The great con job that is HDB

[littlefish]

As most Singaporeans have been told since ages ago, HDB's mission is to provide affordable housing to the public. Of course the issue of what is affordable is debatable but we all know that HDB provides a market subsidy for the flats.

The truth is that it is not even a so called market subsidy but HDB is simply providing low class private housing. That is, HDB operates just like a private developer that is given an unfair advantage to provide housing of the minimum standard. It returns the favour to the government by propping up property prices.

Why is this so? HDB buys land from the government at market prices. These prices are supposedly what a private developer would have to pay in order to purchase the land. Subsequently, they add in the costs of building the flats, carparks, surrounding landscaping, etc, to arrive at a final cost. Then the subsidy amount is deducted to produce the final price. Allegedly, this price is subsidised as a private developer would not have given the subsidy if it was asked to build the flats.

The problem now is that HDB is not a real private developer. In bad times, a private developer has the option of not bidding for the land if it deems the price is too high and you will start seeing a contraction in new private apartments. For the HDB, this is not really an option as it needs to provide housing for the masses however the economy is doing. So, the SLA is able to maintain the high prices on the land since there is always a ready buyer. They just need to sit tight and wait for the good times to come around before selling to the private developers.

Thus, the fact is that HDB is there to prop up the land prices and act as a private developer during the bad times. This is why prices of new HDB flats will never fall. When the good times come around, SLA will sell the land to private developers at inflated prices and thus ensuring that private property will always be more expensive than HDB flats even if they were to be built to the same standards. SLA will then raise the price at which it sells land to HDB to reflect true market value.

Effectively, this scheme ensures that HDB will be around to provide a support for prices. This price control mechanism implies that HDB flat buyers are indirectly subsidising the government rather than being subsidised as it is basic economics that any price floor only serves to provide a subsidy to the sole seller, SLA, in this case. Somewhere along the way, HDB has deviated from the noble aim of providing affordable housing to providing a price support.

In good times, this effect will not be evident as demand pushes the price above the support. However, in bad times, this downward pressure must be repulsed by whatever means necessary. You will then understand why Singapore needs the foreign talents so much. Crappily-implemented policies like Sers and upgrading projects start to creep in to maintain the facade of value retention. Not forgetting also the various policies that restrict the unfettered buying and selling of HDB flats.

At different stages of your life, you have varying needs of property. For a senior citizen, there is no point spending a vast sum of money on a swanky condominium when companionship is more important. That is another problem posed by a greying population. That is, it generates another downward pressure force. Unfortunately, the government operates a monopoly on land in this country.

Singaporeans are not totally blameless as they have believed that their flats are an asset and they were apprehensive about their values falling. They have believed this fallacy and converted all their cash/CPF into HDB flats. They have been riding a tiger (voting for PAP) and they do not know when/how to get off.

The painful irony is that we are paying our leaders big bucks to continue this con job. We are buying shoddily built housing that don't belong to us and to top it off, we are subsidising the sellers for it during bad times.

 

[newyorker88]

What happens when the buyers cannot pay?

That is why the FTs are here, encouraged to take up PR, so that they can buy the HDBs, and take over sinkees.

Sinkees can really eat shit liao.

 

[Hope]

As most Singaporeans have been told since ages ago, HDB's mission is to provide affordable housing to the public. Of course the issue of what is affordable is debatable but we all know that HDB provides a market subsidy for the flats.

The problem with Singapore is that the top production factor,land is under the control of PAP government which makes max use of it to enrich the treasury.

An example is HDB,which buy land fr SLA(Spore Land Authority)that explains why PAP can look into yr EYES and declare that HDB is losing money building for you,but they do not tell you how many billions HDB paid to SLA to buy over the land,SO CALLED MARKET VALUE WOW.

PAP,being the biggest land owner in Spore,does not practise true market principle.

What I would mention is the reserve price set in land tender,they maintain the reserve price and withdraw the said land under tender process when bid prices fall below reserved price.

In this way,the government artificial jack up the land price as it is not a commercial enterprise and never have any urgent need to sell off the land to raise money.

