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Not sure what is "wrong" with making HDB flats more affordable? MBT seems to be very against this idea!

Business Times - 15 Apr 2011

WP proposal will hurt resale prices, raise HDB deficit: Mah

By UMA SHANKARI

A PROPOSAL from the Workers' Party (WP) to lower Housing and Development Board prices by pegging new flat prices to median incomes will hurt resale prices and increase HDB's budget deficit, says National Development Minister Mah Bow Tan.

He also took issue yesterday with the WP's view that the high prices of HDB flats are caused by the ruling People's Action Party's (PAP) asset enhancement policies of the past 20 years.

'What is wrong with giving Singaporeans an asset, and what is wrong with making the asset grow in value? As opposed to what the WP is proposing, which is what I would call an asset devaluation policy,' Mr Mah said. He was speaking to reporters on the sidelines of a seminar organised by the Urban Redevelopment Authority (URA).

The WP on Wednesday defended its manifesto, saying that it is neither populist nor will it incur more government spending.

In particular, WP chairman Sylvia Lim said that new HDB flats are subject to a holding period, so there will be a time lag before her party's suggested policy of pegging new flat prices to median incomes filters through.

In response, Mr Mah said that there will be an 'immediate impact' on the resale values of existing HDB flats. Homeowners who try to sell their flats could find themselves to be in negative equity, he added.

In addition, as HDB already operates at a loss, he said, further reducing the agency's revenue by cutting flat prices means that the gap will have to be covered in some other way - such as through budget cuts for other departments, by increasing taxes or through dipping into Singapore's reserves.

For example, a 20 per cent decrease in the prices of new flats means that HDB will collect more than $1 billion less in revenue, Mr Mah said. He arrived at that estimate using HDB's planned supply of 22,000 new flats for 2011, and an average cost of $300,000 per new flat.

HDB is public housing, why should it not peg to median household income?

otherwise, what is the difference from private housing?

supply and demand?

the long-term prospects of median income priced public housing will ease mortgage spending and enable higher levels of consumption. this means better quality of life for consumers and more sales for businesses. while policy reversal at this stage may lead to negative equity, the long-term gain far outweighs the short-term pain.

1) perpetual appreciation of public housing is not so different from a ponzi. who is going to buy your flat at 1mio? the current high bidders are foreigners and cash-rich speculative locals. when the tide of foreigners ebb, or reverse, the people who have been paying top price for public housing will be gone. prices will collapse. unless of course, more foreigners are invited to purchase singapore public housing. based on the current median income, there is no way locals can support increasing hdb prices.

2) perpetual appreciation of public housing makes no sense to long-term homeowners. if i sold my flat for a 'profit', and i don't have a second home, i will have to buy another at similar market prices. the only reason i would want for my home value to sky rocket is so that i could either; sell it and upgrade to better housing, use it as collateral for loan when it is paid up, or emigrate. appreciating prices only makes sense for those with an intention to realise its value; i.e. cash out. which in other words is speculative and runs contrary to the supposed long-term ownership aim of public housing. i'm not suggesting that people be unable to cash out of their hdb, my point is that there shouldn't be speculative intents/elements in public goods. if you worry about price movements of your flat, you have fallen into the govt's trap of equating homes to financial assets; and consequently perceiving political parties as either detrimental or improvement to said asset.

3) the longer price appreciates beyond its fundamentals, the more painful the reversion to mean will be. singapore is no longer creating high-income jobs, or even new median-income jobs, save for the small proportion in high finance. and there are not only psychological, but also physical limitations to population growth. the question to ask is, 'is perpetual appreciation of public housing sustainable, or even possible?'

parents who has an affordable house will worry for their children and save for them and limit their spending power.

ever-appreciating housing does no good for ordinary people.. it is no longer public housing...

I think MBT's idea is to spread a little fear into voters. Although it shouldn't be, but we can't deny that in human nature and therefore by extension, in this case, politics there is always the influence of self-interest (in the individual or party sense).

The initial intention (in the booming 90s) may have been good- Allow for an environment where rising HDB prices mean that initial buyers can 'upgrade' to a condo so that they can keep up with the Tans. But eventually, the party has to come to an end. Housing prices can't rise indefinitely without the wages rising. Population growth is another factor against us. With a declining birth rate, household formation has to eventually slow down. The only way out of it is to encourage the influx of foreigners to live here but that has social repercussions too.

I still cannot see how it helps by increasing value of my flat will help me.
When i sell it i need to pay high for another. My children will have to pay a markup price.

HDB is a critical social program for all singaporean. Pegging to Median is ignoring the other half of the population.
I think MBT totally lost touch with the lower median when he becomes too rich. A Side Effect of paying million dollar salaries.


Cory

MBT is been generous, he is trying to make everyone in Singapore millionaires by making sure your HDB goes higher and higher and when you retire, when you add your total assets, you will be at least a millionaire, then can report out that Singapore has the highest millionaires in the world!! =)

(15-04-2011, 10:16 AM)flinger Wrote: [ -> ]MBT is been generous, he is trying to make everyone in Singapore millionaires by making sure your HDB goes higher and higher and when you retire, when you add your total assets, you will be at least a millionaire, then can report out that Singapore has the highest millionaires in the world!! =)

Incidentally, MBT mentions that WP's Manifesto seeks to "devalue" HDB flats. Ironically, in the first place, one should NOT be using HDB flats to extract value and make profits!

Public housing should remain so and provide an affordable roof over one's head. PAP (I feel) is trying to tie public housing to profit-making and asset enhancement, all in the name of Singapore Inc.

Don't blame Singaporean for low fertility rate. Everyone know who are to blame.

It is shameful to always open leg and allow many people to come in. We should sit decently and don't open our leg too wide. Only dirty politicians will think of disgraceful idea.

Problem is not solve but more problem created. Billion $$ administration is not productive yet produce more problem. Problem A not solve but problem B is created. We cannot afford to allow them to do trial and error. Enough is enough!

How does HDB factor in the cost of land? How do they acquire the land in the first place? Or do they hold those undeveloped lands since day one? So it's zero cost? Land cost + construction cost = selling price at market rate? What is HDB selling price of a 5-rm flat 10, 20, 30 yrs ago?
Somehow, there is a mismatch: salary increase does not go in tandem with hdb price increase (public housing).