flats could not claimed land prices and amenities played important roles in determining affordability without defining another concept of state subsidies for public housing.
Some Singaporeans criticised the 'flat ownership' scheme because it merely provide monetary security for banks and housing authority to repossess the flat if the public housing tenants default their loan repayments. Furthermore high flat prices is little utility to ensure Singaporeans have adequate savings in their pension accounts until they sell their flats upon retirement. Mah suggested retirees resell their tenancy lease in return for a modest monthly repayment but this scheme remains unpopular because many citizens realised that HDB enjoyed significant discount while 'repurchasing' the tenancy lease from citizens.
In additional, other vocal citizens revealed the concept of 'expensive flat ownership' is flawed because contractual terms used in public housing contracts contradicted citizens' perception of flat ownership. The housing contracts that citizens sign relegate them as tenants whom merely purchase 99-leasehold tenancy rights to live in the flats. At the time of writing, this debate is still ongoing and Mah recently conceded in a 2009 interview he was taken by surprised by public housing prices moving northward during a global credit crisis despite his considerable intellectual prowess.
