By Khalil AdisFeb 5, 2010
Khalil Adis is an experienced property writer, with in-depth knowledge of Singapore's and Malaysia's property market. During his career, he's written for Property Guru, Property Report and Property Buyer and has...
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I have mentioned before that the issue of public housing affordability is a hotly debated topic that could dominate the next general election. And from the look of how recent events have unfolded, it appears to be the case. Opposition parties are reportedly gunning for Tampines GRC where Minister for National Development Mah Bow Tan is the MP. Under Minister Mah’s charge is the Housing & Development Board (HDB).
For the purpose of rational public discourse, let us examine the mission statement of the HDB. Its mission is to provide affordable homes for all. The HDB has a complete monopoly on the public housing market. It controls the supply of flats which indirectly affects prices.
By ensuring demand meets supply, HDB can help ensure flats remain affordable. In the past few years, however, the HDB has not been building sufficient flats to meet the increased demand from both Singaporeans and foreigners, causing property prices to shoot upwards. For instance in 2008, the HDB built only 3,183 new flats when the government welcomed over 90,000 permanent residents and 20,000 new citizens in the same year.
The relentless influx of foreigners have pushed the Resale Price Index (RPI) by 3.9 percent to reach 150.8 points in the fourth quarter of 2009. In the same period, the overall COV went up by a full 100 percent from $12,000 in the third quarter to $24,000. In addition, HDB’s policy allows foreigners to compete directly with Singaporeans for public housing. Median wages have also been depressed, unable to keep up with the increase in the price of HDB flats. These factors have caused much hardship among young couples and singles.
Nevertheless, the HDB has been adamant that its flats are “affordable”. Lately, however, it is singing a different tune with a few cosmetic changes announced and the promise to ramp up more supply. There was never a word of apology from the HDB. Media queries have been stone walled.
Not too long ago, Singaporeans were warned that if we were ever to emigrate, we will be treated like second-class citizens elsewhere. But look right in your own backyard. Aren’t we already second-class citizens competing directly with foreigners for housing and with ethnic enclaves emerging in our heartlands?
Since Singapore is run as a corporation, Singaporeans are therefore its rightful shareholders who have the ability to assess if our government is performing by voting wisely.
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Long-term asset appreciation is most welcome. What Mr Adis pointed out is that the poor HDB capacity planning has resulted in unnecessary volatility in housing prices. Volatility will only invite speculators into the market and further complicate an already hotly debated issue. Looking at 1997 where unsustainable price hike had resulted in a spectacular fall, which took almost 10 years to recuperate. Here again at 2007 we witnessed yet another volatile session. If not for global quantitative easing (i.e. money printing) and extreme low mortgage rate, housing prices will not recover as fast as it should be. So, is it sustainable? hardly. HDB should not worry about excess supply. In fact, moderate excess HDB supply serves as a buffer to prevent extreme price movement. It functions almost like a shock absorber. HDB should build based on long-term population growth, regardless of business cycle.
It was a most interesting read especially the comments following the article. I have a simple question to all first time HDB buyers. If you have a choice which HDB property will you choose a) A HDB flat valued at 300k now but whose value may dip to 250K in 10 yrs time b) A HDB flat valued at 400k now but whose value will likely rise to 650K 10 yrs from now. Which scenario do you guys prefer ? Why all the fuss about rising HDB flat prices ?
Just my 2 cents worth. If we put $25k cash into a 5%pa returns compounded investment platform for the next 10years and have to rent a unit for $1600 per month for a 2 bedroom flat for the next 10 years to stay and with your CPF continue to contribute 2.5/3.5% interest (compounded also). Comparison to you put 25k cash into a HDB flat COV and use your CPF to pay HDB or private loan. In 10 years time, you will see a difference of how much cash you can take out from this 2 investment bearing all CPF funds are returned. Lets say even you have passed on or sell and live with your parents, the appreciation will still goes into your pocket. Thus owning a HDB and hope that our ecomomy continue to stay well seems to be the least risk effected choice. And which in most case suggested that Real Estate is one of the most resiliant way to counter inflation. However, $600k for a 5rm HDB flat without a good finacing system is too much of a risk for many middle income Singaporean....
