“PAP is profiteering from DBSS Land Sales”, screamed a well-known blog yesterday.
Much as it reflects ground sentiments, I must disagree with the utterly misleading headline. I also hope that I can introduce a paradigm shift that can change the way Singaporeans look at DBSS.
First, it’s not PAP that’s allegedly “profiteering”, it’s the Govt. Do not equate State to Party, even if the PAP is forming the current govt, because the money goes into State coffers, not Party coffers.
Big difference, ok?
Second, “profiteering” is a very strong word, with a very specific meaning, and is totally unjustified here.
To “profiteer” means to sell something at far above fair market price, typically to exploit weak, gullible or vulnerable buyers, who have little or no choice.
A classic example would be selling umbrellas at 10x the normal price when it’s raining heavily.
What HDB did, ie tendering land to the highest bidder, cannot be called “profiteering” by any means.
Why should the State sell land lower than what the highest bidder will pay, esp to private developers?
Even if they did sell land below market price, would the developers return the favour by selling the flats at low cost, or would they still price at $880K?
Even if they did price units at low cost, would the buyers also sell at low cost to the resale market after five years, or would they want the highest possible selling price?
The answer is obvious.
So, why call HDB’s action “profiteering” when it is simply selling at market price, which is the price achieved in an open tender.
Land is a state asset, and there’s no justification to sell it to private developers below market price. To do so would be shortchanging the Treasury, and by extension, the people.
The goods in question (ie flats) are also by no means monopolised by a single seller, and buyers have alternatives, such as resale flats in Tampines. The developer has no stranglehold on the market.
The price is not excessive, when you consider that it lands smack in the middle between resale flats and condos in Tampines.
Hence, a charge of “profiteering” cannot be made, and certainly not against PAP.
Many people are disgusted by $880K “public” flats. While this is understandable, it may be that they see DBSS flats wrongly as “public” housing.
I will write on the unique nature of our “public” housing another time. But for now, if you change your paradigm, and see DBSS flats as “subsidised” private housing with HDB restrictions, perhaps your anger and disbelief can dissipate.
When suburban private condos easily command at least $1000 psf and over $1m, DBSS offers the equivalent build quality and finish for at least 20% discount.
However, by the no-free-lunch principle, DBSS buyers have to submit themselves to HDB restrictions, while DBSS developers have to bid and price with HDB income ceilings in mind.
If you see DBSS as private housing with HDB rules, rather than “public” housing, does that change your perspective on price and affordability? Does it also eliminate any thoughts on “profiteering”?
Put aside whether HDB has lost its mission and direction for now.
DBSS is not your grandfather’s HDB flat. It is aimed at those who want to live in private luxury, but cannot afford to pay condo prices.
DBSS is therefore a luxury good, and even with a 20% discount, it is still pricey– as it should be, because it’s aimed at people who can and want to pay, NOT at the masses.
Hence I don’t see how this is profiteering, by any measure.