The Singapore Public Housing Success Story? Lose $ on every flat sold?

By Leong Sze Hian

I refer to the article “Over $1b  given to low-income to buy HDB flats” (Straits Times, Jun 19).

$1.1 b AHG?

It states that “This grant (Additional Housing grant (AHG)), which  can be used to buy either a new flat from the HDB or a resale unit in the open market, has been disbursed to 58,845 households as of April this year, totaling $1.1 billion.”

When I read this – “How generous of the HDB to give so much money to help the low-income buy flats?” comes to my mind.

$18,693 average grant?

Divide $1.1 billion by 58,845 households, and you get $18,693 – the average grant given,

BTO prices increased more than grants?

But what about BTO prices? If BTO prices go up by more than the grants, then is it really a grant or a subsidy?

Well,  let’s see if I can google and find some BTO prices in the same estate in 2006 (because the article says “benefited close to 60,000 first-timer households since 2006), and compare them with recent BTO prices in 2013.

Sengkang BTO increased 101%? 

In the July 2006 Sengkang Fernvale Vista BTO, 3 and 4-room prices ranged from $94,000 to $123,000 and $131,000 to $182,000, respectively.

In the recent March 2013 Sengkang Compassvale Cape  BTO, 3 and 4-room prices have skyrocketed to $189,000 to $227,000 and $284,000 to $361,000, respectively.

So, even if we give them the benefited of the doubt by analysing the cheapest 3-room flat – the increase is $95,000 or 101 per cent or an annualised increase of 10.5 per cent.

Didn’t somebody say that BTO prices have stabilised since taking over the job?

Hence, even if you got the maximum grant of $40,000 for families with household income below $1,500 a month – is your grant really a subsidy when your price could have gone up by $94,000 (and I’m using the cheapest flat to illustrate this point)?

Let’s say you were also able to get the Special Housing Grant (SHG) of another $20,000 to make it a total of $60,000 – it may still be well below the $94,000 increase in the price.

Whilst we are on the subject of the SHG – “The HDB said 1,238 households had taken advantage of the $13.15 million given out by the scheme (since its implementation in 2011).

Divide $13.15 million by 1,238 households, and you get $10,622.

How many got how much?

So, the obvious question that must be in your mind now – is how many families got the maximum AHG and SHG grants of $60,000. And similarly, how many got more than $50,000, $40,000 and so on?

Looking at the average grant calculated above – most households may have got rather low grants compared to the super increase in prices.

Then, what about those who don’t qualify for any grants, like 2nd-timers, household income above $5,000, etc? They still have to suffer the skyrocketed prices.

By the way, if your household income is say $4,501 – you qualify for the grant, but only $5,000. A pitance compared to the increase in prices!

Lose billions selling flats?

So, the HDB used to say that it loses about $1 billion a year selling flats (the previous MND Minister said it was $2 billion when the HDB was building much less flats than now – build less lose more money?). And now, give you $1.3 billion in grants to help you buy flats some more? You believe or not?

Therefore, the $64,000 question may be – how much in reality does the HDB lose or make money every year, and over the years?

The Singapore Public Housing Success Story?

In this connection, I just came back last night from speaking at an international public housing conference and my topic was “The Singapore Public Housing Success Story – Fairytale or Nightmare?”.

Just in case you may be curious about the gist of my presentation – here’s a summary in a nutshell:

Public housing does not cost the Government a single cent, because it acquired land very cheaply and sells at a profit.

Citizens use a lot of their pension fund account to pay for public housing, and when they have to take a mortgage loan from the Government – the Government also makes money by taking the pension funds of other citizens (who still have money in their accounts that have not been used to pay for public housing) at 2.5 % and charging 2.6 % on the mortgage loans.