SDP proposes non-open market flats in housing policy

[yellowarse]

I like this plan for one reason.
It offers another avenue for citizens to own property.
However, the caveat is that only those who cannot afford otherwise should take this up.

There will be some who can afford OM, but prefer to buy NOM and set aside money for retirement, children's education, healthcare, etc. Some enterprising folks may want to start their own business and need some start-up capital.

Why lock so much of your money up in housing, especially if you're a young couple wanting to settle down and start a family?

 

[liongsum]

There will be some who can afford OM, but prefer to buy NOM and set aside money for retirement, children's education, healthcare, etc. Some enterprising folks may want to start their own business and need some start-up capital.
Why lock so much of your money up in housing, especially if you're a young couple wanting to settle down and start a family?

For those who can afford, buying OM HDB is already a somewhat successful enterprise... only in Singapore.
Furthermore, it's CPF money which cannot be touched.

 

[cleareyes]

SDP can make all sort of proposals.

but without a single seat in parliment, not even a NCMP or NMP seat, all these are just empty talk on one side and good ideas for PAP to consider.

 

[coolguy]

Yes. Good idea for pappies to consider.
But they will not be going to take the ideas wholesale and present
it to sinkies.
Cos' this will mean lugi business to them.
How to feed their multi-billion salaries enterprise?
So they will cut cut here, chop chop there, bar bar here,
curb curb there.
As John Lena puts it, "Cheap cheap seems to be the hardest word."

 

[coolguy]

The housing minister Boon Heng is now allaying fears of sporeans by
promising that housing will always be affordable.
The recent BTO campaign also reveal that 3-room applicants can
pay as low as from 110K onwards, after including all the "subsides".
4-room flat priced from 220-280K.
He also said the most number of housing bulit for this year, and next year will be even more.
Is this a sign of the pappies responding to SDP NOM flat strategy?
Are they now scared that SDP NOM strategy will become a potential threat to them in the next election?

 

[coolguy]

The housing minister Boon Heng is now allaying fears of sporeans by
promising that housing will always be affordable.
The recent BTO campaign also reveal that 3-room applicants can
pay as low as from 110K onwards, after including all the "subsides".
4-room flat priced from 220-280K.
He also said the most number of housing bulit for this year, and next year will be even more.
Is this a sign of the pappies responding to SDP NOM flat strategy?
Are they now scared that SDP NOM strategy will become a potential threat to them in the next election?

 

[PROFILER]

Is it too early to bring on fresh ideas? We're still 3 to 4 yrs away. Things will change at a blink.

 

[yellowarse]

An encouraging report by PropertyGuru on the SDP Housing Policy paper:



Widespread Affordability: A Dream
or A Reality?

By Cheryl Tay

Amid rising HDB prices, an opposition party has released a policy paper to offer home buyers with alter-
natives. But just how feasible is it — and what impact will it have on the asset we call home?

Recently, Minister for National
Development Khaw Boon Wan admitted in Parliament that there is much more to be done in the HDB market. The topic of the HDB Resale Price Index was broached when Nee Soon GRC MP Lee Bee Wah raised a question about soaring resale flat prices. According to Mr Khaw, RPI growth had eased to 3.9 percent in the first nine months of 2012, compared to 14.1 and 10.7 percent in 2010 and 2011 respectively.

NEVER-ENDING
ESCALATION

Considering that prices are still rising, there is indeed more to be done. There are issues beyond resale flat prices: increasingly, young couples looking to start families find high HDB prices a major obstacle. Many senior citizens have had their CPF savings depleted by the mortgages on their flats. Divorcees, who are often already saddled with alimony payments, are further disadvantaged by regulations which allow only one party to buy a flat directly from the HDB within five years of the date of divorce.

