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Keeping HDB flats affordable.

Tuesday, May 21, 2013

There is an on-going debate on whether HDB flats are actually subsidised. Personally, I believe that the flats are subsidised because the government could otherwise sell state land to private developers for much higher prices.

A while back, Mr. Khaw Boon Wan, in an interview, revealed that "every year, hundreds of millions of dollars of losses were incurred by the HDB and that's why MOF has to give the HDB an annual grant, otherwise the HDB will be in the red. Because every unit that we sell, we lose money, HDB loses money."

HDB Singapore pays market rate for its land and construction costs. So, selling flats at below market prices, HDB incurs a deficit.

I blogged about how Mr. Khaw Boon Wan plans to bring down prices of new flats in non-mature estates before to ensure affordability. I wondered if this could lead to HDB resale prices crashing too but, once again, Mr. Khaw assured that a crash will not happen because there will be "distinct differentiation" between cheaper new flats and those built earlier.

I wonder how these cheaper new flats will be different from those built earlier but there is no doubt that subsidies will have to continue playing a big role to keep HDB flats affordable.


Patty said...

He can't do anything drastic without crashing the markets... Well, he mentioned bringing down prices by about 30%, a 60 year old lease immediately came to mind. That will lower a 99 year $450,000 BTO flat to around $272,000. Probably throw in some gimmick to extend that lease later on as well.

Either that, or clearly define the resale restriction of such new flats or place restrictions on resale buyers going after cheap flats to keep the price low.

AK71 said...

Hi Patty,

I am very curious as to what KBW has up his sleeves.

What you have said are all possibilities.

Lower prices can only be had if there are trade-offs. What form will these trade-offs take? That is the question.

Alan T said...

This PAP Regime snatched from private landlords back in the 60s and 70s under the name of name of for the sake of people of Singapore and only compensated very little or forcing them to sell to the Regime !!! Now after 50 years started to whole sale selling to people in such a high price and yet had the thick skin to claim it is "subsidy" or "affordable" housing for our next generations children. This is just a Dictatorial evil and greedy Regime only !!!

With our eyes all can see this Evil Regime Prime Minister salary are legalised corruption to allow himself and his team to had more salaries then all developed and democractic government. This Regime only know to trumpet to bluff their claim to so and so good... only stupid people then will trust them !!!

AK71 said...

Hi Alan,

Er... Thanks for your POV.

Ray said...

have to agree with Alan somehow. Land used to belong to the people until the govt took them back. Sales proceed of the land can be claimed to benefit the people thru this fund that fund but end of the day who's the real millionaires in SG? not the people... it's those high up in the govt.

AK71 said...

Hi Ray,

There are two sides to a coin and we must avoid being one sided. So far, you have always sounded balanced in your comments. However, this time, I feel that you are less so.

I don't think it is correct to say that land used to belong to the people and that the government took them back. Sounds like some land snatcher. As long as sellers are compensated at market prices, there is a degree of fairness. Of course, valuation is a subjective exercise.

Inflation is a reality of life. If a surrounding plot of land was acquired to build an expressway or MRT line, should the selling price of that plot of land in future equal the acquisition cost? Or should we not build that proposed expressway or MRT line?

There are many more millionaires in Singapore and not just those in government. :)

Ray said...

the land were taken back and only compensated with a HDB flat back in the 70s to 80s. hardly fair.

speaking of inflation, how our hdb flats have inflated through the years. that's because the land are selling at a rate much higher than nominal inflation rate. i still feel that the govt is not subsidizing enough.

AK71 said...

Hi Ray,

The 70s and 80s were a long time ago. Without reference to specific cases, it is hard for us to comment on whether the exchange of land for flat, if it happened, was a fair one.

Anyway, that is all history. Although there might be grievances, it is more important for us to judge the government based on what they are doing now. Dwelling on the past isn't very useful. :)

As for HDB flats, yes, the government could subsidise more. However, I would like to see subsidies going to more deserving families instead of a blanket subsidy.

I have seen examples of very rich people staying in HDB flats. I actually know a multi-millionaire who stays in a 3 room HDB flat and he gets monetary hand-outs from the government too.

As for pricing new HDB flats cheaper, I think that is what KBW is doing but he has to be very careful because it could end up hurting existing HDB flat owners.

Prices have gone up a lot mainly because new flats were not built fast enough. There was a supply crunch and we know who was responsible for that.

As supply is being ramped up, we have to be realistic about prices and remember that land cost is only one component in building flats. Costs related to other factors of production have all gone up substantially.

I think that KBW is doing well so far if my sister's application for a new BTO 5 room flat in CCK is anything to go by. Price: S$340k. Quite reasonable, I feel. :)

Alan T said...

"Anyway, that is all history. Although there might be grievances, it is more important for us to judge the government based on what they are doing now. Dwelling on the past isn't very useful."

