By Khalil AdisAug 13, 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...
Bookmark & Share
As you may be aware, prices of resale flats are at its record high right now.
Data from the Housing Development Board (HDB) shows that the Resale Price Index (RPI) had increased by 4.1 percent to reach 161.3 points in the second quarter.
This means HDB resale prices are now at its highest point since the HDB began tracking data on the RPI since the first quarter of 1994.
Prices of HDB resale flats had been increasing steadily from the second quarter of 2003.
If you compare that period till the second quarter of 2010, prices of HDB resale flats have gone up by a whopping 60 percent.
Build-to-Order (BTO) flats are then priced 20 percent below resale flats as a form of “subsidy”.
Meanwhile, the median Cash-Over-Valuation (COV) levels rose by a whopping 20 percent to reach $30,000 in the second quarter - some $5,000 jump from the first quarter.
I spoke to a few property agents on how this has affected Singaporeans.
It seems the most affected by the price increase are low-income families.
In fact, almost all my interviewees are with young couples who are earning below $1,500 who in the end had to rent a flat directly from the HDB.
One is a polytechnic diploma holder who informed that HDB officers said his family can rent for up to two years, after which their rent will increase.
Interestingly, while doing my research, I came across a blog by a Malaysian teaching Malaysian PRs on how to make money from the HDB resale market.
The blog went on to say that Malaysian PRs have a distinct advantage over Singaporeans by buying resale flats as they can sell or rent out their flats after three years.
The blog posting shows that it is quite apparent that PRs are taking advantage of their eligibility to buy resale flats to jack up prices, causing undue hardship to young couples and singles.
The blog then went on to blatantly say that Malaysian PRs can reap a handsome profit when they decide to sell off their flats and go back to Malaysia.
The HDB has always maintained that public flats are for occupation and not for investments.
However, the situation on the ground is quite different altogether.
There are god knows how many other Singaporean families suffering in silence due to HDB’s policy.
Which begs the question, is the HDB listening?
“Property prices in Singapore will dip...
A recent headline on Forbes.com grabbed my attention...
Search Property News
Keywords:
Reader Comments (29 comments)
Hi all I agree with some of you that the agency had been sleeping throughout. Please correct me if I am wrong, shouldn't a resale flat to be sold cheaper than its original price or at the same or @ 20% higher max. I will have this point of view is that as most of you know that you will confirm suffer losses if you sell any thing as second-hand (resale) e.g. cars and handphones. But what I see now is that areas like my mother's place is selling at least 7 times of what they had paid for!! I feel that the agency should revise on eligibility of the schemes as well.
ha ha The Gov. had step in again stricter rule on second homes buyers it will effect on investor.. but if they are cash rich than no problem and now private homes owner have a holding period of 3 year befor they can sell..hmmm just like HDB Rules. well to me. hdb resale will still be moving on, commercial & industrial will also be moving on, as for private resdience. down by may be 35% what do you think..
I am also facing the problem in getting a unit for my family.For 2 yrs, six of us (age 47,47,20,19,16 n 15)have to squeeze in a room since we were asked by hdb to sell our flat due to our outstanding with them. till now we are not able to purchase any flat. Middle income like us got no where to turn to n had to suffer in silence. We need to know what other actions are been taken by HDB other then building more flats.
Simple sentence..The rich will become richer.... :P When you are rich, price is not an issue but to most of us, we r here complaining increased of price and immigrants. U can see that the demand is more than supply. WHY? Importing of too many people to Singapore and the RICHes are buying more to earn $$$$... in the end, who suffers??? you and me ... cheers up and earn more $ and become the RICH. :p
I think it is not the HDB fault in general, but partially. Mostly is due to the free market in property. As there is no control of transactions from the mass property agencies.Just flip the newspapers in the property section, you can see so many agents from various agencies, posting for private properties to HDB flats.Most of all, all these agencies are competiting with one another to be the top agency in Singapore. Be it good or bad tranctions, as long you hit the most sales & cover the whole Singapore. That indirectly creat a competition in the market, let alone despicable & unprofessional closings. But i believe there is agent out there whom is upright & rightgeous to their industry. Further to that, all the resale properties & HDB flats increased in the prices over the year as there are so many agencies to service the owner to get a higher selling price, which increases in the COV.I think that is why the whole situation is totally out of control.If HDB is smart enough, i think they should not let all the agencies exist, they should be the agency themselves.In a way, all publics will go to HDB to buy new flats, resale flats, private properties & rental of flats. If they can do it that way, we won't have the problem anymore. I suggested that all agencies' heads forgo the competitive & merge into a govt. bodied sector under HDB. Most of all, to service the most to Singapore publics.
