By Leong Sze Hian
I refer to the National Development Minister’s letter “Seeking truth from facts in the housing debate” (Today, Dec 10).
It states that “The HDB also helps first-timers buy resale flats of their choice with the CPF Housing Grant”.
This echos what his press secretary said in “Understanding the question of affordability” (Today, Dec 3), that “the CPF Housing Grant and Additional Housing Grant, which make resale flats more affordable to first-timers, especially applicants with lower incomes”.
How does a family with household income not more than $1,500, which is the criteria to get the maximum grants, come up with the cash to pay for the Cash-over-valuation (COV) and the five per cent cash down-payment for resale flats?
Can the HDB tell us how many below $1,500 household income families applied and were given the grants last year, and in the history of the grants scheme, to purchase a resale flat?
This statistic may be the best argument that HDB flats are affordable, “especially (for) applicants with lower incomes”.
Ownership means affordability?
His press secretary also said that “in Singapore today, eight in 10 Singaporeans have bought and live in HDB flats, with over 90 per cent owning their flats. This high ownership rate is the best proof that HDB flats are affordable”.
This argument may be flawed because unlike other countries, unless you are rich and can buy private property, there are no other housing alternatives for Singaporeans, other than a HDB flat.
Let me use an analogy to illustrate this. If you are the only property developer in a small country, and you say that the fact that everybody owns or stays in the properties built by you, then it must be affordable?
Other than measures of affordability based solely on people currently owning HDB flats as the argument for affordability, we should also look at the statistics of those who may not be able to afford a flat in the first place, those who can’t afford to keep their flats, and those who have to sell their flats in order to retire because they used most of their CPF and cash savings on HDB flats.
Market subsidy or Cost-plus pricing?
With regard to “In contrast, a cost-based system means that the same price would be charged for different flats in the same project, regardless of their location, floor, direction, and other attributes”, I think the minister may be somewhat confused, as a “cost-plus” system may simply begin with transparency as to the cost of flats, with a break-down of the land, construction, amenities’ costs, etc, like what the HDB used to do in the 1980s. It does not necessarily mean that every flat has to be at the same price.
In this connection, according to the Singapore Land Authority’s (SLA) annual report, its revenue from the sale of land to the public sector was almost as much as that to the private sector, for the last financial year.
How much of the SLA’s slightly less than $2 billion revenue from the public sector, was paid by HDB?
If I may use an analogy, you can tell from a private property developer which is a listed company’s annual report, how its profits were derived, with the revenue and cost components.
So, how can there be less transparency from a public housing authority, like the HDB?
Subsidy from HDB?
As to “the cost subsidy per family averaged $40,000 to $60,000. If we add other housing subsidies such as the CPF Housing Grant and Additional CPF Housing Grant (AHG), the HDB’s total subsidy for first-time buyers comes to $1 billion a year”, let us also not forget that some of these grants may have to be returned by HDB owners to the HDB, by way of the Resale Levy of up to $50,000 per flat, return of flat to HDB due to divorce before the 5-year Minimum Occupation Period, compulsory acquisition at only 90 per cent of valuation, etc.
Let me use another analogy. A property developer tells you that it is giving you a discount (grant), but raise the price such that the increase is more than the discount. So, is it really a discount?
Similarly, the prices of new HDB flats have invariably always increased more than any increase in the housing grants, or for that matter, ever since the grant system was introduced.
I would like also to refer to the article “Resale flat transactions and COVs fall : Mah Bow Tan” (ST, Dec 7).
Resale prices falling?
For the second month, median COV has dropped from $30,000 in the third quarter, to $25,000 and $22,000 in October and November, respectively.
Since the COV data is a component derived from the resale price data, why are there no statistics for resale prices in October and November?
For example, if resale prices rose in the last two months, it may negate any reduction in the COV.
In this connection, the example given of a four-room flat in the Bedok area’s valuation increasing from $400,000 to $420,000, may mean that the total price, despite any decline in the COV, may still be rising.
BTO prices rising?
If resale prices are dropping, shouldn’t the latest Build-to-order (BTO) launches have lower prices too?
Instead, they seem to continue to hit record high prices, for October’s BTO Anchorvale Horizon Sengkang, Senja Parc View, and November’s Yishun Greenwalk.
In this regard, October’s BTO studio, 2, 3, 4 and 5 room prices per square meter, ranged from $2,030 to 2,260, 1,870 to 2,590, 2,220 to 2,850, 2,630 to 3,390, and 3,070 to 3,800, respectively.
Similarly, for November’s BTO, the range for 3, 4, and 5-room was $2,240 to 2,780, 2,430 to 3,040, and 2,660 to 3,260, respectively.
BTO completion getting longer?
Also, why is it that the BTO Estimated Delivery Possession Date (EDPD) seems to be getting longer, from 4 years 5 months to 5 years, for the October/November BTOs?
When the BTO system was started in 2001, I understand that in the initial years, the waiting time for completion, was almost always not more than four years.
In summary, to use the minister’s own words, how do we “seek truth”, “from facts” that may not seem to be very transparent?