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[h=2]NOM-NOM-NOMing[/h]
November 8th, 2012 |
Author: Contributions
As it appears, more people other than me have concerns with
regards to the exponentially escalated public housing prices issue. The talk of
the town today has finally raised legitimate questions towards how the relevant
authorities have structured their pricing schemes (or, some call scams).
If we recall my sharing of material costs to build stacked template
pre-fabricated high rise housing not long ago (A
“Prison” for a Home? & Same-same
but different), the actual material costs is actually quite consistent over the past 2 decades, not withstanding the minor on-year inflation. Labor employed to expedite the works are predominantly low waged foreign nationals. Variable costs involving equipping & logistics may swing the figures a fair bit.
As a whole, the average total cost for constructing unfurnished studios/
single bedroom/ 2 bedroom units should not exceed 6 figures.
The recent article published by a particular political party seems to strike
a cord in many dwellers of the island. Many of whom start raising brows,
reflecting if they have been scammed to put themselves through 25-30yrs mortgage
for a 2 bedroom unit that doesn’t exceed 100sqf.
Hypothetically, let’s assume the total average cost to construct & build
a 2bedroom unit hovers at $100k and the going rate to purchase it hovers at
$250k.
Shocking? What accounts for the $150k? Is it somebody’s profit margins, or is
it land price?
The fundamental concept towards public housing is to make them affordable.
These assets should not be designed to be investment driven, simply because they
were built using public funds, bought using subsidies. And if there should be
any appreciation in value, it should not be based on incoherent factors, simply
because public housing deeds do not entitle owners to land strata. In a
nutshell, it’s just a cell in the air.
I have to say that I’m inclined to agree with the concept of Non-Open Market
(NOM) scheme for public housing, because it resonates with the fundamental
principles for public housing.
Therefore, home owners pay exactly for what they buy – bricks, mortar,
essentials and utility etc. and when the time comes to liquidate the asset, the
home owners sell it back to the housing board, where the property is then sold
to a new prospect at the revised values.
The idea is innovative, sound and with good conscience, because the order of
the day is not to over profit on essentials.
Sure, people like to compare, and tend to compare with better developed
nations. Well, in some most developed countries, citizens have concession rates
to assets and lands. While the ongoing situation on this island is such, where;
prices are marked above realistic value, and “subsidy” is thrown in as a
sweetener, but the prices after subsidy are still ridiculous where home owners
barely make ends meet.
The demand & supply is also a problem, because people are encouraged to
buy beyond their means. If a prospecting couple decides to be frugal & buy a
2bedroom unit, their chances are diminished because there are plenty others need
it more. And they are forced to go for a 3bedroom unit, or more. Therein
resulting in a credit crunch, where they take up 25-30yrs mortgage.
And the problem doesn’t stop there. The mortgage situation is going to result
in the future generation being denied tertiary education, and will be the start
of a new set of problem – incurring debts for higher education (a necessity in
this day & age).
Bold as the policy makers are, calling the situation affordable. Yet little
do they realize that the truth is contrasting.
What really is affordability?
Definition (Affordable): Adjective –
inexpensive, reasonably priced
Synonyms: available,
accessible
In my opinion, affordability is when one can comfortably purchase/transact a
belonging/asset, without having to compromise daily way of life, without having
to jeopardize savings for future use i.e.: children’s education, medical
emergencies, retirement, a holiday or two etc.
When it comes to a situation where home buyers are required to deplete their
savings, live from hand to mouth while servicing a mortgage duration that sees
them through till age of retirement, and not having sufficient funds to retire,
resulting in a need to sell the home they struggled so long to live in, is not
affordable – to put it in proper perspectives, it is a debt situation.
Nothing is guaranteed for life, and in the unfortunate event that one is laid
off from employment, they are done for. And that debt situation puts the lives
of the entire household in limbo.
On learning of what reality lays in ambush, wouldn’t you say no to the
present public home pricing scheme (or, some call scam), and welcome the NOM
scheme with open arms?
.