History like recent ones of "Iraq Dictator Saddam" (Spore case is the Lee Dynasty as can be finding many MP from wong kang seng to DP Teo all are related to the family regime". Let's judge now present this regime importing in so many "Foreign trashes" in the name of economic progress but actually we all know the biggest landlords are the regime themselves benefiting from collecting more taxes and fee (GST/ERP/COE/stamp fees/cigar taxes... etc) and paying themselves millions. Our transportation been privatize till now only showing strain and breakdown and where got had progress ???? Our society are going downhill and how can you
AK71 still claim our this regime is a good and capable govt (those really good and capable ministers are long gone already, either kick out by the old one or gone to heaven already and now all this regime new cabinet are all bunch of greedy and selfish importing in Foreign born or too much scholarship awarder brain dead zombies followers of the Leedynasty ) ???
Wake up from your echoing of the how good and capable this regime !!!

Many common people are suffering of unemployment and no housing or medical care !!!

AK71 said...

Hi Alan,

I think you have gone overboard with the last comment. While I will agree that the PAP government is far from perfect, I will also say that they have done more good than bad.

We just have to compare the progress Singapore has made compared to our neighbours who have ample natural resources and other advantages to know that this is true. The PAP government have made mistakes and they must make amends. I am not defending their mistakes.

I am sure that there are people who are unemployed but, to be honest, our unemployment rate is pretty low. I am also sure that there are some very poor people who are living on a shoestring budget but we still have affordable education and medical care.

You are definitely angry with the government but try to stay rational at the same time. Don't over generalise and make sweeping and even abusive statements.

I am not pro PAP or anti PAP and I have said this many times before. If I am unhappy with something they are doing, I say it.

Can Singapore really house 6.9m people?

So, I do not appreciate a statement like this from you or anyone: "Wake up from your echoing of the how good and capable this regime !!!"

If you cannot prove what you have said, you know what that is.

Alan T said...

Please go google and type tr emeritius website to see for yourself as i travelling alot. Many proof of how greedy this regime are with experts comments from different fields. Now working oversea and unable to write long winded reply. But can confirmed that live example is my grand aunt who had a big swath of farm was force by the regime to sold at below market rate (as they count the number of adult durian tree that had to grow to certain height then compensate by how much). She still curse the regime till she pass on 9yrs ago. Believe or not up to you as you too young to know of it.. go read history books to find out. Maybe history books had been distorted by them too...

Alan T said...

Your saying of they made amendment... and their so-called national conversation are nothing just wayang propaganda so as to made naive citizens to be brainwashed with what they want you to see and believe.. how can we totally trust maintream media or monopolisted newspaper that controlled by them and their reports as complete truth ??? Spore media wad ranked by international ranking as 144 worst and not independent media due to the regime one party control since they come into power. So are the claim of ntuc protecting workers right are all bluffing tactic by them.

AK71 said...

Hi Alan,

I do not know the reasons for which your aunt's farm was acquired. I do not know the circumstances in which it took place. Do I have the inclination to find out? Honestly, no. Yes, maybe I am too young. ;)

I doubt anyone other than the people directly involved would be interested in such past incidents. They are too remote for the rest of us.

I don't believe that opposition parties would even talk about these incidents at political rallies. They have little bearing on the lives of Singaporeans today.

The important thing I want to see now is whether the PAP government is able to make life better for Singaporeans as they correct past mistakes. It will determine how I vote in the next GE.

Thanks for taking the time to write. :)

Ray said...

But I do have specific examples. My paternal granddad as well as my wife's grand dad both have farms bought by government against their wills. Compensation? 4 room flats. Price of the flat? max 400 to 500k. But the land can be sold now for millions.

Is it right for govt to take back land from private landlords? Yes. Otherwise everyone will claim that some piece of land is his. Has govt "return" the money earned to the people. On the surface, it had to be said yes. But still far too many poor people around me fighting to survive, far too many rich ministers for me to agree wholeheartedly.

Does the govt roll out sound policies. Largely yes. But can more be done? Hell yeah!

AK71 said...

Hi Ray,

I do not know the contexts in which those incidents took place. Why were the farms acquired? What were the market prices for farmland and apartments in those days? Was the land bought from the British freehold or was it through adverse possession?

I find it hard to believe that the government would indiscriminately take land from private land owners without compensation pegged to conditions of the time. This would have been a major grievance, no doubt.

I remember my maternal grandma telling me the story of Bukit Ho Swee. It was a huge squatter colony and the squatters refused to move. The urban legend is that the government caused the big fire of Bukit Ho Swee and then provided the squatters with cheap 1 room and 2 room flats. Were the squatters happy? Probably, some were and some weren't.

I know a person who inherited a big plot of land in the Pasir Ris area which was bought by his late father. The last I heard, he and his siblings are still wondering what to do with the land. Why was that plot of land amongst others not acquired?

Anyway, people are never happy when something they cherish is taken away from them. Why should they be? For example, the building of the NS expressway will see many FH landed homes acquired in the Marymount MRT station area. Are the owners happy? No.

