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Thread: What is the actual cost of a HDB flat?

  1. #201
    Senior Member melvin's Avatar
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    Default Re: What is the actual cost of a HDB flat?

    Quote Originally Posted by Silence Sky View Post
    I think it is right that our oldest estate is about 40 years old.
    If CYRN has got it right, there is no resetting of lease when you purchase a resale flat, then what is going to happen to a 25years old chap who bought a 40 years old resale flat?
    If this chap lives up to the age of 86, he’s going to be kicked out of the flat, wouldn’t he?
    Wun get kick out la... cos before that he will kena SERS!....
    even if get kick out they will surly give him a pl to stay la....

  2. #202

    Default Re: What is the actual cost of a HDB flat?

    Quote Originally Posted by melvin View Post
    2) I believe the abv sentence should be "If your flat tenure is left with 30years or less, the banks will not provide loan."
    Thanks, that is exactly what I meant.

  3. #203

    Default Re: What is the actual cost of a HDB flat?

    A lot of us here assume that all old flat will eventually be SERS.
    I have called up HDB and checked. I was told that not all old flats will definitely be under SERS. If your flat has undergone MUP, it is very unlikely you will be under SERS.

    Now I see buying a resale flat as a very risky business and it is also very irrational to do so, unless you are dead sure you will be under SERS.

    Paying 200k for a 99 lease = Renting the unit for $2,000 per month.
    Paying 250k for a 60 lease = Renting the unit for $4,100 per month.

    I am wondering how a product with limited shelf life can appreciate in value as time lapses. Is there any economic theory addressing this phenomenon?
    Last edited by Silence Sky; 13th November 2006 at 06:30 PM.

  4. #204
    Senior Member melvin's Avatar
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    Default Re: What is the actual cost of a HDB flat?

    Quote Originally Posted by Silence Sky View Post
    A lot of us here assume that all old flat will eventually be SERS.
    I have called up HDB and checked. I was told that not all old flats will definitely be under SERS. If your flat has undergone MUP, it is very unlikely you will be under SERS.

    Now I see buying a resale flat as a very risky business and it is also very irrational to do so, unless you are dead sure you will be under SERS.

    Paying 200k for a 99 lease = Renting the unit for $2,000 per month.
    Paying 250k for a 60 lease = Renting the unit for $4,100 per month.

    I am wondering how a product with limited shelf life can appreciate in value as time lapses. Is there any economic theory addressing this phenomenon?
    Of cos flat which undergo MUP will not be SERS in the near future but nobody knows in the later part. If the flats r old n nt fit to leave in they definately got to come up wif some alternatives which i foresee now will be SERS! The govt will definately dun wan to risk its people.

    And we have not reached the stage where most of the flats are 40 or 50 n abv. of cos they say MUP flats will nt be under SERS wait till most of them are u think they will still tell u MUP flats will nt be affect!

    Anyway Toa payoh is the first estate to undergo MUP it have been abt 11 or 12years snice the first batch of upgrading. Those flat 30yrs 40yrs now. We shall see...

    Buying resale flat may not be risk! In terms of appreciation it will depend much on your location whether u fall in the govt. Concept Planing ....etc

    So when buying consider the location to minimise the depreciation!

    As for these Phenomenon ... no logical theory seems capable of the explaination! or is there?

  5. #205
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    Default Re: What is the actual cost of a HDB flat?

    Quote Originally Posted by Silence Sky View Post
    I think it is right that our oldest estate is about 40 years old.
    If CYRN has got it right, there is no resetting of lease when you purchase a resale flat, then what is going to happen to a 25years old chap who bought a 40 years old resale flat?
    If this chap lives up to the age of 86, he’s going to be kicked out of the flat, wouldn’t he?
    This 25yr old chap of yours can't use his CPF to buy a 40yrs old flat. If he's rich enough to be able to pay for the mortgage out of ready cash, then maybe there isn't to much need to worry about him not being able to get another property when the lease's up.

    There's a rule for CPF usage, which basically states that combined remaining lease of property + age must be > 80yrs old, which is the average life expectancy of a Singaporean. Anyway, this is the reason why bank wouldn't grant loan for properties with less than 30 yrs lease (some private properties has less then 30yrs remaining, but no HDB flats yet), 'cos minimum lease for CPF usage is 30yrs.
    Last edited by justarius; 13th November 2006 at 10:02 PM.

  6. #206

    Default Re: What is the actual cost of a HDB flat?