My point here is I don’t see any benefits from the so call “asset appreciation” especially if your property is in those urlu places like punggol or woodland. Say your property price of your flat in Punggol increase 20%, probably those flats in Central region would probably increase more 20%. DS- If you cannot agree with me, can you pull out figures and facts to show otherwise? So MIW, why tell pple not to be choosy with the location of property, after all this is the biggest “ticket” and would take your life time to pay. For your info, I sold my HDB in some urlu place last year thinking I could “unlock” the value of the flat but I was wrong. The price just keep moving up and the property in the central region rise even much faster.
Yeap, very much agree with your thoughts!
Should public housing be linked with economy especially in country like Singapore with around 80% of residents stayed in HDB flats? If answer is no, then we may just sell new public flats at construction cost and enforce all owners to return their units when they decided or force to give up their HDB flats in future. If yes, I think the current open market system still works well for us. However, an increase in numbers to price young citizens out of open market through high COV should be dealt with earlier last year. Though more supply seems to have ease demand/supply issues a little but current $600k for a public flat is a little of a concern due to the facts of population growth doesnt co-increase with our current economy growth.Just imagine average earning young Singaporean can only buy Woodlands, Punggol and Jurong West for next 24 months. And in 5years time, with a possible increase of interest rate, how do these Singaporeans buy a unit in Marine Parade, Queenstown and Toa Payoh? Is unlikely, that they can sell their Punngol, Woodlands and Jurong West flats to buy core area flats. Let alone our inflation should be between 3-4% for the next 5 years. We should all let the current open market system stay but allows creative financing to young Singaporean first time buyer who mostly in time to stay in this country to live happily.
Hi DS, I don't think anyone here is disuputing with the fact that our flats have appreciated over the last 50 years - the same is true for my flat (it's worh five times what we paid for it in the late 80s, because infrastructure was built around it over the last 2 decades). I think the sore issue here is that younger couples who are looking to start a family and find a home are finding it difficult to do so due to the high prices....the crux of the issue is not about managing expectations. We are talking about hard earned money (cash/CPF) that will be sapped from your bank/CPF over the next 20 - 30 years. You may or may not have enough to retire as a result, so why should we not be allowed to be choosy when it comes to a heavy investment like a home? Unless of course, money is not so much of a consideration - because for most of us, it definitely is, and that is why we need, and deserve to be reasonably choosy. Ok, Khalil's insinuations may have been too blatant, but he's written what most of us might feel but are afraid to say. I don't know about you guys, but frankly, as I mentioned, our govt has done a brilliant job of keeping the country safe, streets clean etc., but I wonder if they're a little too detached from the common man...?
I'm in a family with 5 siblings. We used to live in a rented flat during my childhood day. When my family had our first flat in Jurong, we were elated. The flat has appreciated in values over the years. The flats of all my siblings had also apprecaited over the years with some went for a 2nd direct flat from HDB, some purchase from the open market after selling their first. All their 2nd flats has appreciated in values. I believe my family is not alone. A friend got a flat in Sembangwang from the open market; another got a direct Punggol flat from HDB; one of my neice had her direct flat from HDB in Jurong and another bought one from open market in Bukit Panjang ---All have likewise see their flat appreciated in values. The current escalating prices has surely post some pressure to anyone thinking or buying flats ( including muself) but there are always possible options depending on our expectation. ST - I am not sure if you have really look into various available options in the market for your housing needs or you are one that just keep "complaining" without looking into closer context. If you have not benefitted from any of the HDB policies for the last 50 years; I'm sure you should be happy that someone in your family or friends (who had plan their life) should have also benefitted. For this forum to be meaningful, i thought comment should be more constructive than purely inking complaints.
Khalil's article is a dangerous piece for a small country like Singapore. I really do not understand the intention to associate elections to the issues raised especially in such platform. It may have some market trend to "analysis" but the direction of the article seems to advocate some sort of "political agenda".