At least HDB are increasing the number of BTO which give 95% to the first timer. 5% of non priority is pathetically little. As the rate of divorce increases in Singapore(actually worldwide), shouldnt HDB look into helping the needy "single" parent with kids? Most ironically, the rational why the repayment of the $40-50k grant that was given for the first subsidy(if taken) had to be given back IN CASH but no other option like from CPF?? No everyone is CASH RICH and isnt CPF our CASH WITH GOVERNMENT???
I think cos many events coming up such as YOG, F1, New HDB Housing, Land for sale or even Parliament Voting may be drawing near that's no action at this moment. Hopefully government can look into the property market the soonest to curb this kind of ridiculous pricing. I have also come across numerous of HDB in Bukit Panjang asking for more than 100k Cov. Please, please, kindly stop all these !!!!!!
We read in the papers recently that COV has reached another new high of $30k. Many couples are putting their hdb purchases on hold as the COV of $30k is beyond the means of many. Interestly, when we were negotiating on the price for our proposed purchase of a 5 rm recently, the first offer was $30k and every time we call the agent, the price went up by another $5k to $10k and finally, the transaction was closed at $65k above valuation. We were not the buyers. Our take from this experience is that there are many buyers out there - PR or Singaporeans who can and are willing to pay COV above $30k ,,, !
Good Day Guys... No offend but just a thought after reading the posting and the comments, finding it particularly interesting... The objective of the request by the Property Buyer Magazine is to discuss about the affordability issue on public housing in Singapore, not about focusing on the affordability issue face by SINGAPOREAN only or about how the specific Malaysian PR ways of profiting from the price inflation. Correct me if I am wrong. However, the discussion has became focusing on how ONLY the Singaporean suffered and who is the likelihood of the cause, Malaysian PR? I am wondering why? Singapore is a free market, with super limited resources and especially towards the land size (rank at 187/233, a land mass of 707.1 km(sq)). With limited natural resources and land mass, it is easily for us to know and understand that the only way for the country to develop and grow is UP? UP as in all aspect of the development, education, financial, limited manufacturing, building and technology etc... Has anyone of us even come across a developing country or city that encounter reversing trend, meaning as the country become more developed or wealthy, the available items such as housing, cars, luxury items, cost of living become cheaper each day? The world economic and same goes for Singapore, works on a very basic fundamental, Supply and Demand. The higher the demand, with only limited supply, will result in the increase in pricing. By applying this basic fundamental understand of how the economic works, we can easily forecast where the price of housing, cost of living will be like in the future... In fact, each one of us, including myself, in one way or another has contributed to the increase in the pricing of items, willing buyer, willing seller theory comes into play... The price of the items on sales is not determined by the seller, in actual fact, it is determined by the buyer. Options are always there in the market but it all depends on individual wants and desire for a better living. The moment a buyer agreed to the seller indicative selling price, it has sent a perfect signal to all, including the manufacturer, developer, owners etc that this is the selling price and there are demand in the market. This lead to the other sellers following the trends, with the assumption that they will be able to achieve the similar selling price as well, especially the request for the cash over valuation. After buying the flat, our desire will want to have it nicely renovated including furnishing tv bed etc (thats where the extended credits on installment 48 or what 60 months schemes comes about), trying our best to extend our credit and getting as much financing from the bank as we can... then what we did next, we start to ask for more increment in salary from the companies or bosses... which in turn, leads to the increase in the manpower cost (which is always the biggest percentage in the company P&L), which in turn, leaving the bosses or companies no choice but to increase in the selling price of their products... the effects goes on and on in a circle until the day when the buyer said enough is enough, and stop to buy... that when the price will have the slight possibility to come down, if all conditions remain equal... I believe all of us are aware of the effect of Supply and Demand, willing buyer, willing seller theories but how many of us want to acknowledge the fact that we have one way or another contributed or involved in this... these theories have been around for century and will still continue to be... Maybe, we should be asking ourselves, what do we really want? Desire for good life, luxury items at the expense of the world resources and yet do not want to pay a price for it? Think again... NB: Btw, those asking for high COV or selling the HDB price at such level are not just the PR or Malaysian, Singaporean has a part to share as well.
I agree with you. I am currently staying in Sengkang. The prices are extremely high, most asking for cash above valuation. We were looking for a 5 room resell flat and most of the selleres are PR who are selling to upgrade to private properties. And we have noticed that there is an increase of Hindi in our area. We believe they are PR and very rich PR!
I agree that HDB housing prices are getting very high esp the high COV. We are a recently married couple and because of the high prices, we are drove to renting a flat. Without a proper roof over our head, having kids is the last on our priority list. Oh and abt the issue of HDB being a tool for investment - isnt it meant to be a public housing? Did our pay increase so much since 4-5 years ago when the prices of public housing and the COV is not that high? Bear in mind I am not even mentioning prices that are 10 years ago!