The important question to ask is whether the reason for the acquisition is a good one and if compensation is fair. Of course, even so, we cannot expect 100% agreement from everyone.

Finally, I agree with you that the government has done more good than bad but, most definitely, a lot more could be and should be done.

Alan T said...
Filipinos to celebrate their Independence Day at Hong Lim Park?
May 22nd, 2013 | Author: Editorial
“The Pilipino Independence Day Council Singapore (PIDCS) is a non-profit umbrella organization of Filipino Community in Singapore, represented by different Societies of the Filipino Community consisting of Filipino Professionals, Skilled Workers, Cultural and Social Societies. PIDC Singapore is mainly tasked with the organization of celebrating the Philippine independence Day Activities that will bring together the different Filipino Community Societies in Singapore”, according to its Facebook page.

Today (22 May), PIDCS posted the following on its Facebook page [Link]. With the support of the Philippine Embassy in Singapore, they are planning to celebrate the 115th Philippine Independence Day together with their fellow Filipinos in Singapore:

PIDCS also posted the following:

Using Google Translate, the posting says:

“Otherwise you Pinoy! Embracing Diversity, Making a Difference!

Please invite all citizens of the Philippines in Singapore to take part in the festivities be held on the 16th of June, 2013 at Hong Lim Park from 8 am.


It is not known if foreigners are allowed to organize events at Hong Lim Park in the first place.

According to a letter NParks sent to Gilbert Goh, the organizer of the May Day Protest against the 6.9 million Population White Paper, a police permit must be obtained if foreigners are speaking or participating in any activities organized at Hong Lim Park:

From: Norzehan AHMAD (NPARKS)
Subject: Registration for Hong Lim Park-Speakers’ Corner
To: “ ”
Received: Thursday, 18 April, 2013, 9:03 AM

Dear Mr Goh,

We spoke on your application to speak at Hong Lim Park – Speakers’ Corner. Under the terms and conditions of approval, a Police Permit must be obtained if foreigners are speaking or participating in the activity organised by you at Speakers’ Corner, Hong Lim Park. The e-mail address is

If you have any further queries, please do not hesitate to let me know. Thank you.

Norzehan Ahmad § Section Head § National Parks Board § Tel: +65 66362388 § Fax: +65 66047141

It is not known if PIDCS will apply for a police permit for their event and if the police will grant them one if they apply.

Gilbert did not apply for one and he put up signs asking foreigners to stay away from Hong Lim Park during the May Day event.

AK71 said...

Hi Alan,

Er... Is this comment relevant to our discussion here?

Ray said...

To Alan, stop wasting your time on Temasek Review. The people there are too one sided against the govt. There are many other social media sites I recommend that offer a more balanced view point. TOC and Publichouse for eg.

Alan T said...

How Is Your CPF Money Being Used And Taken Away?

AK71 said...

Hi Alan,

This is advice offered to me by a friend on how to respond to your comments:

"just tell him this is not the channel nor the correct platform"

Although I encourage comments from readers, what you are now doing is spamming. Please stop.

Alan T said...

All the website links above are provided for you and anyone want to had a look at how the other side of the coin views on this regime been hiding from people knowledge as our mainstream media are all fully controlled by them with their 2/3 majority in parliamentary seating which they control and pass the laws as they deem fit to beneift themselves (just like Nazi Germany of Hitler, Iraq of Saddam and North Korea as well as PRC communist china - where parliament they hold the majority and can pass the laws as they like it as nobody can check on them at all which mean our future generations and their's shall keep suffering).

Now it's common people had access to internet and seeing many other side of the news which the pap regime is unable to block (as previously the regime Temasek holding try to sue them for using similar website name and they had since changed to another new name TR emeritius).

There are also online citizen website which the regime are unable to block or prevent people to surf to view them as well as providing many singaporeans a venue to expressing their views too.

Just like to share with you and other whom visited your blog beside want to know only micro level (investing) but also can had a look at macro level kind (national level).

Ray said...

Just because it is on the internet does not make it true. Even wikipedia contains alot of stuff that are wrong.

AK71 said...

Hi Alan,

I thought for a while whether to publish your last comment and as it seems like it would be your last on the matter, I decided to publish it. So, with this, let us end the exchange. :)

yeh said...

I bought my 5 rm flat two yrs ago from resale market. If new BTO will be lower 30% than current price, very worried my 5 rm flat will drop in value. Then hard for me to sell

AK71 said...

Hi yeh,

I think second timers who bought new BTO flats recently, hoping to sell their existing flats for a higher price than what they are going for now might be disappointed when the time comes.

All the property cooling measures and larger number of BTO flats launched will benefit first time flat owners but probably not existing flat owners.

yeh said...

But do u think is it unfair for those buyer who bought from resale market in the last two years.

Don't think They can accept their property price drop >30% in value.

AK71 said...

Hi yeh,

Well, if it happens, it happens. :)

In the GFC, the price of my home did fall some 30% and that was not so long ago. :(

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