Your views on the current surging property market

[flowerpot]

Scenario 2 (HDB uses market subsidy)

At Year 0, HDB builds and sells new Flats at A for $100,000.

At Year 5, Resale Flats at A are now worth S$150,000 and HDB starts building new flats at B. But instead of selling at a real cost subsidy of 10,000, HDB now sells it at S$140,000, citing that resale flats are worth S$150,000 and now gives the market subsidy of S$10,000.

At Year 10, By this time, resale flats at B will have risen from 140,000 and at A even more. A knows that since new flats at B are 140,000; he can ask for higher. Hence A's price appreciates to say, 225,000 and B's resale price is say, 200,000.

Now, HDB builds new flats at C. Using market subsidy again, it then discounts the current resale price of B and says, since B is 200,000, my new flats at C are now S$190,000 (even though cost is still 100,000).

Can you now see the difference of how market subsidy is propping up the market? At the same time, the HDB tells you "B and A, aren't you glad your property prices are increasing?"

Now multiply this by a factor of X, and you can see where this is headed.

With the rise in HDB new flats, propping up resale flats price; the private properties also will increase in price (because the resale flats prop up their price). Now who do you think gains the most from private properties prices going up?

The everyday Joe like you and me? Or the very rich who has the money to buy 10 private properties at a go for investment?

To answer your last question, why don't you try comparing the price of a new flat in Tanjong Pagar in the 1970s compared with the price of a new flat in say, Punggol (super ulu place). Even taking into account inflation, you will see the Punggol new flat is far far far more expensive.

its a point our garment just refuse to acknowledge... its about making money, nothing else...

after our beloved Mr MBT take over HDB, its about money making... maybe he needs to fulfil his KPI... i have a friend who bought a flat in Jurong West near Jalan Bahar... it cost him i think less than 200K for a new 5 room when the market is down... then when the market is good, the prices for the same new 5 room flats went to the roof...

 

[vince123123]

Heh long ago, the discerning people have known that it is all about $$. Almost every policy instituted by the government has money behind it.

For example, the recent talk about legislating children to take care of parents or some fillial piety act. You think its about that? Sounds nice on paper to get children to be filial and tugs on heartstrings right?

Wrong, its about the Govt not wanting to spend money to look after destitute old people or welfare on them. This works in conjuction with Minimum Sum, Mandatory Annuity Schemes, Retirement Account etc.

its a point our garment just refuse to acknowledge... its about making money, nothing else...

after our beloved Mr MBT take over HDB, its about money making... maybe he needs to fulfil his KPI... i have a friend who bought a flat in Jurong West near Jalan Bahar... it cost him i think less than 200K for a new 5 room when the market is down... then when the market is good, the prices for the same new 5 room flats went to the roof...

 

[alantkh]

I am not bitching about anything. ??? U are the one who is unhappy with the pricing, not me. If anything, I am bitching about you bitching

I have thought about this. Seriously, as a country, would you rather see the housing prices cheap or expensive? Look at places with cheap housing in Asia. Indonesia, Myamar, philipines, australia, etc. Which are the places with expensive housing, Hong kong, tokyo, Seoul, etc.

I think HDB flats increasing in value is GOOD. There is no doubt about it. The main issue is the rate of increase must be kept within the affordability of the citizens. I think the focus should be on jobs, economy, immigration policy rather than hdb pricing.

Frankly the new hdb flats in newer estates are still affordable. you just have to travel further. this is a fact. no matter how you look at it, a 200k flat after housing grants is always affordable. The flat is just small and in a new estate.

The government decides on the pricing for new flats but the resale flats are set by the market. With the huge number of PRs in Singapore, I think that is one of the reason why resale prices are so high. But that in a way is good for citizens as they can sell their 200k flats for 400k to PRs.

Using your point you are championing, why don't you tell me what you think the outcome is rather than bitch about it too? Besides, the 105% figure is thought up by you; and not me. I never said 105%.

A. I'm not being employed to be a policy maker; I have no responsibility nor need to think of a solution because I have not been paid to do so nor is it my job to do so.