The ceiling is thus under control of PAP government with the overall result that high rental is a killer for biz in Singapore.

 

[Ah Guan]

http://www.todayonline.com/articles/296452.asp

HDB not singing in tune with Govt ?

[SIZE=+0]It should be more sensitive to tough economic times </B>[/SIZE]

Monday • January 12, 2009


CONRAD RAJ

[email protected]

BUSINESSES big and small are being ravaged by the global economic downturn, with firms here down on their knees pleading for all the help that they can get, from cash to measures that will help them reduce their costs.

The Government has recognised their plight and has promised help. Prime Minister Lee Hsien Loong said the Government would help workers acquire new skills and make sure businesses continue to operate by cutting costs and ensuring that they have access to credit.

The Government wants to keep the economy competitive and make sure that Singaporeans remain employable, he said.

“Because if you are not working, and if your company is not competitive, then there is no way you can come back up and stand on your feet again,” he was quoted as saying.

And in recently explaining to an audience in Chile why the Singapore Government had cut the remuneration of ministers and top civil servants by 18 to19 per cent, he noted: “It is the right thing to do, economically as well as politically, to send the signal that at a time like this, everybody has to tighten his belt.”

However, this message doesn’t appear to have trickled down to the Housing and Development Board (HDB), which has raised the rents of its commercial properties while almost everyone else has brought theirs down.

Mr Nelson Koh of Horizon Books, a company in which my brother is a shareholder, complained that when he received the tenancy renewal notice last month from the HDB, there was a 13-per-cent increase in the rental rates from the current $1,410 a month to $1,590 a month.

When he went to the HDB office to seek clarification and ask for a reduction, he was told to wait for further notice as there were a number of other tenants making similar pleas.

In fact, in November, businesswoman Mdm Tay Boon Yong wrote to the papers to complain about a 20-per-cent hike in the rent for her HDB prototype factory in Defu Industrial Estate, which is slated for redevelopment in a few years’ time.

“What is this talk about keeping business costs down? Does the HDB not align its policies with Government initiatives? We are already bleeding from the slowdown. Increasing rent at this inopportune time is adding salt to the wound,” she asked.

“We are trying hard not only to stay in business, but also retain our workers. Can the Government please knock some sense into the HDB?” she added.

The HDB’s reply to her plight borders on callous.

“Our industrial tenants pay a fixed rent during their tenancy period, which could range from one to three years. Before the tenancy expires, they are offered the option of renewing their tenancies at the prevailing market rent.”

Now who doesn’t pay a fixed rent during their tenancy period?

The HDB then went to point out that “since 2006, the rent of similar industrial premises has increased by about 22.5 per cent. Since September last year, HDB has offered to stagger rent increases to assist industrial tenants like Mdm Tay who face significant rent increases at tenancy renewal, by spreading their rent increases over the renewal term of three years.”

For sure, rents may have risen by the amount that the HDB claims, but aren’t we facing a serious downturn now — perhaps the most serious since the depression of 1929?

Then came a “magnanimous” offer to Mdm Tay from the HDB.

“To help Madam Tay confirm the prevailing market rent of her unit, she can opt for an independent assessment from a private valuer. Alternatively, HDB is prepared to put the unit up for tender so her company can re-bid for it,” it said.

This appears to be a take-it-or-leave it attitude.

Wasn’t the HDB established to provide cheap lodging and premises to not only the population at large but also to Singapore’s small- and medium-sized enterprises (SME), which employ the bulk of our workers?

Or is its main priority now to churn out huge profits? Perhaps the tagline of it new vision and mission statement, “Soaring to Greater Heights”, should read “Soaring to Greater Profits”.

It’s not as if the HDB is losing money on its commercial and industrial properties. For the financial year ended March 2008, the HDB reported a “higher surplus” of $632 million as compared with $381 million in the previous year. It attributed the increase to higher rents, the reversal of impairment losses of commercial and industrial properties and land, as well as higher compensation received for the return of some land parcels to the Government during the year.

