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