Suggestion. 1)Allows first time Sporeans HDB buyers (those with no private/comercial property) to use their CPF funds to finance their COV in full or partial. However, profits from subsequent sale, the COV portion will be fully returned to their CPF. This option can only be used once or first time HDB purchase. 2)Allows PR to use their CPF to finance their rental for HDB not more than 48months with no interest charge. 3)Allows PR to buy new HDB flats with a 10year lease and buy back option by HDB
Heartening to hear your voices. Is simple to solve these issues. My suggestions are as follows ; 1)Allows COV to be finance through CPF for HDB first-timer (without any private/comercial properties) with the future capital gains from COV to be returned to his/her own CPF (allows for Singaporean only. 2)Allows PR to rent HDB flats for not more than 48 months using their CPF $$$ with zero interest rate. 3)Allows PR to buy new HDB flats (with a quota per development) at a 10year lease rate with attractive buyback option by HDB.
My dear Mark Lai, What so great about paper appreciation of your HDB property? How does it benefits us when your HDB flats price appreciate on paper? You still need to stay abieit having to pay higher and higher property tax when your HDB flat apreciates. If you sell high, you need to pay high for another property be it HDB or private properties! So who is benefiting? Of course citizens or the government? Therefore dun talk about HDB flat as an investment ok unless you are thinking about migration and sell away your flats to realise your gain. Just wonder if it is government unsaid agenda to ship out the old Singpaporean and let in more energertic foreigner to take our place so your HDB asset appreciation make senses. Another thing for sure..with this crazy price of HDB flats, we need to slot longer and longer to pay off the flat with not much left for retirement. Would young Singaporean be able to think about procreation when they have to worry about the rising cost of living and constant threat that the foreign talent would snap away your rice bowl?
Well well, first of all, whatever HDB...Happy holiday for the non-chinese and Happy chinese new year to all the chinese readers out there. Gong xi Gong xi.I wanted to stop posting but I can't, I think I am treating this like a SR project :-) Back to our discussion. ST - Based on what you stated, government is guilty of protecting citizens' invesment in housing? Because all those before you, they benefit from what you think the governement has done and valuation of thier flats increase. That include all your relatives and friends that currently own a HDB's flat. So in your opinon, what should the government do? Matthew: 1. I understand your frustration, 13 yrs ago i went thru the same cross road. At that time, same thing, everyone was complaining about raising public housing prices. I made the jump and the rest is history. If you are willing, I think i am able to help you find a unit that will appreciate 3-5% in valuation, wont burn a whole in your pocket, in the location you want. I am not an housing agent. I just want to help because I went thru the same bottleneck back then. 2. About the point on reprecussion - Every citizen is entitle to express your views but if you are making an accusation you have to get your facts right. Just like doing a thesis, you need to support your points with facts and figures and not just hypotheses. Repercussion will only occurs when you make a blind accusation. Khalil's entry is making use of a common but unfavorable market situation to instigate readers that are caught in the situation, to vote against the government. This is serious matter and has heavy responsiblity. He would need more than a blog entry. In actual fact, all those affected readers, like yourself, need is - Some sound advices and to be shown the available options on crossing the junction. Khalil's entry also instigate, by casting alternative vote, it would change the current situation facing young couple and singles. You really think so? 3. I respect your political belief. You are entitle to express it and I do agree with you to certain degree. At least you didnt try to mislead readers to support your belief :-) Btw Khalil, you have not state your intent on my pending request.
The price of property in Singapore has rose much faster than wages of ordinary citizens even when the economy is not doing well last year. Can you just all blame purely on globalization, low interest rate and high expectation of Singaporean for the woes of price hikes? Is government not at all guilty? On one side, government control the supply of new flats and land as well price for private development. On the other hand, government also “create” the demand for property here by its liberally policy of letting in so many foreigners into this tiny Island and giving PR and citizenship over this short period of time. Dun tell me these are not the primarily reasons for the surge in the property price? Should our million dollar paid ministers not be thinking hard about the current housing woes rather than blaming everybody except themeslves? Isn't it sound a bit silly to blame the high HDB price all the time on Singaporean being picky and choosy lots? Mind you, even those even those BTO flat in Punggol Crest that are released today cost up to $301k for 4 room flat. Isn't these high price outskirt flats also due to Picky Singaporean?