    Land is limited in singapore as the population grows.

    as the city centre enroaches on its borders, the estates that are nearest to its expanding fringes will grow in value. This, in theory, at least explains how a 30 yr old 4-room flat in Tiong Bahru is more expensive than a brand new 99 year lease 5-room flat in Woodlands. As for those ppl who buy sengkang, punggol and woodlands, it remains to be seen how the govt wld re-develop the city centre to create alternative business hubs. Because it is foreseeable that flats there wld reach a threshold value, esp in our current economy where ppl are increasingly able to afford more expensive housing and public land pockets in central areas are being released for private redevelopment. There will be a balance point that has to be met, where by a flat far away from the city centre is cheap enough to attract ppl to sacrifice opportunity cost of time to live there.

    Now, if they were to decide to locate a casino in Punggol Marina.....

  7. #207

    Default Re: What is the actual cost of a HDB flat?

    Quote Originally Posted by feryl View Post
    Land is limited in singapore as the population grows.

    as the city centre enroaches on its borders, the estates that are nearest to its expanding fringes will grow in value. This, in theory, at least explains how a 30 yr old 4-room flat in Tiong Bahru is more expensive than a brand new 99 year lease 5-room flat in Woodlands. As for those ppl who buy sengkang, punggol and woodlands, it remains to be seen how the govt wld re-develop the city centre to create alternative business hubs. Because it is foreseeable that flats there wld reach a threshold value, esp in our current economy where ppl are increasingly able to afford more expensive housing and public land pockets in central areas are being released for private redevelopment. There will be a balance point that has to be met, where by a flat far away from the city centre is cheap enough to attract ppl to sacrifice opportunity cost of time to live there.

    Now, if they were to decide to locate a casino in Punggol Marina.....
    Thanks Feryl and Justarius. Good points.

    Now there's this ruling "combined remaining lease of property + age must be > 80yrs old". Does this also mean that in 10 years time, the demand for resale flat with remaining lease of 50 years will drop drastically? Since, only those below the age of 30 can use their CPF to purchase these flats.
    Last edited by Silence Sky; 15th November 2006 at 09:03 AM.

  8. #208
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    Default Re: What is the actual cost of a HDB flat?

    Quote Originally Posted by Silence Sky View Post
    Thanks Feryl and Justarius. Good points.

    Now there's this ruling "combined remaining lease of property + age must be > 80yrs old". Does this also mean that in 10 years time, the demand for resale flat with remaining lease of 50 years will drop drastically? Since, only those below the age of 30 can use their CPF to purchase these flats.
    You mean only those above the age of 30. Property with short leases are always hard to sell... it's just that more properties will be having short leases as time goes by, unless the govt. steps in to renew or extend the lease.

  9. #209
    Member Parka's Avatar
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    Default Re: What is the actual cost of a HDB flat?

    One of the reasons why flats are so expensive is to make the people work for it. It's working that drives the GDP and the economy. If flats are expensive, people will just get into their comfort zone and lose the drive.

    I hope there will be a Michael Moore of Singapore to do a documentary on this issue. A potential blockbuster.

  10. #210

    Default Re: What is the actual cost of a HDB flat?

    The below article is taken from ST Forum 25 Nov 2006.


    No subsidy in new HDB flats, just a discount


    FROM the letter by the Housing Board's Ms Kee Lay Cheng ('How prices of new HDB flats arrived at'; ST, Nov 17), it would appear that new flats that are sold are not subsidised.
    Ms Kee said that 'new HDB flats are... priced below their equivalent market values so that buyers enjoy a substantial market subsidy' - that is, they are sold at prices lower than those sold in the open market.

    In fact, there is no such thing as 'market subsidy'. If a flat's price in the open market is $400,000 and the seller reduces it to, say, $350,000, he is giving a discount and not a subsidy. Likewise, if the HDB sells its flats at $350,000 each, it is giving a discount to what similar flats can fetch in the open market.

    A subsidy is the difference between the cost of a product or service and the reduced price at which the product or service is sold or provided, the difference being absorbed by the Government to make the product or service available to those who may not otherwise be able to afford it.

    Thus, if it costs $200,000 to build each flat (land cost + construction cost + consultants' fees and other incidentals) and they are sold at $150,000, then the HDB is giving a subsidy of $50,000. On the other hand, if it sells the flats at, say, $350,000, it is in fact making a profit of $150,000, even though it may be giving a discount of $50,000 to the market price.

    The flats in Queenstown that are close to the MRT station were constructed after demolishing low- and medium-rise blocks that were constructed during the early 1960s. The land on which they stood was acquired at very low cost. Even allowing for inflation, the final costs of the flats cannot be the prices now quoted by the HDB. At these prices, the flats are not subsidised.

    To say they are sold at these prices because they are near the MRT station is to place a value on them and not their cost. It would have been far better had the HDB said that, because the flats are located close to amenities, they will not be subsidised, but will be sold at cost or even at a small profit to subsidise flats that are not so well located.

  11. #211

    Default Re: What is the actual cost of a HDB flat?

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