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Leong Sze Hian rebuts PM Lee on ‘housing problems’[/h]
October 26th, 2012 |
Author:
Contributions
Leong Sze Hian
I refer to the article “
PM
Lee: Many housing problems due to family breakups” (TR Emeritus, Oct
25).
It states that “A fair share were residents with housing problems. But the
root cause is family breakups”
Are “Many housing problems due to family breakups” or the other way round –
Family breakups due to housing problems?
HDB affordability?
The persistant argument that HDB flats are affordable, because most flat
owners do not use more than 30 per cent of their income to service their
mortgage, may be fundamentally flawed as only those who can afford it will buy
the flats. Those who cannot may already have given up their flats.
The fact that median and lower incomes have been lagging further behind,
relative to HDB prices as a multiple of income, may be the best indicator of
affordability.
Which is the only country in the world that allows public housing prices to
increase by about five times more than median wage increase?
Singapore – The real median wage only increased by about 1.1 per cent over
the last 10 years or so.
Passing the buck to banks?
Why were banks allowed to offer HDB housing loans from 1 January, 2003?
One possible reason perhaps, may be that at its historical peak, more than
40,000 HDB households were in arrears over three months (30,770 HDB loans were
in arrears in September 2009, excluding HDB bank loans)..
I understand that the last reported statistic on HDB loans in arrears was
28,000 in 2010, which was about seven per cent of HDB loans.
HDB annual reports used to have a statistic on the number of HDB households
given financial assistance, but this has disappeared for many years.
The last time that “applications for financial assistance approved”
statistics were published was the HDB’s 2004/2005 annual report.
The figure was 28,386 and 39,308 for FY2004 and 2003, respectively.
Of course, it may also have been helpful then, to publish the statistics on
the number of applications that were not approved.
No HDB bank loans’ delinquency statistics?
Since 1 January 2003, the HDB delinquency statistics have increasingly become
more “incomplete”, as there are no publicly available statistics on HDB bank
loans in arrears or foreclosures. HDB loans (not HDB bank loans) are only
occasionally and rarely disclosed when typically a question was asked in
Parliament.
The HDB has said that it does not have the statistics on HDB bank loans in
arrears or foreclosures.
However, I understand the last time that HDB bank loans ‘in arrears’
statistics were disclosed, the figure was seven per cent (Feb 2007,
Parliamentary debate).
So, if HDB bank loan arrears’ statistics could be disclosed in 2007, why did
the HDB say subsequently, that it does not have the statistics on HDB bank loans
in arrears or foreclosures?
I understand that there are now over 180,000 HDB bank loans which have been
rising over the years, whilst HDB loans have gradually declined on a relative
basis.
Compulsory acquisition at only 90 per cent of valuation
Most HDB loans’ flat owners in default would have sold in the open market at
valuation plus cash-over-valuation to avoid HDB compulsory acquisition at only
90 per cent of valuation.
Those who are forced to sell would disappear from the ‘in arrears’ and also
not be reflected in the foreclosure statistics.
Forced to buy bigger flats?
Some may be forced to buy bigger flats than they can afford, due to the HDB’s
income ceiling policy, which does not allow applicants with a household monthly
income of more than $2,000 to buy two-room flats.
The income ceiling is applied regardless of family size or situation, or
financial circumstances.
What this means is that those who earn more than $2,000 have to buy
three-room or bigger units.
Housing woes of divorce
As to “One resident I saw was locked out of his marital home years back,
recently divorced, and has transferred the flat to his ex-wife. Another recent
divorcee is having to sell her flat, leaving her and her teenage daughter to
fend for themselves, with no other relatives here to fall back on. Both asked me
for HDB rental flats. I often receive such messages through Facebook too”,-
Which is the only country in the world that requires a public housing flat to be
returned to the public housing authority, at a price to be determined by the
authority, when couples divorce?
Singapore – Divorce within five years, without children.
Which is the only country in the world that requires divorcing couples to
cancel their existing public housing loan, and re-finance with a new one?
Singapore – Why can’t the existing housing loan be continued? Many divorcing
couples have difficulty in re-financing, which may result in the sale of the
flat.
Rental flats’ policy issues?
With regard to “MPs do our best to help, and HDB is building more rental
flats” – Which is the only country in the world that increase the rent of the
poorest of the poor, after two years of renting a public flat?
Singapore – Households earning just over $800 a month have to pay higher rent
after two years of tenancy.
Finally, the 30 months debarment rule to apply for a rental flat or new flat,
for those who have sold a HDB flat for any reason including foreclosure, may
also contribute to family breakups.
.
Leong Sze Hian
* Leong Sze Hian is the Past President of the Society of Financial
Service Professionals, an alumnus of Harvard University, Wharton Fellow, SEACeM
Fellow and an author of 4 books. He is frequently quoted in the media. He has
also been invited to speak more than 100 times in 25 countries on 5 continents.
He has served as Honorary Consul of Jamaica, Chairman of the Institute of
Administrative Management, and founding advisor to the Financial Planning
Associations of Brunei and Indonesia. He has 3 Masters, 2 Bachelors degrees and
13 professional qualifications. He blogs at http://www.leongszehian.com.