My wife to be and I have been looking for a place of our own but due to the ridiculous and prohibitively expensive prices, we've decided to wait. And yes, this affects our wedding plans. And yes, this frustrates us because we want to get on with our lives but we don't qualify for public housing and private and resale prices are cut throat most often times. We're not looking for anything posh or new, in the CBD. All we want is to find something that's in the East/North East, near an MRT line so that our folks can visit us with some convenience. While we could theoretically purchase something at current prices, we'd spend our time worrying about monthly payments than actually enjoying the fact that we have a home. And this is not acceptable to us, nor to any other couple in our situation I'd expect. Reading the comments, I applaude Khalil for putting to print what many Singaporeans fear to vocalise for fear of repercussions. Daniel and Mark - you sound like you're colleagues or belong to young PAP or something because what you're saying is that we, as traditionally good and obedient Singaporeans should just manage our expectations accordingly and settle. Is "settle" the right word? Why should we settle? Homes are an incredibly large financial commitment over the long term, so why should we not be able to have a home that meets out requirements? A home that we'd part with our hard earned money over the next 25 to 30 years? Sorry Mark and Daniel, but it seems like you both are trust fund kids, because if you were the common man (i.e., the majority of the population), you shouldn't be talking like this. I'm not anti Govt/anti PAP - on the contrary I think they've been doing a good job most of the time. But I also think that because they make the million dollar salaries and live in large sprawling homes, when they say that they "understand" our plights, I take those comments with a big pinch of salt. As such, while I think the govt will continue to rule for the forseable future, this coming election, if I feel there is CREDIBLE opposition, I might cast a vote in their favor - if only to keep the govt on their feet and realize that as the years pass, the younger generation is a lot more restless, vocal, and more willing to stand up and make their voices heard.
Interesting discussion. Political or not, we have to admit that Kahlil's article does arouse common interests and concerns among the general public. Reading through the comments, it seems that everyone is up against Mark and I have to say, although Mark is not entirely correct about HDB or the government doing a freaking fantastic job for the past few years to prevent overheating of HDB prices, Mark got a good point on their good effort to provide affordable housing for the past 50 years. Like Mark, due to my work, I had the opportunity to travel around the world and had seen public housing in other countries too. Trust me, they are nowhere compared to ours. Also, these public housing are meant for very low income households (typically for households with combine income less than S$1500/mth) and most middle income households have no choice but to turn to private housing, which are way beyond their reach. In cities like Shanghai, Beijing, Seoul, Hong Kong and Tokyo, most middle income households and young married couples cannot effort to buy even a tiny apartment and are force to rent it. If they want to own one, they can only effort to buy in the suburbs, which are typically one to two hours drive away from their work place. Hence, compare to their conditions, our "out of nowhere HDB flats" in Sengkang, Punggol, or even Jurong West (which is where I stay) is nothing. Also, according to Wikipedia, Singapore's Gross National Income per Capita is higher than all the countries/cities that I mentioned above. This means that if other fellow middle income Asians are able to find a way to resolve their lodging issue, without their government's help and by adjusting their lifestyles, we Singaporeans, who have higher GNI per Capita and relatively lower housing cost (comparing our HDB to their Private Housing), should be able to find a solution for ourselves. Adjust our expectations. Instead of living in Queenstown and Toa Payoh, reside in new flats in Sengkang, Punggol & Boonlay. Why not? Get a cheaper place to stay, start a family, work harder & smarter, earn more $$ and aim for your dream home when you can afford it. If our fellow middle income Asians in other countries/cities are not getting and expecting their government to help at all, why are we whining about our government not helping enough? How are we able to stay competitive and be tough among Asians? Lastly, although harsh, I'm sad to say Mark is correct about one thing. We Singaporeans had been too protected for quite sometime now. Not that I don't like it. But seeing what's happening in other developed Asian cities, I've learnt to appreciate what the government and HDB had done so far. They may have made their mistakes (like not building enough HDBs in time to meet demand for the past couple of years) and may not be right everytime. But generally, they are not that bad.
It's great to see many people sharing their opinions on this particular topic. Public housing is a basic necessity and we have the right to question the fundamentals when prices of flats start creeping up towards the $1,000,000 mark!!!
The HDB has been given many opportunities to give their right of reply. You are more than welcome to blog on your expertise by providing a picture and a short bio of yourself.
