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HDB Housing Policies Tilting The Advantage Towards PRs ??

exgoon

Alfrescian
Loyal
As usual, this fukking Givernment works harder for the PRs than they do for Singaporeans. No wonder there is so much speculative activity in the HDB re-sale market.

HDB housing policies – tilting the advantage towards PRs?

The following is Part One of a special three-part focus on the Housing and Development Board’s public housing policies. Parts Two and Three will be published on Tuesday and Wednesday respectively.

Leong Sze Hian

I attended the HDB’s Resale Seminar which was attended by over one hundred persons.

Judging from the 75 minutes Q & A, during the 3 hour 45 minute seminar, and mingling with the crowd during the break, I estimate that about 80 per cent of the attendees were permanent residents (PRs).

Many questions centred on when PRs could sell or rent out their flats, and when they can repatriate profits from the sale of their HDB flats, when they leave Singapore.

To what extent has HDB policies led to undesirable outcomes for Singaporeans, relative to PRs?
Minimum Occupation Period (MOP)

A PR can sell his or her resale HDB flat after just 1 year’s MOP.

A Singaporean who buys a resale flat with a bank loan, can also sell after just 1 year.

However, many Singaporeans buy new flats, or resale flats with a CPF Housing Grant, which have a MOP of 5 years.

For resale flats with a HDB loan, the MOP is 2.5 years.

The increasing “headache” for some Singaporeans may be that they cannot afford the Cash-Over-Valuation (COV) on a resale flat.

Since foreigners do not need to contribute to CPF, they generally may have more cash to pay for the COV, when they become PRs.

As to new flats, since a typical Build-To-Order (BTO) is about 3 years, plus another 5 years MOP, it may be about 8 years before a Singaporean can sell his or her flat.

What if you can’t service your mortgage before your MOP?

What if you need to be divorced without children before your MOP?

Let me use an analogy. You want to invest in a property and also need a house to stay.A property developer offers you a private property at a discount of 20 per cent, using its unique “market subsidy pricing” policy, but it will take 3 years to build, and you cannot sell it for the next 5 years.

Another developer offers you a similar property that you can stay in immediately (and save on your rental for 3 years), and allows you to sell anytime.

Which property would you buy?

I think the developer with the “subsidy” may hardly get any customers at all.

But, many Singaporeans are fixated with the notion that a new flat is sold with a “discount”.

Imagine you had applied for a new BTO flat in 1990 and saw your flat appreciate greatly in value until the last peak in 1996, and then declined in price by as much as 40% for the next 13 years.

Your headache may be that you couldn’t sell when the price was high, because of the MOP.

Will PRs ever have this “headache”? No, because they can’t buy new flats. A blessing in disguise perhaps – no need to wait, can buy immediately and sell after just 1 year.

Resale Levy

When a Singaporean buys a second new flat, the resale levy has to be paid, based on the first flat type sold earlier.

For those who may be financially stretched, who can’t afford to pay the Resale Levy, they will have to purchase a resale flat instead.

Do PRs have this “headache”? No.$

In fact, when they become citizens, they can buy their second flat, which is considered as their first subsidised flat, with a 1st-timer grant as well.

HDB Concessionary Loan

When a Singaporean buys a second flat, he can only get a second HDB loan if the flat purchased is a bigger one.

This may entice him to buy a bigger flat than he can afford.

PRs don’t have this “headache”.

When they become citizens, they can buy their second flat of any size and get a HDB loan.

Since bank loans are typically lower than the HDB loan’s 2.6 per cent interest for the first 3 years of the housing loan, a PR who becomes a citizen within say 3 years, may actually pay a lower interest than HDB’s in the first 3 years, and then convert to a HDB loan when they become citizens, say before the 4th year.

Income Ceiling

Singaporeans are subject to the $2,000 and $3,000 Income Ceiling for the purchase of new 2-room and 3-room flats. This may in a sense “force” Singaporeans to buy a bigger flat than they can afford.

For example, if your household income is $3,001, you must buy a 4-room or bigger flat, as you have exceeded the 3-room Income Ceiling.

Why is it that the Income Ceiling is $8,000, instead of $3,000, for 3-room flats in mature estates like the recent Queenstown (Dawson) where the prices of flats are very high?

Since the lower the household income, the higher is the Additional CPF Housing grant, Singaporeans may be tempted to buy a flat before they can really afford it.

For example, a household with monthly income not exceeding $1,500 gets the highest grant. But, how many households earning less than $1,500 can really afford to buy, and run the risk of default over the next 30 years?

So, to buy earlier so as not to cross the Income Ceiling and get a higher grant may be a “headache”, if you can’t pay in the future.

Buy later when you can afford, but risk crossing the Income Ceiling, and be “forced” to buy a bigger flat, also a “headache”.

PRs don’t have this “headache”. They just buy any size resale flat that they can afford. Even if a PR earns $1 million, he can buy a 2-room resale flat as there is no Income Ceiling for resale.

CPF Housing Grants

Some Singaporeans also perceive that it is better to get a CPF Housing Grant. But you may have noticed in recent years that every time the grant is increased, the prices of new flats increase by even more.

