HDB Doesn’t Get It

HDB scored an own goal last week. I think they didn’t even know about it.

In its “rebuttal” last week, HDB claimed that the PropertyGuru report, “HDBs more unaffordable than private homes“, is misleading, as it is based on “a simplistic analysis of incomplete data“.

I find HDB’s own analysis also highly misleading, and shows how hyper-sensitive this Govt still is.

For one, HDB’s own analysis is based on direct flat sales in “non-mature” (ie ulu) estates and factors in “grants” and CPF contributions in an attempt to show that mortgage payments are below 30% of monthly income.

Clearly the above shows HDB flats– even direct from HDB– are unaffordable. If they were affordable, why would the Govt need to provide grants, and why would people have to pay out of their CPF savings?

HDB forgets that CPF is meant for retirement savings. If people have to draw on their CPF savings to pay for HDB flats, it means they are forgoing retirement planning to pay for housing consumption. It also means that in theory, they will not have enough for their retirement.

This is definitely “unique in the world”, as HDB proudly claims.

Yet after all these are taken into account, the monthly payment is still 24% of monthly income, ON AVERAGE? And HDB still claims its flats are AFFORDABLE?

Second, Propertyguru includes resale flats in its cross-country comparison for precisely the same reason HDB says its housing program is a success– that 80-90% of people live in HDB flats.

How then can one exclude resale flats from comparison when the bulk of property transactions by volume is HDB resale flats?

HDB should not take offence at this. If HDB believes that HDB resale prices are driven by market forces, then it’s not HDB’s fault that resale flat prices have gone crazy. It may be PMO’s fault, for allowing so many foreigners to immigrate to Singapore, driving up demand for resale flats. It may be URA’s fault, for not releasing enough land to build more property in tandem with high immigration. It may even be due to “irrational exuberance” of property speculators.

Just because a flat was built by HDB does not mean HDB is responsible for its price movements after its sale. You don’t hear Capitaland criticising Propertyguru for the high resale prices of its condos, do you?

So the fact is that

(1) New flats are unaffordable. That’s why the Govt has to give all kinds of grants, that’s why people have to forgo retirement savings to pay for their flats

(2) Resale flat prices are crazy. When a 5-room resale flat with 90 years left on its lease can command $800K or more, something is not right, although we do not claim it is solely HDB’s responsibility or HDB’s fault.

Affordable housing means people do not have to pay through the nose over 15 or 30 years. Once upon a time, HDB flats were really affordable, even blue-collar workers could pay off their mortgage within five years. For some strange reason, when HDB saw that people were making a killing in the market reselling HDB flats in the 80’s, it decided to peg the price of new flats to resale flats, less a “market subsidy”.

HDB flat price affordability has rapidly gone downhill since then.

Just because the Govt gives “grants” and allows CPF for housing loan payments does not make HDB flats affordable. Indeed, housing grants come from the Budget, which means it comes from our taxes. So in reality, we are all indirectly paying for the high cost of HDB flats.

How can you claim HDB flats are “affordable”? HDB, you just don’t get it. Well, what can one expect from an organisation whose CEO claims that smaller flats don’t lower our quality of living?


About politicalwritings

Someone who sees beyond PAP and "opposition" in Singapore politics. To understand more please see the Top 10 link below.
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12 Responses to HDB Doesn’t Get It

  1. jax says:

    thank you. this piece, like your other other earlier ones, makes
    sense. i like how you cut through the crap.

    one thing that disturbs me is the fact that more than 80% of
    sporeans lives in PUBLIC, supposedly subsidised, housing!
    this in one of the so-called richest countries in the world. how
    can this be? shouldn’t it be tt 20% lives in public housing? housing
    originally meant for the poorer people?

    anyway, based on how things are proceeding, sporeans will
    soon not be able to “afford” this “affordable” housing. even though
    we are paying foreign construction workers the embarrassing
    sum of $18 or so a day. even when every scrap of land is covered
    with flats, and terrace houses (which are being replaced by condos.
    go look at telok kurau) are consigned to history.

    • Thanks for comments. HDB has subsidised public housing. Just not enough. Mah Bow Tan’s “market subsidy” is a discount off resale flat prices.

      As far as having only 20% live in public housing, that is a really big question for Singaporeans to ponder. Indeed, in other countries, only the poorest people live in council housing– and typically at very low rentals. Singaporeans have to ask whether we want such a model. But I can’t decide if it is better to be screwed by Capitaland or by HDB.

      Well, maybe it’s better to be screwed by HDB– at least you can vote against the Govt, and they have to do something to win your vote. If it was a property developer, they don’t have to do anything for you once you paid for the apartment.

  2. Excellent article. This is the govt strategy to build more reserves and enslave all citizens to work till die. Don’t ever think of retirement! Fat hope! Really langgar!

  3. Pingback: HDB rebutted propertyguru insist HDB is afforable!!! Who say HDB is expensive? - Page 6 - www.hardwarezone.com.sg

  4. RC says:

    Hi Political Writings,

    do you intend to send this writing to the ST forums? seriously, the more ppl know about this, the better it is for our next generation

  5. Saycheese says:

    The property market will collapse if they stop the use of CPF.
    CPF is a big Ponzi and is a tax on the average wage earner – ever increasing medisave and minimum sum. Your money but you can’t spend it like it’s yours!

  6. Pingback: Propertyguru: HDBs more unaffordable than private homes - BMW-SG - The BMW Singapore Community

  7. Pingback: Daily SG: 26 Mar 2012 « The Singapore Daily

  8. thevoiddeck says:

    “HDB forgets that CPF is meant for retirement savings. If people have to draw on their CPF savings to pay for HDB flats, it means they are forgoing retirement planning to pay for housing consumption.”

    True. However, most of us want to drain away our CPF into housing and see the HDB or private property as our retirement egg rather than cash in CPF that we can’t easily withdraw in the end. The idea that since CPF is our money and it is sitting idle CPF as OA, might as well put it into housing. The idea of CPF has changed from CPF-for-retirement origins into CPF-for-housing. Not easy to change back that mindset that evolved over a generation.

  9. Alan Wong says:

    The problem is that HDB (or rather the responsible PAP Minister whoever he is) who sees no interest to keep it to the basics as there is plenty of money to be made by pegging the selling prices of HDB flats to the market value. Hence the deceptive “subsidy” when there is really nothing they are subsidising but actually a big fat profit to be made our of each flat the sell. Even for that studio flat that they are selling, they seem to making some kind of profit consider their small area and many other restrictions.

    How else can they explain that the same studio flat they are building in Queenstown is so much more expensive that the one in Woodlands especially when the land cost the Govt next to nothing. If our PAP Govt thinks the public should equally be paying for the land cost just the same as for private properties, then why refer to it as “public housing” ?

    Maybe they think it is a good political strategy to first make a killing for themselves especially if those flats are in hot demand that command a premium for their choice location, then make use of part of these ‘excessive’ profits to be ploughed back as grants to make them look like a ‘responsible & caring’ Govt that in the eyes of the unsuspecting public.

    If a ‘responsible’ Govt has to resort to ‘deception’ of a subsidy when there really isn’t any, what else will it not capable of doing to fool the public ?

  10. Name says:

    One factual error. Land release is by SLA not URA.

  11. Apple with Orange says:

    HDB reply was like Mediacorp saying their programmes are well-viewed by Singaporeans when we don’t have other independent non-paid channel to choose from.

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