Folks - you also have to understand Singapore's Macro situation. This place has the highest home ownership in the region, which means a majority of folks (who're obviously not posting here) actually benefit from increasing home prices. Also - singapore being a small country with not much in the way of natural resources (unlike china) has to keep very open and flexible policies with regards to allowing foreigners and PR's move money into singapore and procure property. If we did what HK and Shanghai are doing, we dont have the internal economy to sustain property prices and it may lead to a sharp correction to not only property prices, but also the economy and therefore jobs. For singapore, due to the small size and fragility, these things are all connected. Am sure govt will introduce some more cooling measures but they cant be as aggresive and direct as other countries. Our economic prosperity does come with certain downsides. Everything cant be perfect. You only have to visit a few of these countries which we're holding up as examples to realise this.
I think the government should be harsher in granting PRs to foreigners and not allowing them to buy HDB flats at all. To be a PR in other countries, you have to be rich if not, cash rich. The same rule should apply to foreigners wanting to reside in SG. If they're not choosy, there are cheap private housing in areas like Sembawang and Geylang. Distance should not be a problem because you can afford to buy a car.
I think Mr Khalil, as a property expert publishing his view online, has made some unfair statements by telling only 1 side of the story. Yes, we have seen some titles on the news paper saying: Taiwanese PR offers $50k for a HDB flat, etc. However, how many Singaporeans offer not less than $50k for flats? The PRs transactions only forms around 26% of the HDB transactions, which is less than one third of the total transactions. To me I think the HDB ruling is not unfair. There are privilege that PRs don't enjoy: 1) CPF grants 2) Getting new flat directly from HDB which is subsidised 3) Single PR cannot buy a flat, even after age of 35. The increase in price of housing, in the long term, is only natural and healthy. How much was a cup of coffee back in 1994 and how much it is now? Even the price of a cup of coffee has increased, let alone the price of housing. Do you wish that the price of your flat/house to remain the same for 10 years? If this happens you would then complain that the government is not doing enough to ensure housing price appreciation. Besides, when the price increase, everyone that purchased at a lower price makes money, not only the PR. Hence, not only PR reap a handsome profit for selling a flat. Having said all the above, I think the increase in the housing prices is excessive, given the macro economy still remains gloomy. The government should regulate to control it before the US housing crisis repeats in Singapore.
With the housing prices increasing and the pathetic pay difference, I just wonder how our next generations would be able to afford even a HDB house.
Policies have derailed from its true intent... It is perhaps time to revisit the true role of HDB.
i believed HDB is venturing all possible solutions to curb the increasing prices of hdb flats.
HDB is here to make business, not to listen on Singaporeans need in public housing..
more or less 50 years after HDB was established, the shortages in housing units in Singapore are still there..
second hand HDB flats are cointinously increasing during the past few year + coupled with high COV = struggling singaporeans owning a flat.
HDB now is a big business agency, and its main goal is to earn profit from HDB flats.
I think the government has to do something to prevent prices from continously increasing, just like what the China and Hong Kong government are doing to cool down their red-hot property market. In a way, their measures are effective...
I agree! Flats nowadays are beyond the reach of most people. i have seen it in my line of work. ?Irony is, even if people have enough money to buy a house using CPF, they can't afford the COV(cash-over-value),which begs the question: how did this ever happen? HDB is meant for the masses,and that includes middle and low income Singaporeans. I believe that HDB has been sleeping on the job,but not meeting up to the demand of houses.More demand,less supply has led to the high COVs and not to mention, cash-rich PRs drive up the COV market
id like to make few corrections on my comments earlier. i said: "malaysian pRs are really benifiting from the kind of trend, knowing that they have to stay on the flat for 8 yrs before they can sell it.." what i mean is, malaysians are BENEFITING from the kind of trend, knowing that they DONT HAVE to stay on the flat for 8 years (like Singaporeans)before they can sell it.. SORRY FOR THE MISTAKES.
HDB resale flat price is making a consistent increase in the past decades.
i also read the blog, its really worse for the singaporean while malaysian pRs are enjoying the kind of benefits.
(cont.) regarding the issue of malaysian benefiting from HDB flats, i also read that blog mentioned., malaysian pRs are really benifiting from the kind of trend, knowing that they have to stay on the flat for 8 yrs before they can sell it, plus they dont have to pay for the CFP when they purchased public flat. in the end, singaporeans are still struggling to own a decent home, exactly opposite for what HDB supposed to achieved.
when HDB was established in 1960s, its main goal is to give singaporeans quality & affordable homes. however, as the time passed by, HDB's main goal is set aside little by little. the agency is becoming a business, reaping gains from their flats, which supposed to help its citizen to own a home.
I love Singapore and it's opportunities but HDB prices are going out of hand! It's no longer affortable to the citizens without burning a Huge hole in their pockets and cpf savings. A 3Improved hdb flat costing $120K last 5-6yrs now is costing almost $270-$280K now! And that's not in Central areas...We should do a Relook of goverment housing..Is it for the people? Is it for the citizens?