Lowering land cost is like raiding S'pore's reserves: Mah

Bigfuck said:

Raising land prices indiscriminately can be tantamount to feudal lord tax hikes of yesteryear in China and Europe. High land prices does not generate any economic product and service by itself. High land prices and closely related high rentals causes low cost competitiveness and is one of the major reasons hawkers can longer sell you the good quality and healthy food Singaporeans enjoyed 30 years ago. Masturbating on the private sector and MNCs hiking pay in tandem to increasing costs in Singapore is ludicrous. By the way, CPF minimum sum hike of 4% for inflation is also a tax. But there is no compulsory legislation available for salaries to be raised 4% for inflation. But salaries of civil services with their taxing instruments and inflationary instruments increase like clockwork. Such forms of topping up the national reserves and meaninglessly raising the GDP growth destroys real wealth of the citizens and reduces the economic and entreprenuerial potential and possiblities in Singapore.

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Bigfuck said:

You can imagine how cheezed the old man was when Toh Chin Chye lamented in parliament that government is telling people how to spend their own money. We have been cheated since 1984 when our real PAP champions were removed from the picture.

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ManBearPig62 said:

When you are in a hole, the first thing to do is to stop digging.

So he's implicitly admitted that the Government makes money from land sales. Whether it goes to reserves or not, doesn't matter.

That his "market subsidy" is not a subsidy at all.

Well done.

Make sure every Singaporean knows about this.

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http://finance.dir.groups.yahoo.com/group/RealEdge/message/2448

Jan 1, 2007
Did HDB land pricing use Raffles Place as rule?

I REFER to the letter, 'Why sale of state land is done at market price' by Ms Kee Lay Cheng of the Housing and Development Board (ST, Dec 28).
Mr Ngiam Tong Dow has a very interesting thing to say about land pricing in Singapore in his book: A Mandarin And The Making Of Public Policy, on page 153:
'Sadly the clarity of thought shown by Dr Goh Keng Swee in pricing land has been lacking in more recent years. Relying on the concept of opportunity cost, the Chief Valuer, at the behest of either the Ministry of National Development or the Ministry of Trade and Industry (I am not sure which), has valued land across Singapore using Raffles Place land as the benchmark. The assumption is that every square metre of land in any part of Singapore has the potential to be Raffles Place.'
Would the HDB like to comment how this has affected the pricing and allocation of subsidy of new HDB flats?




Viktor Ye Kok Kheong

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jq75 said:

Jan 2, 2007
___________Settle question of HDB subsidy once and for all [/SIZE]


I REFER to Mr Viktor Ye Kok Kheong's letter, 'Did HDB land pricing use Raffles Place as rule?' (ST, Jan 1).

The Housing Board said that 'HDB does not reveal the land and construction costs of specific projects as they vary from location to location... That is why it incurs an overall deficit each year for its home-ownership activity, as reflected in its annual accounts which is available publicly'.

The reason given for not revealing the land and construction costs is somewhat illogical, because the HDB is not being asked to disclose the costs of every project or location. Why not just reveal the breakdown of total costs, and a few examples of some projects and locations, now and in the past?

What the HDB is saying is akin to 'since we cannot tell you each and every item, we won't tell you anything at all'.

Every once in a while, the question of the cost and pricing of HDB flats comes up in the media. So, why not put a stop to the on-going speculation that HDB flats are not really subsidised?

In the interest of maintaining Singapore's reputation of having the highest standards of transparency and corporate governance, the HDB should keep up with the standards of disclosure in the private sector.

To illustrate the point of transparency, no real-estate investment trust or publicly-listed company would be able to give the reason given by the HDB for not breaking down the information on the major cost components in its accounting statements.

How can we tell whether HDB prices are 'at market price' without a breakdown of the land and construction costs for comparison purposes?

As to the market price for land taking into account the 'substantial resources... invested to provide major infrastructure, such as roads, MRT, sewers and utilities, for the new housing development', thus significantly enhancing the land value beyond the acquisition costs incurred by the Government, aren't the billions collected every year from road tax, electronic road pricing, property tax, 30 per cent water- conservation tax, etc, supposed to be used to provide such infrastructure?


Leong Sze Hian

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an 10, 2007
___________New flats' market value minus sale price = subsidy [/SIZE]


I REFER to the letters from Mr Viktor Ye Kok Kheong and Mr Leong Sze Hian (ST, Jan 1 and 2, respectively) pertaining to the subsidy for new HDB flats.

First, Mr Ye asked if it is true that the Chief Valuer values all land in Singapore using Raffles Place as the benchmark. We wish to state that it is not so.

It is a fundamental valuation principle that lands are valued based on the specific attributes of the site, such as location, the permitted use of the land, and tenure.

The Chief Valuer's valuation has to be supported by comparative land-sales evidence.

It is simply not tenable to benchmark every plot of land to Raffles Place pricing, as this would drive property prices beyond the reach of most Singaporeans.

For example, state land alienated by the Singapore Land Authority for housing in Tampines will be valued taking into account the market values of housing in Tampines, while state land for industrial use in Tuas will take into account industrial- land values in Tuas, etc.

Second, Mr Leong asked HDB to reveal its land and construction costs to prove that HDB flats are subsidised. He has missed the point.

To understand the full extent of public-housing subsidy for new HDB flats, one should be comparing the market value of the flats with the sale prices charged by HDB, rather than look at the input costs of land and building.

New flats are subsidised as they are being sold at prices that are lower than what they would otherwise fetch in the open market.

If this subsidy is not real, why should many flat buyers choose to buy new flats from HDB instead of resale flats in the open market using the CPF Housing Grant?

Third, Mr Leong asserted that HDB has not kept up with the standards of disclosure in the private sector. He is wrong.

HDB's financial statements are prepared in accordance with the Financial Reporting Standards, audited by the Auditor-General and tabled in Parliament for information.

HDB's standards of disclosure and governance are no less than those required of publicly listed companies and real-estate investment trusts in Singapore.

Overall, HDB is unable to recover the development cost of new flats that it offers to the public, and has incurred a deficit averaging $390 million in its home-ownership programme in the last five years. These figures are reported in HDB's audited financial statements, which are publicly available for inspection and scrutiny.

Kee Lay Cheng (Ms)
Deputy Director
(Marketing & Projects)
For Director (Estate Administration & Property)
Housing & Development Board

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Jan 4, 2007
No cause to doubt credibility of HDB


I DO NOT think that it is justified to press the Housing Board for its land and construction costs or doubt its word that the flats are subsidised.

In the first place, Singaporeans are not obligated to buy HDB flats. If they suspect that the flats are not 'at market price', they can buy private apartments.

However, the ongoing demand for the flats speaks for their market value. If a comparison were to be made, private apartments are still beyond the reach of the majority of Singaporeans.

Secondly, in view of the subsidy, owners should sell their flats back to HDB if they want to upgrade. However, HDB is good enough to allow owners to sell their flats in the open market and make a tidy profit.

Thirdly, the flats have improved in design and size since they were first built. If the flats are not 'at market price' and therefore unattractive, why are some Singaporeans using the names of their siblings, aunts and uncles who are still single to purchase these flats with the intention of selling them later?

I voted for a government which is trustworthy, honest and capable in every sense of the word and I have no cause to doubt the credibility of the HDB.

In fact, I appreciate what the Government has done to house poor Singaporeans like me in the 1960s when we were desperate for a roof over our heads during the Indonesian Confrontation.

Today, our housing system is a pride of the nation. It is unfair to throw brickbats of any kind at the HDB when it deserves bouquets.

Grace Cheah Gek Neo (Miss)

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