Reflecting on “Reflections” – A review of Mah Bow Tan’s book (Part 3 of 9)

This is a review from a statistical perspective, wherever possible, of the book “Reflections on housing a nation”, launched on 22 March. (You can read it here for free and save yourself ten dollars. – Editor)

Leong Sze Hian/

In Part Three (“Housing Supply:  Allocating Scarce Resources”), the Minister for National Development wrote:

“HDB had to come up with all sorts of ways to clear the flats (31,000 unsold) – converting five-room and executive flats into smaller two-and three-room ones”

How many five room and executive flats were converted to two and three-room flats?

How many lost homes?

“Some who bought flats just before the crisis ended up with negative equity and even lost their homes and hard-earned earnings”

How many households lost their homes and hard-earned evenings?

Is this why banks were allowed to offer HDB loans from 1 January 2003?

Why are there no statistics as to how many HDB bank loans are in arrears or how many flats have been foreclosed since 2003?

I understand that there are now over 160,000 HDB bank loans which has been rising over the years, whilst HDB loans have gradually declined on a relative basis.

Since the last reported statistic on HDB loans in arrears was 28,000, which was about seven per cent of HDB loans, if the ‘in arrears’ percentage is about the same for HDB bank loans, does it mean that about 39,000 HDB mortgages in total may be in arrears?

Disappearing  statistics?

Why is it that the statistic on the number of “financial assistance to HDB flat-dwellers”, which used to be published in HDB annual reports, has disappeared for the last few years?

The last time that HDB bank loans ‘in arrears’ statistics was disclosed, the figure was seven per cent (Feb 2007, Parliamentary debate).

The last time that “applications for financial assistance approved” statistics were published was the HDB’s 2004/2005 annual report.

The figure was 28,386 and 39,308 for FY2004 and 2003, respectively.

Of course, it may also have been helpful to publish the statistics on the number of applications that were not approved.

The Minister added:

“Ninety-five per cent of the flat supply is set aside for first-timers”

I understand that flats are also set aside for grassroots volunteers – how many?

BTO only?

“Build according to real demand – Construction will proceed only when majority of flats in the BTO project is booked.  This overcomes the mismatch of supply and demand under RFS (the former Registration for Flat System)”

Since BTO is only for citizens, how do we meet the housing needs and demand of citizens who do not qualify for BTO, and the hundreds of thousands of new Permanent Residents (PRs) and foreigners in the last few years?

Is it not bad planning when we do not project for the demand of non-Singaporeans, and yet at the same time say that we would like to grow the total population to 6.5 million eventually?

Must buy or else?

“Indeed to be fair to those who genuinely need a flat, the Board has since 2008 removed for one year, the first-timers status of those who have rejected two chances to book a flat”

Allow me to illustrate the fallacy of such reasoning – If you have say one leftover flat on a second floor facing the rubbish bin in a block that is very far from the MRT and amenities, and you offer it to 1,000 first-timers, wouldn’t it be natural for most of them to reject it?

Or, what if you offered a flat that is higher priced than what you originally intended?

After all, the HDB flat is normally the largest asset in a family’s life-time.

Why is it that most private residential property projects do no seem to have this perennial problem of HDB balance flats that most buyers don’t want?

Could it be that the pricing of such HDB units is inappropriate?  Private property units may not have this problem, because they may be appropriately priced with a sufficient discount to reflect the poorer location.

Is the HDB in so doing, compounding the housing problems of Singaporeans?

Perhaps it should learn from private property developers and price such less desired HDB units lower, instead of consistently saying that Singaporeans are unreasonably fussy.

It may be akin to a merchant complaining that most of its customers do not want to buy the item that is leftover because nobody wants to buy it – because customers are fussy.

The real and obvious reason may be that the leftover item is not being priced low enough relative to those already sold, to match most customers’ price, quality, design, etc, expectations.

If the customer rejects to buy the leftover item for two times, he will only be allowed to enter the shop one hour before closing time, because he has been penalized – his preferred customer status will be lost for one year.

Will this merchant always end up with leftover items that no customers wants to buy?

I think the answer is yes, because as the news spread about this merchant’s ‘leftover’ item policy, will any customers want to buy and perhaps be seen by others as being the ‘stupid’ customers?

By the way, this item happens to be the highest value item that the customer is ever likely to buy in his lifetime.

Uniquely Singapore!


End of Part 3

Also read Part 2 here

Mr Leong has beaten Mr Mah by publishing a book in 2008. It has no pictures but at 186 pages (with Chinese translation), is more value for money. You can buy it here!

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