While the Government has recently made available$2.3 billion in loan and credit facilities to companies, especially to SMEs, by offering to take80 per cent of the risk of financial institutions in their loan grants, its gesture will come to nought if Government-linked entities like the HDB raise costs to businesses in the current climate.

Prime Minister Lee has said the Government would be introducing “strong measures” to deal with the current recession. One such measure could be to prevent the HDB and like bodies from causing business costs to soar.

 

[zhihau]

Singaporeans are not totally blameless as they have believed that their flats are an asset and they were apprehensive about their values falling. They have believed this fallacy and converted all their cash/CPF into HDB flats. They have been riding a tiger (voting for PAP) and they do not know when/how to get off.

lol... simple! don't get any HDB pigeon hole loh!

 

[zhihau]

What happens when the buyers cannot pay?

That is why the FTs are here, encouraged to take up PR, so that they can buy the HDBs, and take over sinkees.

Sinkees can really eat shit liao.

bro,

i think the PRs are only allowed to get HDB pigeon holes from re-sale market, not from the HDB directly.

 

[Nice-Gook]

bro,

i think the PRs are only allowed to get HDB pigeon holes from re-sale market, not from the HDB directly.

So what?Invariably HDB gains.How mah you ask ah.....Simple,how would third rate PRC and ah nehs whom we name as FT who themselves cannot afford house ownership in their own mother land are housed here?...HDB becomes affordable to FT if they work here for only six months.Does it really matters it its resale or otherwise?

 

[po2wq]

... Mr Nelson Koh of Horizon Books, a company in which my brother is a shareholder, complained that when he received the tenancy renewal notice last month from the HDB, there was a 13-per-cent increase in the rental rates from the current $1,410 a month to $1,590 a month.

When he went to the HDB office to seek clarification and ask for a reduction, he was told to wait for further notice as there were a number of other tenants making similar pleas.

In fact, in November, businesswoman Mdm Tay Boon Yong wrote to the papers to complain about a 20-per-cent hike in the rent for her HDB prototype factory in Defu Industrial Estate, which is slated for redevelopment in a few years’ time.

“What is this talk about keeping business costs down? Does the HDB not align its policies with Government initiatives? We are already bleeding from the slowdown. Increasing rent at this inopportune time is adding salt to the wound,” she asked.

“We are trying hard not only to stay in business, but also retain our workers. Can the Government please knock some sense into the HDB?” she added.

The HDB’s reply to her plight borders on callous.

“Our industrial tenants pay a fixed rent during their tenancy period, which could range from one to three years. Before the tenancy expires, they are offered the option of renewing their tenancies at the prevailing market rent.”
...

y u fellas tel u so many times stil dun understand? ...

oredi said dun u rely on gahmen ... instead, u muz chip in 2 help gahmen ... cmon, do ur part now ...

 

[Frankiestine]

What losses can HDB suffer? It like the left hand paying the right hand...market value what is market value...is it something tangible...its how they want to put a figure on it..they can pick a piece of shit and say its worth millions...who is to dispute? HDB, CPF....these are the biggest con job....and unfortunately there are hundred of thousands of gullible singaporean that still believe or perhaps they are in denial of the truth..

 

[Whats4]

lol... simple! don't get any HDB pigeon hole loh!

then get a slaughter house?

 

[littlefish]

bro,

i think the PRs are only allowed to get HDB pigeon holes from re-sale market, not from the HDB directly.

There is still an indirect spillover effect into the price of new HDB flats. With increased demand for accommodation, rents will rise and prices of properties available in the private market will rise too. This will then push up prices for new HDB flats as they have a land cost component.

There is a solution to this HDB con job. As someone has said, paying for leasehold land is like paying all the rental upfront. What HDB buyers should be paying should be just the actual cost of building the flats (plus other considerations like floor level and whether it has views). HDB should then charge the tenants annually for the cost of renting the land on which the flats are built. The rents can be put up for review periodically, e.g every 5 years. The rent amount should be assessed by independent valuers. Of course, maybe there should be an additional amount built into the rental paid to reflect that the land cannot be used for other purposes within 50 years (I think no one would want to live in a flat older than 50 years, for houses maybe but not apartment blocks). But this additional amount should really be waived since HDB's aim is to provide housing for the masses. Real subsidies can then be provided to offset the costs of owning the flats whether by reducing the price of the flats or the annual land rental amount.