TIME FOR CHANGE
Three years after the first property cooling measures, home prices have not decreased significantly. A possible explanation is that, instead of dealing with the root problem —the prices themselves — the measures focus on other aspects, such as a lower borrowing ceiling, the Additional Buyer’s Stamp Duty (ABSD), Sellers Stamp Duty (SSD) and tax for those buying their second and subsequent homes.

While such measures directly affect investors and upper-middle to high-income buyers, they do little to help middle- to low-income buyers. To tackle the issue, the Singapore Democratic Party (SDP) crafted a policy paper entitled
Housing a Nation: Holistic Policies for Affordable Homes. Notably, the SDP is the only political partyin Singapore to have released a comprehensive paper on housing, though Workers’ Party Non- Constituency MP Gerald Giam and former National Solidarity Party candidate Goh Meng Seng had previously made suggestions regarding public housing affordability. But just how feasible
are its proposals?

A BRIEF ASSESSMENT
The chief components of the paper are the Non-Open Market (NOM) and Open-Market (OM) schemes. The former seeks to lower HDB flat prices mainly by removing land cost from home prices, based on the rationale that land in Singapore already belongs to its people and as such, they should have to pay only construction and administration costs for HDB flats.

The latter will allow homeowners to sell their flats on the open market at market value. An OM flat can also be converted to an NOM flat. Under the NOM scheme, average guide prices for 99-year leasehold flats range from S$70,000
for a two-room unit to S$240,000 for a five- room unit, depending on location and other flat characteristics. A NOM flat cannot be sold on the open market but can be sold back to the HDB at purchase price, minus the consumed lease. At the same time, OM flat owners can choose to convert to the NOM scheme, where the government will return to them an amount based on the flat’s original HDB purchase price and the price of an identical or similar NOM flat, which will go to their CPF.

While this sounds promising, one might question how realistic it is for the government to return money to those who convert their flats. Leong Yan Hoi, a member of the SDP housing policy panel that crafted the paper, explained: “When homeowners bought their flats, the land cost was paid into the Singapore reserves. If they convert their flats to NOM status, they’ll be reimbursed a portion of this cost, which is already in the reserves.”

YAY OR NAY?
In his blog, Singapore Alternatives, Goh said that NOM flat owners “cannot upgrade themselves” as their flats cannot be rented out and can only be sold back to the HDB at a loss. He also argued that monthly mortgage payments make the scheme inferior to simply renting from the HDB, which is a cheaper option.

PropNex Realty CEO Mohamed Ismail said that though similarly sized NOM flats are cheaper than new BTO flats, “the latter does not have resale value. The SDP’s proposal will deprive lower-income Singaporeans of a property asset to enjoy its capital appreciation”.

Like Goh, he believes the scheme is tantamount to flat rental.

Chen countered this assumption: “A S$6,000 monthly income means a S$1,200 monthly mortgage for just under 14.5 years. (A lower- income individual) could rent a four-room flat for S$143.10 per month if the rental rate increases with the inflation rate. However, for the government to recover its costs, every new flat will have to be rented out for its full 99 years — hardly possible and highly impractical.”

Still, in The Sunday Times on 18 November, Opinion Editor Chua Mui Hoong called the proposal “drastic”, saying, “I…don’t think it’s a good idea to deny lower-income households the opportunity to benefit from increases in the value of their homes”.

A CRITICAL PATTERN
It is worth noting that the aforementioned criticisms of the SDP’s proposal use capital appreciation of HDB flats as their common
argument.

But one wonders if investment is even a priority for lower-income households. For many, if not most, a home fulfills exactly what Ismail had mentioned: a basic need for shelter. Making it a “dream home” can follow when one has settled in and is more
financially comfortable.

For that to happen, however, lower-income households not only need sufficient grants but also less exorbitant home prices.

WORTH A SHOT?
As with any other proposal, there is no pleasing everyone. But if such policies, when implemented, achieve their goal of making homes affordable to the general Singaporean public, they would certainly lead to one very important step in the right direction for our society.

*The HDB was contacted for comment
but was unable to provide any at the
time of press.