So, is an increase in a grant that is less than the increase in the price, really a benefit?

Renting Out Rooms

PRs may generally have smaller families as they may not have their parents in Singapore, or not have children yet.

So, some may rent out rooms immediately after they buy a flat. [PRs can rent out rooms immediately but not for the entire flat.]

Some foreigners may also be accustomed to sharing a flat before they become PRs.

So, they may be able to pay higher prices for resale HDB flats, because they plan to rent out the rooms for income.

Singaporeans, on the other hand, generally buy flats to stay without the intention to rent out rooms immediately, as they may generally have larger families of parents and children.

I think most Singaporeans see a HDB flat as their home for life, and not as a temporary investment, providing income as well as saving on housing costs whilst in Singapore.

How can our housing policy allow PRs who own private property to buy a HDB resale flat and rent out the rooms immediately, as long as they stay in their HDB flat as well?

Are these some of the possible contributing factors to why HDB resale prices are skyrocketing?

In this connection, HDB resale prices rose about 8 per cent last year, compared to only about 2 per cent for private property.

Why is it that two PR siblings of any age can buy a resale flat, whereas two Singaporean siblings must be either orphans or age 35 and above before they can do so?

Review HDB Policies

HDB policies could be reviewed, with a focus on the undesirable outcomes for Singaporeans, and at the same time vis-a-vis PRs.

Policies should not be maintained for reasons of solving a problem – like PRs need housing too, IR foreign workers need housing too, etc.

Policies should also not be maintained for reasons of avoiding a problem – such as if new flats are priced lower on a cost-plus basis, the property market will crash and HDB resale prices will not grow.

This reasoning is in my view fundamentally flawed, as even if new flats’ prices are gradually reduced on a cost-plus basis, it will be about 8 years (3 years BTO plus 5 years MOP) before they can be sold in the open market.

So, it may not cause resale prices to drop.

Instead, it may help to moderate the current skyrocketing prices which may be an increasingly unsustainable asset bubble.

—-

source : TheOnlineCitizen
 

Char_Azn

Alfrescian (Inf)
Asset
I can't see how the government works harder for the PRs then the locals from this article. The bugger is just twisting it such that it sounds better to be a PR then a citizen by stating twisting facts like the government grant is not good coz it binds U to the flat for 5 yrs or that PRs do not get the same heaache of selling the flat as a local. which is pretty much Bullshit

1st off, yes, there is 5 yr period where U need to wait before U can sell a flat if you buy direct from the government. However U have a choice not to get locked in and say :oIo: to the grant given by HDB and buy a resale flat. PRs DO NOT HAVE THAT CHOICE

His arguement for the 2nd point is that PRs do not need to wait coz they can sell after 1 yr, buy resale flat mah. Guess what, Locals also have the choice to buy resale flat and to sell it after 1 yr.

And I do not totally agree with his argument on the salary cap however I feel that the salary cap is not updated. It is there to ensure that there are enough housing for pple who wants to buy a flat but can barely afford it.

End of the day it fails to point out a single privilege that PRs can enjoy over a citizen making the title "HDB Housing Policies Tilting The Advantage Towards PRs ??" invalid

However HDB is not without its faults, instead of questioning whether HDB is working for PRs or locals they should be questioning HDB's method of calculating the price of flats.

Why are flats prices for first time owners tag to market rate instead of cost of building it. Yes this was mentioned in the article but instead of elaborating on this the author chose to twist facts on other points

Is the salary cap still valid? $8000 today is not a lot

Still on the salary cap, 1 point I agree with, should the cap for a house in/near be different from the outskirts since the cost of the flat is very different.

This are more valid questions which should be explored to make the HDB look bad rather then point a finger at HDB for helping PRs and twist facts to make it look bad when in reality it does not seem to be the case. If it really was the case, PRs would be enjoying equal or better rights then we have. The fact is that all the choices available for PRs are available for locals however the not all choices the locals have is applicable for PRs. Which pretty much makes his arguments totally invalid

Question the government for their faults, there are many. You can find lots of them here but sadly many in here try to twist it to look even worse. Twisting facts to make them look bad will only serve to make the opposition look bad in the end. Use what is available to attack them an not create something from nothing. Chee tried that and all he has succeeded in doing so far is to make the opposition look bad
 

Internet Brigade

Alfrescian
Loyal
Singaporeans are subject to the $2,000 and $3,000 Income Ceiling for the purchase of new 2-room and 3-room flats. This may in a sense “force” Singaporeans to buy a bigger flat than they can afford.

For example, if your household income is $3,001, you must buy a 4-room or bigger flat, as you have exceeded the 3-room Income Ceiling.

Why is it that the Income Ceiling is $8,000, instead of $3,000, for 3-room flats in mature estates like the recent Queenstown (Dawson) where the prices of flats are very high?

Leong's arguments are getting tired.

Since when is anyone forced to buy a house? Since when is a higher salary a bane? If you hit the income ceiling.... you are not entitled to public housing because you are not NEEDY.

Public housing is designed for the needy and not the greedy.
 
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