Tag Archives: HDB

In response to ST journalist Fiona Chan’s article

Posted on 23 Sep 2009 | Comments Off on In response to ST journalist Fiona Chan’s article

I refer to the report “Are private homes getting out of reach?” dated 19 Sept 2009 by Ms Fiona Chan (read article here)

Of being upset

Ms Chan reported that I was ‘upset’ with two independent conclusions indicating that private properties are more affordable now.  It goes beyond that.  There were specific statements made especially by Mr Kit Wei Zheng that were outright wrong or simply unreasonable.

For example, Mr Kit stated categorically in both of his letters that 9 out of the past 11 years have seen salaries outgrow property price increases.  We both did the sums for the past 10 years and found this to be wrong.  Mr Kit also insisted in using the bubble year of 1996 as the base year to judge all other years which is unreasonable because when you crash your car going at 240 kmh, you don’t use 240 kmh as your safety speed limit.  So while Ms Chan is right about there being many ways to calculate housing affordability, certain statements are factual in nature and can only be right or wrong.

Shifting base year from 1990 to 1998

Ms Chan wrote that it is not fair to compare current property prices with those 20 years ago because Singapore is such a young nation.  This statement is not valid in and of itself.  Is it meaningless to compare Singapore’s GDP today with our GDP 20 years ago simply because we are so ‘young’?  Is it meaningless to compare our heathcare standards today with those of 20 years ago?  National statistics like birth rate, death rate and home prices are compared right from the very first day.  There is no expiry date so to speak of. Continue reading →

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Watching HDB price behaviour, sensibly

Posted on 23 Sep 2009 | Comments Off on Watching HDB price behaviour, sensibly

THERE is a rising pitch of anxiety evident in queries and feedback about HDB housing in recent months. These have centred on affordability mainly, no surprise considering that the sudden spurt in private property prices since July has boosted HDB values, which already were holding better during the recession. Hence, complaints about cash over valuation. Why don’t buyers exercise their democratic right to not pay a premium by looking in towns less ‘prime’? Home buyers have also touched on policy issues like household income ceiling and the operation of ethnic quotas. National Development Minister Mah Bow Tan addressed most outstanding grouses in a well-timed statement in Parliament last week, but such is the variety of need and the habits of personal preference that assurances would still leave some home-seekers unconvinced.

Affordability is a bugbear, which in turn influences notions of supply relative to demand. Median income and the ratio of household income used for loan service (up to 30 per cent, as a general rule) cited by the minister are indicative of most people’s ability to pay, but these are rough guides. In every flat type of up to five rooms and the corresponding price ranges, households which fall below the median income line could progressively be less able to own their homes. That’s a lot of families. Financing difficulty can also arise when a family chooses a bigger flat than it can pay for, or needs. There are far too many of these big-is-better purchasers. But this is also where the comprehensiveness of HDB’s income-differentiated schemes and the different types of supporting grants available reinforce affordability. Continue reading →

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