Affordability of homes

In a special report about a year ago, there was a debate over the affordability of public units.

Last September’s relaunching of Pinnacle@Duxton had once again sparked the issue. The Pinnacle has turned out to be the most expensive housing project in Singapore, with prices of its units with five rooms amounting to $645,000.
 
Also, at that period, bigger units of condo-style flats under the Design, Build, and Sell Scheme (DBSS) of HDB could cost more than $700,000.

The Straits Times Forum have been flooded by irritated home buyers with letters on what they saw on HDB flats as an “upwards price spiral”.

However, with the global downturn, the buzz had faded. The property market fizzled, and jobs were lost.

Now, the volume is back, but with retaliation. Taking into account the recession-defying property boom over the past six months, the resale flat prices of HDB surpassed the 1997 peak and escalated to a historic record.

Based on the latest reports in The Straits Times, developers have raised their prices by up to $20,000 for the projects under the DBSS, like The Peak@Toa Payoh and Natura Loft at Bishan.

Due to the prime location at Tanjong Pagar, property analysts have predicted that when the remaining Pinnacle@ Duxton units are launched by the HDB, prices may even reach up to $700,000.

With some home-buyers questioning the way of HDB to measure affordability, the issue on affordability has been intensified. Figures have shown that homes here are more expensive than in New York and Tokyo.

“HDB is not building enough new flats where Singaporeans want them,” a Forum letter writer said. A few urged to ban the practice of cash-over-valuation (COV) or ramp up the supply of new HDB flats.

It has also been noted that prices of HDB flats have increased faster than wages. Prices have ever since increased, which has reflected the growth in the economy of Singapore over the past decade, driven by the demand from citizens and new permanent residents (PRs).

Mah Bow Tan, Minister of National Development, has taken the pains to address the affordability issue, which was recently debated in the Parliament.