Mr Khalil, may i asked you some questions? I noted your point about HDB. 1.Why are u attaching a political ton to your entry? If you are addressing policies and movement in property market, why do you have to touch on political words? 2. Are you a Singaporean? 3. What are you trying to achieve by telling readers how to "vote" in a property market news section. I am puzzled by your intention, instead of giving maket analysis of what to buy or not to buy, you linked HDB's flats prices to a "Vote". I would think you are being unprofessional hidding a political intent with your capacity as a property analysis or "expert" status. Keep your political agenda with the appropriate channel. Do it in other forum, that should be the way.
Wow wow…things are getting personal aren’t they? Tot it suppose to be a genuine discussion for the good of the country? :-) Have I triggered something undesirable? My apologies. Singapore is like others around us. Hong Kong, China, India, Vietnam and even Malaysia encounter the same problem - Surging demand. We will have to go through this path due to rapid globalization. Let’s say what you guys wanted materialized - Supply meets demand. So what’s next? HDB’s prices will tank. We will have another problem – Prices of HDB flats remain constant for years and flat owners will have no capital gain and most importantly – Their first pot of gold. If that happens, tons of complaints will still pour in because with no or little capital gain there is no way to offset mortgage interest and every sales will become a net loss. From statistics, I do believe many Singaporeans has benefitted from the past 50 years of HDB policies. However, human nature will never be contented. We will not appreciate and treasure what we gained. We will keep asking for more. Due to my work, I had the opportunity to travel around the world. I had seen public housing in other countries. Look into those and compare; you will know what I meant. I really do wonder, HDB should have cease operation and let the private market take over. No more public housing for the middle class. Focus and build rental units only for the under privileged and low income. I think it is time to let go so our population will mature and able to compete with foreigners that are from tougher environments. In a protected environment, we only create whiners and not fighters. If HDB concluded that by creating a better environment and housing options for the people will make them feel contented – No way. Only in our past generations, moving into a new HDB flat will move the whole family to tears. In the next 50 years, HDB will be engaged in a never ending and losing war to try to satisfy the unrealistic demand to have very cheap, very spacious and very good location flats. So why bother? All that is only possible in fairy land. HDB should divert attention to the under privileged and low income group, why get stuck in situation that will not be appreciated. Happy 50th Birthday HDB!! Thank you and is time to let go.
I would like to thank everyone for their comments. The issue on public housing deserves to be raised because the mainstream media has laid the blame squarely on Singaporeans for not planning ahead. As the statistics show, the HDB has not been building sufficient flats to meet with the growing and changing population. Why then should Singaporeans pay the price for the government’s flawed policy and oversight? In addition, the escalating prices mean young couples and singles will be highly leveraged. Will they have enough for their retirement? Already flats in Telok Blangah and Marine Parade are asking for almost $1 million. Although the HDB has promised to build more BTO flats, this will not solve the current problem, as these flats will only be ready in 3 years time. Therefore, till 2013, Singaporeans will have to deal with rising prices of HDB flats – something that will put young couples and singles at a disadvantage. Only PRs who sold their flat and returned back to their homeland can truly benefit from the price appreciation, but at the cost of the buyers – Singaporeans. What then does it mean to be a Singaporean?
Mark - It is amazing how simplistic and almost naive you can be. Perhaps you need to come out from the shell, mix around more with the community from all walks of life and of all status and then review what that educated washed brain of yours have been blinded to. Buying a HOME is a PERSONAL choice and it is a long term commitment unlike buying food, clothes and electronic stuffs. It is a PERSONAL choice that one is investing their hard earned money into. And because it is a personal long term commitment and investment, every buyer have every right to be choosy and get to as close as what they can call their dream home... A HOME to return to... and when it comes to what you call HOME... you don't just settle. Just as the options are out there for the citizens... the options are there too for the decision makers to adjust to the voice of the people that feed the nation. If the leaders want their citizens to consider options.. it is only right if the leaders start with theirs first.. after all they are leading the citizens they're calling "sheeps" right? But of course, the options should be there first for the citizens to choose rather than unannounced sign boards in cases like those in Tampines and Pasir Ris where residents have completely no say. Unfortunately, we are not sheeps, we don't just herd and follow, we have evolved to being simply humans standing up to our long due rights and fighting for the value of our citizenship that should make us the privileged in our own country. Your vague unthoughtful answers is far from even an eighth of the full picture and to allow people to decide for themselves you shouldn't start with, may I quote you: "For those who just starting to build their family get a new HDB flat dont buy from resales." Clearly you are still very YOUNG to even speak for whatever that you're trying to stand for, if you actually even know what it is that you're standing up for.