If you pay me, I'll gladly sit down, analyse the existing and historical data and then propose a solution. Are you willing to pay me? Otherwise, shouldn't the people actually being paid to do this job, do the job?

I don't know why these sort of "No solution means no right to comment" arguments keep being bandied about. It is flawed since its inception.

B. The problem is a result of their own creation. In trying to make people think their HDB flats are appreciating in value; they have slowly propped up the market by releasing new flats at a "market subsidy". Now, the clock is too far turned to go back without coming up with a good ingenious solution. As for this solution, refer back to Point A.

 

[vince123123]

First paragraph: My pt exactly, you are bitching about me bitching, and hence, YOU should offer the answer to your own question; just as you expect me to provide a solution to my own complaint

I don't wish to see housing prices cheap or expensive, I want to see them at fair value.

As for your final paragraph, read my links on how resale price is affected by new flat prices. PRs are another contributor to resale price.

As for price going up being good, then I'd say that the HDB has succeed in convincing you that price increases are good becuase your flat hasappreciated in value. However, unless you have more than one HDB flat, I fail to see how its good unless you deicde to sell and sleep in the streets after that, or sell and emigrate. In buying your next flat to stay in, your gains are wiped out.

I am not bitching about anything. ??? U are the one who is unhappy with the pricing, not me. If anything, I am bitching about you bitching

I have thought about this. Seriously, as a country, would you rather see the housing prices cheap or expensive? Look at places with cheap housing in Asia. Indonesia, Myamar, philipines, australia, etc. Which are the places with expensive housing, Hong kong, tokyo, Seoul, etc.

I think HDB flats increasing in value is GOOD. There is no doubt about it. The main issue is the rate of increase must be kept within the affordability of the citizens. I think the focus should be on jobs, economy, immigration policy rather than hdb pricing.

Frankly the new hdb flats in newer estates are still affordable. you just have to travel further. this is a fact. no matter how you look at it, a 200k flat after housing grants is always affordable. The flat is just small and in a new estate.

The government decides on the pricing for new flats but the resale flats are set by the market. With the huge number of PRs in Singapore, I think that is one of the reason why resale prices are so high. But that in a way is good for citizens as they can sell their 200k flats for 400k to PRs.

 

[vince123123]

Take a look at this letter which demolishes the false argument of how rising HDB flat prices creates wealth for Singaporeans and the chasing prices - in this example, we are talking about different prices for the same flats:

http://www.todayonline.com/Voices/EDC090916-0000032/Its-not-all-about-the-numbers

It's not all about the numbers


Letter from See Leong Kit
05:55 AM Sep 16, 2009

I REFER to "Loopholes now closed" (Sept 15).

Sky-high prices of Housing and Development Board (HDB) flats will naturally push up private property prices. Thus this issue affects all Singaporeans, even those who aspire to own private property. Its root cause was not covered in the anti-speculation measures just announced.

Following the 1996 property bull run, the HDB had switched from a "cost-based" to a "market-based" pricing approach. The selling price for a new flat is pegged not to its cost but to the prevailing market price of a similar resale flat.

This has resulted in prices of new flats and resale flats chasing each other in a never-ending upward trend that is detrimental to buyers of both new and resale flats.

The Total Breakeven Cost of a new flat comprises Construction Cost (CC), Land Cost (LC) and Other Related Costs (ORC).

Take for example, the Pinnacle@Duxton project which has 1,848 units in 50-storey blocks occupying a small plot of land. From available public tender information, the actual CC component is $150,000 per unit. The onus is now on HDB to publicly disclose the remaining LC and ORC components.

A quick estimate of LC plus ORC is around $80,000, leading to an estimated Total Breakeven Cost of $230,000 per flat.When launched in 2004, the average selling price was $370,000 (actual range: $288,000 to $450,000), which translates to an average profit of $140,000 per unit sold.

A total of 428 unsold units were relaunched in 2008 at an average selling price of $550,000 (actual range: $450,000 to $645,000), which is $180,000 higher than initial launch prices. This arose from HDB's "market-based" pricing approach, as prevailing market prices of similar resale flats nearby were between $593,000 to $670,000.

