By Leong Sze Hian

I refer to Raymond Ng’s letter “Reveal the actual cost of public housing” (Today, May 25).

Formula for HDB subsidies?

Mr Ng asked “how the Housing and Development Board (HDB) derives its formula for “subsidies” for each housing type and the profit margins”.

Well, I thought that a good starting point in trying to dwell deeper into this question (since years of repeated calls by MPs and citizens for this “top secret” information has fallen on deaf ears!) may be to examine the cheapest HDB flats that one can buy.

I refer to the booklet “Enhancing Your Retirement Income”.

Sell flat buy studio?

It states that “Move to a smaller flat or Studio Apartment – when doing so, you can choose to sign up for the Silver Housing Bonus (SHB), which provides additional financial help to lower-income elderly, who sell their flat and buy a smaller one”.

Why 30-year lease so expensive?

Since a Studio Apartment has a lease of only 30 years, why is it that it cost almost as much as a 2-room flat with a 99-year lease?

Can’t be sold in open market?

Moreover, a Studio Apartment cannot be sold in the open market like 2-room flats, and as I understand it, can only be sold back to the HDB after a Minimum Occupation Period (MOP) of 5 years.

Higher profit margin?

So, in view of the above, is the profit margin higher for Studio Apartments compared to 2-room flats.

If this is the case – why?

Helping lower-income retirees?

Arguably, are we really helping lower-income retirees to monetise their existing HDB flat, by selling Studio Apartments to them at such “relatively” high prices?

In this connection, the lowest priced BTO Studio Apartments in Choa Chu Kang were from $58,000 to $66,000 (December 2008 BTO) and $77,000 to $104,000 (January 2012 BTO).

PSM – Studio cost as much as 3-room?

For 3-room flats in the same January 2012  Choa Chu Kang BTO, the price range was $146,000 to $172,000.

Using the floor area of 37/47 sqm for studio and 68 sqm for 3-room, the psm is $2,081 to $2,213 for studio and $2,147 to $2,529 for 3-room.

So, on a psm basis comparison, Studio Apartments can cost as much as 3-room flats. Why?

In mature estates like Queenstown, prices were from $113,000 to $168,000 (November 2012 BTO).

I have been told that one could buy a Studio Apartment for only around $50,000 about a decade or so ago.

Breakdown of costs?

In view of the 30-year lease, what is the breakdown of the construction and land costs for Studio Apartments?

In this connection, I would like to thank reader X for sending to theonlinecitizen the following information:

“The block of flats involved is “”Costa Ris”” at Pasir Ris
Annual Report from BBR Holdings ( main contractor )
in the AR2012 pg 15, AR2011 pg 09, it refers to a $179 million contract to build 1,386 new homes in Pasir Ris neighbourhood estimated to be completed in second quarter 2014.

This was further elaborated in the AR2012 to


“”The $179 million contract was the second contract awarded in recent years from the Housing and Development Board (HDB) to build 1,386 new homes in Pasir Ris Neighbourhood 5. Work on the 17 blocks of 13 storeys each have commenced in November 2011 and will be carried out in 13 phases. The contract also includes the construction of a multi-storey carpark, supermarket, childcare centre and shophouses. Hardscape and soft landscape works such as a precinct pavilion, pergola, shelter, site works and civil engineering works will also be undertaken. Completion is targeted by June 2014″”
Going by simple arithmetic ( $179 million / 1386 = $129,148 ) – Point to note is that the contract included the construction of commercial buildings ( which will be rented out at market rates ), as well as landscaping ). If this angle is pursued, then the HDB cost can be calculated using the annual reports of the main contractor.”
So, from the above analysis estimating the cost of construction per flat as $129,148 – the construction cost of a studio apartment being much smaller must be much lower.


Top-up CPF $90,000 to get SHB $20,000?

In the booklet’s “SHB Example 3 – A couple sells their 5-room flat to buy a Studio Apartment for $100,000, and top-up their CPF accounts to enroll in the CPF Life Scheme.

They use $90,000 of their flat’s cash sale proceeds to top up their CPF to get a $20,000 Silver Housing Bonus.

Where does the money go?

Since the CPF Life annuity payouts are projected (in this example – $975 to $1,071 (husband) and $764 – $843 (Wife)) at the average yield of the 10-year government bond plus 1 per cent, in a sense the Government gets to utilize $70,000 from this couple.

So, what happens to this $70,000?

What returns on the money?

Well, since the total sum of our reserves and the rate of return on our reserves is not known, we can only look at Temasek’s 17 per cent per annum return over the last 34 years or so, and GIC’s 6 per cent per annum in US$ over the last 20 years or so, as a guide.

What happens to excess returns?

If the average return that is derived from this example of $70,000 from this couple exceeds the 10-year government bond yield plus 1 per cent, in the future – then, in a way, the Government gets to keep the excess.

Who’s making how much for what?

In the final analysis, can the experts give us some ideas about how much the Government makes or lose from Studio Apartments and CPF Life for the entire population of Singaporeans now and into the future?

One-way ride to oblivion?

Since the accumulation of our reserves are like a never ending one-way ride that never seems to be returned to benefit Singaporeans, is the Government’s gain in a sense a loss to Singaporeans?

Studios subsidised?

Or, are Studio Apartments subsidised at a loss, as we have always been told about the Market Subsidy Pricing of HDB flats?

Are there any countries in the world that helps their retirees to retire, by way of the above?

New MDA licensing rules?

Stop press! You may not be able to read any more articles like the above soon – that tries to analyse whether HDB flats are really subsidised (or for that matter healthcare) – because when the new MDA licensing requirements (“Singapore to regulate Yahoo!, other online news sites“, Reuters, May 28) announced on 28 May kicks in – volunteer citizen web sites like theonlinecitizen and TR Emeritus may become history.

In this regard, to quote the article “TOC’s statement on MDA licensing of online news sites” (theonlinecitizen May 28) – “we will have to reassess the viability of continuing the website in light of the significant financial and legal liability the new rules impose”.

Press freedom dying a slow death?

You wanna bet that Singapore’s press freedom ranking will fall to yet another record low from the current 149th – thanks to yet another draconian rule to dampen free speech and freedom of expression in Singapore!

Majulah Singapura!

You can kiss goodbye to Article 23 –  Every person has the right to freedom of opinion and expression, including freedom to hold opinions without interference and to seek, receive and impart information, whether orally, in writing or through any other medium of that person’s choice” of the ASEAN HUMAN RIGHTS DECLARATION – which also states – “REAFFIRMING FURTHER our commitment to the Universal Declaration of Human Rights, the Charter of the United Nations, the Vienna Declaration and Programme of Action, and other international human rights instruments to which ASEAN Member States are parties”.


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