To be fair to those who own existing HDB flats, the government should return the amount paid for the land minus the appropriate land rental costs which are to be assessed. It will be more complicated for those who bought resale flats since the land price would be different from when the flats were built but I am sure this can still be worked out.

No doubt it will be a massive effort and will require supreme willpower but this is the only way for the true costs of owning a HDB flat to be reflected.

 

[makapaaa]

sounds like a ponzee scam...

 

[DerekLeung]

[COLOR="_______"]PAP government says Singaporeans should wake up and not be complacent ![/COLOR]

 

[Papsmearer]

As most Singaporeans have been told since ages ago, HDB's mission is to provide affordable housing to the public. Of course the issue of what is affordable is debatable but we all know that HDB provides a market subsidy for the flats.

The truth is that it is not even a so called market subsidy but HDB is simply providing low class private housing. That is, HDB operates just like a private developer that is given an unfair advantage to provide housing of the minimum standard. It returns the favour to the government by propping up property prices.

Why is this so? HDB buys land from the government at market prices. These prices are supposedly what a private developer would have to pay in order to purchase the land. Subsequently, they add in the costs of building the flats, carparks, surrounding landscaping, etc, to arrive at a final cost. Then the subsidy amount is deducted to produce the final price. Allegedly, this price is subsidised as a private developer would not have given the subsidy if it was asked to build the flats.

The problem now is that HDB is not a real private developer. In bad times, a private developer has the option of not bidding for the land if it deems the price is too high and you will start seeing a contraction in new private apartments. For the HDB, this is not really an option as it needs to provide housing for the masses however the economy is doing. So, the SLA is able to maintain the high prices on the land since there is always a ready buyer. They just need to sit tight and wait for the good times to come around before selling to the private developers.

Thus, the fact is that HDB is there to prop up the land prices and act as a private developer during the bad times. This is why prices of new HDB flats will never fall. When the good times come around, SLA will sell the land to private developers at inflated prices and thus ensuring that private property will always be more expensive than HDB flats even if they were to be built to the same standards. SLA will then raise the price at which it sells land to HDB to reflect true market value.

Effectively, this scheme ensures that HDB will be around to provide a support for prices. This price control mechanism implies that HDB flat buyers are indirectly subsidising the government rather than being subsidised as it is basic economics that any price floor only serves to provide a subsidy to the sole seller, SLA, in this case. Somewhere along the way, HDB has deviated from the noble aim of providing affordable housing to providing a price support.

In good times, this effect will not be evident as demand pushes the price above the support. However, in bad times, this downward pressure must be repulsed by whatever means necessary. You will then understand why Singapore needs the foreign talents so much. Crappily-implemented policies like Sers and upgrading projects start to creep in to maintain the facade of value retention. Not forgetting also the various policies that restrict the unfettered buying and selling of HDB flats.

At different stages of your life, you have varying needs of property. For a senior citizen, there is no point spending a vast sum of money on a swanky condominium when companionship is more important. That is another problem posed by a greying population. That is, it generates another downward pressure force. Unfortunately, the government operates a monopoly on land in this country.

Singaporeans are not totally blameless as they have believed that their flats are an asset and they were apprehensive about their values falling. They have believed this fallacy and converted all their cash/CPF into HDB flats. They have been riding a tiger (voting for PAP) and they do not know when/how to get off.

The painful irony is that we are paying our leaders big bucks to continue this con job. We are buying shoddily built housing that don't belong to us and to top it off, we are subsidising the sellers for it during bad times.

There is still an indirect spillover effect into the price of new HDB flats. With increased demand for accommodation, rents will rise and prices of properties available in the private market will rise too. This will then push up prices for new HDB flats as they have a land cost component.