For the average Singaporean, a HDB flat is the single most expensive purchase item in a lifetime. Applicants of HDB new flats are mostly young Singaporeans who want to get married, move into their own home and start a family.

Why then is the HDB not doing the right thing as a not-for-profit low-cost public housing developer by passing on to citizens the economy-of-scale cost savings in its huge developments by pricing new flats on a cost-based breakeven basis?

 

[johnlim]

As for price going up being good, then I'd say that the HDB has succeed in convincing you that price increases are good becuase your flat hasappreciated in value. However, unless you have more than one HDB flat, I fail to see how its good unless you deicde to sell and sleep in the streets after that, or sell and emigrate. In buying your next flat to stay in, your gains are wiped out.

Yeah, it seems like a gain initially, but taking into consideration that you need to buy another place to live in, and that's not really a gain at all.

Maybe it's good for foreigners. They can sell for a tidy profit and then leave Singapore for good. A landed home in their own country is definitely cheaper. :think:

 

[vince123123]

Yup, I hope more Singaporeans can see the flawed argument for what it really is

Yeah, it seems like a gain initially, but taking into consideration that you need to buy another place to live in, and that's not really a gain at all.

Maybe it's good for foreigners. They can sell for a tidy profit and then leave Singapore for good. A landed home in their own country is definitely cheaper. :think:

 

[flowerpot]

I have thought about this. Seriously, as a country, would you rather see the housing prices cheap or expensive? Look at places with cheap housing in Asia. Indonesia, Myamar, philipines, australia, etc. Which are the places with expensive housing, Hong kong, tokyo, Seoul, etc.

i rather see housing prices cheap... tyoko and seoul is a city, likewise hong kong, singapore is a similar to a city as well, they are expensive because of space...

I think HDB flats increasing in value is GOOD. There is no doubt about it. The main issue is the rate of increase must be kept within the affordability of the citizens. I think the focus should be on jobs, economy, immigration policy rather than hdb pricing.

increasing is GOOD?? now the problem is its increasing too fast, no matter how fast the economy grow, u can't offset it, r u suggesting the garment should focus on improving jobs and make sure everyone earn 15K per month...then hdb flats would cost millions by then, back to square one...

Frankly the new hdb flats in newer estates are still affordable. you just have to travel further. this is a fact. no matter how you look at it, a 200k flat after housing grants is always affordable. The flat is just small and in a new estate.

200K everyone can afford for 30 year loan, but COV 30K to 50K not everyone can fork out. Another 20K for reno ?? how do young couples manage without the support of rich parents ?
unless the couples are both agents make 15K per month :bsmilie:

The government decides on the pricing for new flats but the resale flats are set by the market. With the huge number of PRs in Singapore, I think that is one of the reason why resale prices are so high. But that in a way is good for citizens as they can sell their 200k flats for 400k to PRs.

sell 400K and than what happens... buy another 400K flat elsewhere...:bsmilie:
its oni good if u are very very old and ur kids are taking care of you, i dun see the financial gain even if u are upgrading to a private property since the property u are buying are going to be higher as well...

 

[NitroTech]

ur questions its the same as why i dun do sales, insurance agent etc... u chose a jobs that suits u... i might not earn as much but i earn enough and i cherish my time with my family...

Bollocks... going by what you just said.... you agree that property agents spend a lot of time away from their families.... Sooooooooooo, even though they make a lot..... there is a sacrifice and it's not "too simple"...

 

[zcf]

I wonder how one would think expensive housing can be better than cheap housing given the same housing standard :what:

If the housing is cheaper, you would have more free money to spend on healthcare, insurance & improve quality of life.

Though some may say increase in housing price improve existing house owner wealth. But that is unfair to the non-house owner and future generation. I actually wonder how our kids in the future affording to buy their own house, even govn housing (which are suppose to be affordable) Or we are heading the way like Tokyo & HK, to sacrifice our housing living space.

