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Reflecting on “Reflections” – A review of Mah Bow Tan’s book (Part 9 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 Nine (“Housing a Nation – Today and Tomorrow”), the Minister for National Development wrote:

“HDB builds and prices flats to achieve home ownership for the masses. Unlike some other countries where public housing caters to the poorest minority, HDB’s mission is to house the masses so that we can build an inclusive nation”

Highest public housing prices in the world?

Singapore has the highest public housing prices in the world, with arguably the highest delinquency rates. How many Singaporeans have lost their homes, CPF, have been made bankrupt, because of our public housing policies?

“Oversupply is as worrying as undersupply.”

With the current sky-rocketing HDB prices, and heavy over-subscription for HDB flats, why does the HDB keep harping about the problem of oversupply?

Just because the HDB had poor planning in the past (more than a decade ago), building too many of the wrong type of larger flats, which caused an oversupply, the HDB should stop whinning, and perhaps focus on the problem now, instead of “living in the past”.

“HDB therefore sets aside new BTO flats for first timers and prices them at a substantial subsidy relative to market value”

How on earth would Singaporeans know whether it is a real subsidy, when the HDB consistently refuses to disclose the break-down of the costs of building flats?

Never talk about Debt Service Ratio anymore?

“Beyond international measures like the Housing Price-to-Income ratio (HPI) and the Debt Service Ratio (DSR), our high ownership rate is the clearest indicator that flats remain affordable for first-timers. Most couples buying new flats use only 20 to 25 per cent of their monthly income through CPF contributions to pay for their housing loans, without any cash”

Have you ever wondered why the HDB does not talk about the DSR anymore, in the recent BTOs or resale flat prices? Is it because prices have risen so much now that even the DSR may no longer be tenable?

Malaysia vs Singapore

When Singapore separated from Malaysia in 1965, the currencies were on par, and arguably the prices of public housing were probably similar to each other.

Now, 45 years on, let’s examine them from the perspective of affordability.

In Malaysia, public housing start from around RM25,000, against a 2-room HDB flat in Singapore at around S$105,000.

In Malaysia, the monthly maintenance fee for public and low-cost housing is minimal, wheareas Service and Conservancy Charge (S & CC or maintenance fee) in Singapore range from about S$35 to S$60 for 3 to 5-room HDB flats, plus a monthly season parking fee of about S$70 for those who have a car.

No money when you retire?

“Under the Lease Buyback Scheme, elderly home owners can receive a longterm income stream without uprooting from their surroundings”

Under the  Lease Buyback Scheme, the family can only stay in their flat for 30 years. Assuming one starts at age 62, by age 92, about 15 per cent of the retirees may still be alive. Why is the HDB silent on what will happen when their 30-year lease to stay runs out?

Isn't the fact that the HDB has to promote this scheme so aggressively (road shows, newspaper advertisements, etc), the best self-contradiction that our public housing asset enhancement policy has not worked, particularly for lower-income Singaporeans? - No CPF when they retire because most of it may have gone to the HDB flat, such that they have to give up their ownership to HDB after 30 years, for a miserly $500 a month life annuity? Since the life annuity is not adjusted for inflation, can you imagine trying to live on just $500, in 5, 10, 20 years from now?

Homes Where We Belong?

"When HDB was formed in 1960, its pressing challenge then was to solve the huge housing shortage for Singaporeans. Fifty years on, HDB has succeeded beyond expectations and received numerous international accolades for its achievements. I am thankful for the selfless contributions of the many men and women in HDB through the years who have made it possible”

Try saying this to the estimated 40,000 families who are in arrears on their HDB and HDB bank loans, the thousands who have lost their homes because they cannot pay, the tens of thousands who discover to their horror when they retire that they have hardly any CPF because most of it went to their HDB flats.

The notion that you can monetise your HDB flat when you retire may be a fallacy, particularly for the lower-income.

If you sell your 4-room flat when you retire, with 3-room flat prices having risen the most in the  history of HDB flats, you may be able to monetise very little because the difference in prices between your current 4-room and the down-graded 3-romm, may not be very much.

Also read Part 8 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!