A deluge of letters were published in the Straits Times forum today protesting against rising prices of HDB flats and imploring HDB to do something to solve the problem!
Despite repeated reassurances from the government that HDB flats remain affordable, the latest coming from National Development Minister Mah Bow Tan, many Singaporeans apparently are not convinced by their arguments.
The writers expressed their disagreement and dissatisfaction with the official response from HDB penned by its Deputy Director Mr Ignatius Lourdesamy who wrote that “HDB flats remain affordable to eligible first-time households as they use between 21 to 25 per cent of their monthly income to service their loans on new and resale HDB flats which are well below the international affordability benchmark of 30 per cent. “(read letter here)
Ng Kok Lim questioned if it is realistic for the market value of flats to be determined by professional valuers. (read letter here)
He wrote:
“Valuers base their valuations on recent transactions, which is as good as being determined by ‘willing buyer, willing seller’, with all its associated problems I have described.
In explaining how it arrives at its criteria for supplying new flats, it would be helpful if the HDB could detail how it takes into account the number of immigrants Singapore has admitted, as well as the number of marriages over the period in question.
The inclusion of these statistics will help answer the question of whether supply can meet demand, which Monday’s reply did not address.”
Ng also cast doubts on the use of the international affordability benchmark to rationalise affordability and concludes that homes are priced reasonably:
“The international poverty line is commonly defined as US$1 (S$1.44) per day. If Singaporeans earned US$10 per day, would we consider Singaporeans to be well above poverty levels?
Clearly, US$10 per day is extreme poverty by Singapore standards, yet it is well above the international poverty line.
A more realistic benchmark would be to use international city rankings of house price-to-income ratio which is an affordability measure similar to the one used by the HDB.
As the accompanying table illustrates, Singapore has one of the priciest property markets in the world, relative to income – even dearer than Tokyo, Toronto and New York.”
A young Singaporean lady, Grace Ho shared her personal experience of hunting for a matrimonial home in this inflationary market: (read letter here)
“From the points raised, I feel HDB has not adequately addressed the affordability concern.
My husband and I are a young couple still looking for our first matrimonial flat. We belong to the sandwich generation that exceed HDB’s income ceiling for subsidised housing yet need an HDB flat in a mature estate to support elderly parents….. As a young couple, we are priced out of the market by COVs at such levels, despite a combined household income in excess of $8,000.”
Chew Kim Cher highlights the plight of resale flat buyers who are squeezed by the high COVs: (read letter here)
“While cash over valuation (COV) is not determined by the Government, rising COV is an indicator that housing demand exceeds supply. Buyers of resale HDB flats are now squeezed by high COV and asking prices demanded by sellers.
Information on recently transacted resale prices on the HDB website may have little relevance since they were concluded three to four months ago. Given the current market frenzy, it is a challenge for today’s buyers to find flats that can still be transacted at prices which prevailed three months earlier. ”
He ended his letter with an exhortation to HDB to tackle the rising cost of the flats:
” I urge HDB to address the ultimate concern of current HDB flat buyers – the soaring resale prices.”
Steven Yeo questioned HDB if they are building too few flats a year to meet demand: (read letter here)
“How did the HDB determine that building 8,000 new flats a year is sufficient to meet demand? There are seven applicants for each new flat. For example, there were about 24,000 marriages last year, which means only one-third of newlyweds will get a new flat.
The other 16,000 must buy resale or private property. If 80 per cent of the population qualify for subsidised flats, should the HDB build 19,000 flats a year instead?”
Being the biggest landlord in Singapore, the ball is in HDB’s court to lower the prices of new and resale flats which can be easily done by building more new flats a year thereby increasing the supply.
As supply of new flats increase, there will be a downward price pressure exerted on the prices of resale flats. COVs should also be done away altogether to prevent sellers from profiteering from the sale of their flats.
After all, HDB flats are meant to be cheap, affordable and subsidized public housing and should not become a money-making venture for some.
An online petition was also started by a group of Singaporeans requesting the government to reduce HDB valuation. However, their pleads are likely to fall on deaf ears. (read article here)
With so much critical information withheld from the public, such as the cost of building a HDB unit, Singaporeans will be ill-positioned to jduge for themselves if the flats they are paying for are really worth the value.
To some Singaporeans who still retain blind trust and confidence in the government, it is not a bad idea to allow prices to continue rising since it will create wealth for them in the long run.
Source : The Temasek Review – 5 Sep 2009
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