I also think that high housing cost will defer couple from having children early. Which may be part of the reason of falling child birth rate, as most can't afford to have children young, but when they are older, they will suffer as fertility rate fall with age. HDB BTO policy doesn't help either, imaging have to wait for 3 years before you can live together, then can plan for children, this futher delay the child bearing age.

 

[flowerpot]

Bollocks... going by what you just said.... you agree that property agents spend a lot of time away from their families.... Sooooooooooo, even though they make a lot..... there is a sacrifice and it's not "too simple"...

do sailor make a lot ???

 

[flowerpot]

I wonder how one would think expensive housing can be better than cheap housing given the same housing standard :what:

If the housing is cheaper, you would have more free money to spend on healthcare, insurance & improve quality of life.

Though some may say increase in housing price improve existing house owner wealth. But that is unfair to the non-house owner and future generation. I actually wonder how our kids in the future affording to buy their own house, even govn housing (which are suppose to be affordable) Or we are heading the way like Tokyo & HK, to sacrifice our housing living space.

I also think that high housing cost will defer couple from having children early. Which may be part of the reason of falling child birth rate, as most can't afford to have children young, but when they are older, they will suffer as fertility rate fall with age. HDB BTO policy doesn't help either, imaging have to wait for 3 years before you can live together, then can plan for children, this futher delay the child bearing age.

its a question the garment refuse to address... the next generation will suffer, we also suffer becos as parents no choice have to help them financially :bsmilie:

 

[vince123123]

For those comparisons to Tokyo and HK, please note that they have the option of living in the suburbs. We don't.

 

[zcf]

you forgot about JB, didn't one of our minister mentioned elder care would be better there? :sweat:

 

[vince123123]

JB not considered suburbs leh, its outside Singapore; can't stay for long.

you forgot about JB, didn't one of our minister mentioned elder care would be better there? :sweat:

 

[alantkh]

200K everyone can afford for 30 year loan, but COV 30K to 50K not everyone can fork out. Another 20K for reno ?? how do young couples manage without the support of rich parents ?
unless the couples are both agents make 15K per month :bsmilie:

what COV? I am talking about 200k new flats. That everyone can afford. ZERO COV + housing grant??? Young poor couples just have to get those 200k new flats.

 

[vince123123]

That depends on what you mean by "affordability". A slew of alternative media articles have been written on this when the Minister said that flats are affordable.

Let me ask you, if a flat requires both husband and wife to use all their CPF to fund the mortgage (ie they pay 0 cash), over 30 years, is that considered affordable to you since they pay S$0 cash?

what COV? I am talking about 200k new flats. That everyone can afford. ZERO COV + housing grant??? Young poor couples just have to get those 200k new flats.

 

[alantkh]

That depends on what you mean by "affordability". A slew of alternative media articles have been written on this when the Minister said that flats are affordable.

Let me ask you, if a flat requires both husband and wife to use all their CPF to fund the mortgage (ie they pay 0 cash), over 30 years, is that considered affordable to you since they pay S$0 cash?

.... Lets say they earn an average of $2k a month for the next 20 years. After grant lets say they take 160k loan, putting aside $855 (out of the $4k household income) a month for housing will allow them to finish paying off everything in 20 years assuming the current 2.6% hdb loan rate.

if you want to pay of in 10 years, u need $1515 per month.

 

[flowerpot]

what COV? I am talking about 200k new flats. That everyone can afford. ZERO COV + housing grant??? Young poor couples just have to get those 200k new flats.

u think these flats are readily available ?? if there is one available i would not have gone through 10 rounds of BTO... still have to wait 3 years for it to be ready... my cousin is on her 2nd child and her flat is oni ready by 2012...go figure

 

[alantkh]

u think these flats are readily available ?? if there is one available i would not have gone through 10 rounds of BTO... still have to wait 3 years for it to be ready... my cousin is on her 2nd child and her flat is oni ready by 2012...go figure

ya. The availability is a problem. not affordability. They should shorten the wait time. I think that is the main reason why people want to buy resale.