Mark - also, waiting and queing for new flats is always oversubscribe by 6 to 10 times. You may want to follow our HDB says of speculation - then please come with the real true statistics and not just another way of placing the reason back to the people again. And when will the income ceiling be adjusted after so many years when prices are that high and income is barely moving up.
Mark - you mentioned about flexi options that will abuse the public system. But does the current strict policies and for so many years help with the current situation? Whatever we are discussing, political agenda as you defined and not supposed to be in the forum - are all pretaining to making Singapore a better place. Therefore is not politics as you deem to be as we are not politicians, we are ordinary Singaporeans wanting to have a better life, especially with the higher cost of living. You mentioned about else where there is affordability, your else where is also seeing the same increased in prices. Btw, HDB does also earn stamp duty fees of the total purchase price.
I salute You, Mr Khalil! Well written and its definitely what most single Singaporeans are thinking of right now. If Govt dun do something to the supply & demand issue now, soon they will realise they might not have the choice to decide anymore. I dun agree with Mark Lai on "cheap HDB out there". Does that applies to Singaporeans who are singles? Do you think an average single Singaporeans aged above 35 can afford to buy a 300K 30 years old 3 room flat?
Affordable housing = New HDB flats. For those who just starting to build their family get a new HDB flat dont buy from resales. Look at all those young couples that bought Sengkang and Punggol, their flats had appreciated. If their personal income has improve through out the years together with HDB valuation, they can choose to sell their flats and move to private housing. If they need money, they can downgrade to smaller public housing. To all those out there, the options are there, all it takes is to use our educated brains to make the best for ourselves. No point whining. This is my last post for this topic, as i said ealier this is not the place to discuss policies. I am doing this to allow those reading to see the full picture and decide for themselves.
I was thinking a loud, when the valuation of your flat goes up, who is the biggest beneficies? If you are local, when you sell your flat, you need to buy another property at a even higher price in this market. So how does it benefit the citizen. For those who still stay in the flat, you need to pay a higher property tax due to the high valuation of your flat. The only people that would benefit from fast appreciation of property are the people who have more than 2 property and can sell the flat when the price is right or the PR who decide to exit from Singapore and sold back to the local at a good profit. So I dun understand why Garmen keep humming that appreciation of property is good for citizen. Could the authority enlighten me on the virtue of property appreciation?
Thanks Khalil for the article and i agree with Az.. Singaporeans dont dare to speak up in case we get ourselves into 'trouble' but c'mom i think the situation is quite bad now and we shd start opposing and fight for ourselves! To imagine the govt bringing in all the foreigners but we are the ones who have to pay for everything isnt it very silly!!!? The ministers are getting high pay but citizens like us are not and we have to pay for the high cost of living due to policies that they've come out with.. i really cant imagine what will happen when the govt targets 6mill population.. are we going to sleep on the streets??
There are various flexi options available if you have to exit a HDB line due to unexpect turn of events in life. Please understand that, there must be measures in place to deter people from abusing the system. HDB cant allow people to walk in and out of the line as they wish, they are dealing with public resources here. Measures has to be in place to deter abuse and encourage thinking before making commitment. It is pointless to discuss policies here, this is not the right forum. Lets stick to market discussion. I think the above blog entry is way off.
The argument has always been PRs and foreigners form a small percentage of buyers, which I agree. But sometimes all it takes is for one person to set a new high watermark and HDB prices are going to head north. Recently a 3rm HDB flat was valued at $390k, with owner asking for $460k. All it takes is for one person to bite, Singaporean, PR or whoever, and other sellers will start asking for $500k for a 3 rm flat. I am not against rising price, but at this rate of increase, it won't be long before a HDB flat costs more than a million. Where then is the 'affordable' housing?