Alvin Tan
* Alvin is an Industrial Designer by Qualification, Lighting Professional
& Business Developer by Profession & Practice. He blogs at
http://canvasinglight.wordpress.com.
regards to the exponentially escalated public housing prices issue. The talk of
the town today has finally raised legitimate questions towards how the relevant
authorities have structured their pricing schemes (or, some call scams).
If we recall my sharing of material costs to build stacked template
pre-fabricated high rise housing not long ago (A
“Prison” for a Home? & Same-same
but different), the actual material costs is actually quite consistent over the past 2 decades, not withstanding the minor on-year inflation. Labor employed to expedite the works are predominantly low waged foreign nationals. Variable costs involving equipping & logistics may swing the figures a fair bit.
As a whole, the average total cost for constructing unfurnished studios/
single bedroom/ 2 bedroom units should not exceed 6 figures.
The recent article published by a particular political party seems to strike
a cord in many dwellers of the island. Many of whom start raising brows,
reflecting if they have been scammed to put themselves through 25-30yrs mortgage
for a 2 bedroom unit that doesn’t exceed 100sqf.
Hypothetically, let’s assume the total average cost to construct & build
a 2bedroom unit hovers at $100k and the going rate to purchase it hovers at
$250k.
Shocking? What accounts for the $150k? Is it somebody’s profit margins, or is
it land price?
The fundamental concept towards public housing is to make them affordable.
These assets should not be designed to be investment driven, simply because they
were built using public funds, bought using subsidies. And if there should be
any appreciation in value, it should not be based on incoherent factors, simply
because public housing deeds do not entitle owners to land strata. In a
nutshell, it’s just a cell in the air.
I have to say that I’m inclined to agree with the concept of Non-Open Market
(NOM) scheme for public housing, because it resonates with the fundamental
principles for public housing.
Therefore, home owners pay exactly for what they buy – bricks, mortar,
essentials and utility etc. and when the time comes to liquidate the asset, the
home owners sell it back to the housing board, where the property is then sold
to a new prospect at the revised values.
The idea is innovative, sound and with good conscience, because the order of
the day is not to over profit on essentials.
Sure, people like to compare, and tend to compare with better developed
nations. Well, in some most developed countries, citizens have concession rates
to assets and lands. While the ongoing situation on this island is such, where;
prices are marked above realistic value, and “subsidy” is thrown in as a
sweetener, but the prices after subsidy are still ridiculous where home owners
barely make ends meet.
The demand & supply is also a problem, because people are encouraged to
buy beyond their means. If a prospecting couple decides to be frugal & buy a
2bedroom unit, their chances are diminished because there are plenty others need
it more. And they are forced to go for a 3bedroom unit, or more. Therein
resulting in a credit crunch, where they take up 25-30yrs mortgage.
And the problem doesn’t stop there. The mortgage situation is going to result
in the future generation being denied tertiary education, and will be the start
of a new set of problem – incurring debts for higher education (a necessity in
this day & age).
Bold as the policy makers are, calling the situation affordable. Yet little
do they realize that the truth is contrasting.
What really is affordability?
Definition (Affordable): Adjective –
inexpensive, reasonably priced
Synonyms: available,
accessible
In my opinion, affordability is when one can comfortably purchase/transact a
belonging/asset, without having to compromise daily way of life, without having
to jeopardize savings for future use i.e.: children’s education, medical
emergencies, retirement, a holiday or two etc.
When it comes to a situation where home buyers are required to deplete their
savings, live from hand to mouth while servicing a mortgage duration that sees
them through till age of retirement, and not having sufficient funds to retire,
resulting in a need to sell the home they struggled so long to live in, is not
affordable – to put it in proper perspectives, it is a debt situation.
Nothing is guaranteed for life, and in the unfortunate event that one is laid
off from employment, they are done for. And that debt situation puts the lives
of the entire household in limbo.
On learning of what reality lays in ambush, wouldn’t you say no to the
present public home pricing scheme (or, some call scam), and welcome the NOM
scheme with open arms?
.
Alvin Tan
* Alvin is an Industrial Designer by Qualification, Lighting Professional
& Business Developer by Profession & Practice. He blogs at
http://canvasinglight.wordpress.com.