There is a solution to this HDB con job. As someone has said, paying for leasehold land is like paying all the rental upfront. What HDB buyers should be paying should be just the actual cost of building the flats (plus other considerations like floor level and whether it has views). HDB should then charge the tenants annually for the cost of renting the land on which the flats are built. The rents can be put up for review periodically, e.g every 5 years. The rent amount should be assessed by independent valuers. Of course, maybe there should be an additional amount built into the rental paid to reflect that the land cannot be used for other purposes within 50 years (I think no one would want to live in a flat older than 50 years, for houses maybe but not apartment blocks). But this additional amount should really be waived since HDB's aim is to provide housing for the masses. Real subsidies can then be provided to offset the costs of owning the flats whether by reducing the price of the flats or the annual land rental amount.

To be fair to those who own existing HDB flats, the government should return the amount paid for the land minus the appropriate land rental costs which are to be assessed. It will be more complicated for those who bought resale flats since the land price would be different from when the flats were built but I am sure this can still be worked out.

No doubt it will be a massive effort and will require supreme willpower but this is the only way for the true costs of owning a HDB flat to be reflected.

I don't think that u understand what is going on here. What u are proposing is to lower the prices of the HDB flats. If you are talking about paying costs, than a new flat will cost no more than $50,000 - $80,000 depending on the size. Of course, this is desirable for the the people, but not for the PAP. If prices of HDB flats were to fall, a ripple effect will happen. The value of resale flats will also fall, and private condo prices, etc. This will never happen because the ruling PAP elites are some of the largest property owners in S'pore. they will not allow an erosion in their wealth when they see all their properties decline in value. It will also be politically and financially hard to those sinkies that were forced to buy over priced $400K flats, and than to see the next batch of buyers pay cost price. Banks who land to homeowners to buy these overpriced flats will see the value of their security drastically reduced. I think u can safely forget about the govt. being fair and returning the artificailly high price of the land to people, because it will cause billions of dollars and the HDB must open its books. So, it is a nightmare situation.

By the way, u don't give the FTs enough credit. Unlike most singaporeans, they know a con job when they see one. How many of them are really buying flats? Why do u think the HDB had an inventory of 40,000 unsold units as recently as 2 years ago? MOM told them they were letting in hundreds of thousands FTs, so they build it. But they DID not come. The FTs were not so stupid to buy, hence the glut. How many FTs really bring their whole families here? Or is it likely that their families are back in their home countries in a low cost environment, while 4 or 5 of them rent a flat here and repatriate money back?

 

[R4g3]

bro,

i think the PRs are only allowed to get HDB pigeon holes from re-sale market, not from the HDB directly.

it is even worst. PRs will buy from resale market and push up the price, or a lot of FT are renting them, paying high rent which also result in people will to pay more.

When price of resale market goes up, those sold direct also will go up because it is base on market subsidy, even though the building cost has remain the same.

 

[2lanu]

The best solution is to get Mudland and Indo to invade this red dot. Pull down everything and slaughter those NS untrained. Then start all over again.

 

[zhihau]

then get a slaughter house?

no... stay with my folks until i migrate

 

[zhihau]

So what?Invariably HDB gains.How mah you ask ah.....Simple,how would third rate PRC and ah nehs whom we name as FT who themselves cannot afford house ownership in their own mother land are housed here?...HDB becomes affordable to FT if they work here for only six months.Does it really matters it its resale or otherwise?

alamak... very clearly, you didn't catch my drift...

 

[zhihau]

As someone has said, paying for leasehold land is like paying all the rental upfront.

i do recall starting using the term "upfront rentals" back in the Delphi forums back in 2006? anyone been using this term for the HDB mortgage prior to that?

by right, the spill-over effects from the increased demand for accommodation required by the FTs will have no bearings over the new HDB pigeon holes as long as the HDB doesn't peg their retail price to the "market value".

HDB is supposed to build affordable and cheap housing for her CITIZENS, and honestly, i don't think a 4-room pigeon hole that costs over SGD$200K is considered affordable.

 

[zhihau]

it is even worst. PRs will buy from resale market and push up the price, or a lot of FT are renting them, paying high rent which also result in people will to pay more.

When price of resale market goes up, those sold direct also will go up because it is base on market subsidy, even though the building cost has remain the same.

of course it will, then Marboky will be happy