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Thread: How HDB flats are priced affordably !

  1. #21
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    Default Re: How HDB flats are priced affordably !

    Quote Originally Posted by vince123123 View Post
    I recall reading somewhere before that the building costs does not exceed S$100k per flat. Unable to further substantiate though.
    when u can, they'll say thatz years ago...

  2. #22

    Default Re: How HDB flats are priced affordably !

    Don't think HDB ever released any detailed information on build costs... and a good reason not to. Or else, 5 years and we'll be gone...
    Olympus EM-1, 7-14/2.8, 12-40/2.8, 40-150/2.8, 17/1.8, 25/1.2, 60/2.8

  3. #23
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    Default Re: How HDB flats are priced affordably !

    Of course the selling price is not the price of the construction. Its like saying the price of oil is the price of its extraction. The flat (and oil) has a market value, driven by its supply and demand. That is not to say that it is affordable though.
    Last edited by dkw; 21st July 2008 at 02:37 PM.

  4. #24
    vince123123
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    Default Re: How HDB flats are priced affordably !

    I suppose you're one of those who subscribe to the unique concept of "market subsidy" huh

    Quote Originally Posted by dkw View Post
    Of course the selling price is not the price of the construction. Its like saying the price of oil is the price of its extraction. The flat (and oil) has a market value, driven by its supply and demand. That is not to say that it is affordable though.

  5. #25
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    Default Re: How HDB flats are priced affordably !

    Quote Originally Posted by vince123123 View Post
    I suppose you're one of those who subscribe to the unique concept of "market subsidy" huh
    Not necessarily. The point is that IF the HDB were to build flats, and then put them on the open market subject to bidding, will the prices commanded be equal to merely the price of construction? The answer, very clearly, is 'no'. Therefore, the flat has a market value (mind you, I'm not talking about sale price, but VALUE) that exceeds the price of construction. Should a g-ment body, now in possession of a commodity/resource (the flat) that has a reasonable value, be cavalier about how it manages it, bearing in mind the limited land in Singapore?

    Therefore, the sale price of a new flat does not necessarily need to be equal to its price of construction, nor should one expect it to be. It can in fact, be at a) Market Value (no subsidy), b) a discount to market value (the so-called 'market subsidy'), or c) less than construction cost (aka loss-making). All 3 are in fact, acceptable, depending on what the purpose of the sale of the flat is and what the general populace feel the social aims of this subsidy should be and cost. Bear in mind, all subsidies come at a cost, either in increased taxes for everyone else or lost revenue (aka increased taxes). I am personally willing to bear higher personal income tax and GST so that first time flat dwellers and families get an easier access price point. Who's joining me in writing a petition letter to ask for that?

  6. #26

    Default Re: How HDB flats are priced affordably !

    Quote Originally Posted by Silence Sky View Post
    Quoted from 'The Strait Time'

    "HDB adopts a market-based pricing approach so as to reflect the true subsidy that buyers enjoy.

    Under this approach, HDB determines the market value of the flat, based on its location, finish and other attributes. Then, it sells the flat at a discount to the market value.

    HDB buyers understand this, and appreciate that new HDB flats are priced lower than resale flats.

    Similarly, when they want to sell their flat in the open market, they do so at the prevailing market value, not at their cost of purchase of the flat.

    We also wish to highlight that this approach has enabled HDB to continue to price its flats affordably despite the current sharp escalation in construction costs.

    Currently, a new four-room flat can cost close to $300,000 to develop, taking into account land, building and other costs.

    This is significantly higher than the subsidised price of a four-room flat in Punggol/Sengkang sold by HDB at about $200,000 to $260,000.

    Through the market-subsidy approach to pricing, HDB has been able to keep its flats affordable for Singaporeans.

    On average, first-time flat buyers need to pay only about 20 per cent of their monthly household income to service their housing loan.

    This is well within the 25 to 30 per cent that is commonly cited internationally as the benchmark for affordable housing.

    Lower-income households can enjoy additional help in the form of the Additional CPF Housing Grant.

    Mr See commented that young couples have to wait as long as six years for new flats. This is incorrect.

    New Build-To-Order flats take about three years to complete from time of registration.

    Those with urgent housing needs can consider the resale market where there is a wide range of resale flats to match the preference and budget of buyers.

    Eligible first-time buyers can also enjoy a CPF Housing Grant of $30,000/$40,000.

    Kee Lay Cheng (Ms)
    Deputy Director (Marketing & Projects)
    for Director (Estate Administration & Property)
    Housing & Development Board"
    here we go again. 300k to develop.
    unfortunately they can't release one of the official state secrets... the actual cost of building a hdb flat. else they have to kill us if they tell us.
    this is not going to change as they have the 66.6 supporting them.

  7. #27
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    Default Re: How HDB flats are priced affordably !

    looks like is better to purchase old re-sale flats instead, at least some of the 4 rooms are still bigger than the newer ones.
    tough times ahead...
    Last edited by Simon_84; 21st July 2008 at 04:57 PM.

  8. #28
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    Default Re: How HDB flats are priced affordably !

    Quote Originally Posted by auron View Post
    here we go again. 300k to develop.
    unfortunately they can't release one of the official state secrets... the actual cost of building a hdb flat. else they have to kill us if they tell us.
    this is not going to change as they have the 66.6 supporting them.
    They don't have to tell you, its no big secret and easily derived! Simply, the cost of construction is far less than the sale price. But that is not the issue......

  9. #29
    vince123123
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    Default Re: How HDB flats are priced affordably !

    The question is, is the cost price less than the sale price. Everyone knows the cost price is more than the cost of construction, but everyone also knows that the cost price is much lower than the sale price.

    Quote Originally Posted by dkw View Post
    They don't have to tell you, its no big secret and easily derived! Simply, the cost of construction is far less than the sale price. But that is not the issue......

  10. #30
    vince123123
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    Default Re: How HDB flats are priced affordably !

    The first flats were built with real cost subsidies. The newer flats are now built with market subsidies.

    In the past, flats were sold based on cost price. Now new flats are sold based on market subsidy, where market values of new flats are based on prices of "resale flats" in mature estates.

    In the past, new flats were S$X. Resale flats were priced higher due to better location etc, hence S$X + S$Y, where S$Y is the resale premium.

    Now, new flats are (S$X + S$Y) x market subsidy factor. Resale flats then are priced even higher because now you need to have ((S$X + S$Y) x market subsidy factor) + S$Z.

    The premium in resale flats have shifted from S$Y, now to S$Z, and the old premium is already incorporated in the new flat's selling price.

    Hence, over time, you can see an artificial upward price spiral

    Quote Originally Posted by dkw View Post
    Not necessarily. The point is that IF the HDB were to build flats, and then put them on the open market subject to bidding, will the prices commanded be equal to merely the price of construction? The answer, very clearly, is 'no'. Therefore, the flat has a market value (mind you, I'm not talking about sale price, but VALUE) that exceeds the price of construction. Should a g-ment body, now in possession of a commodity/resource (the flat) that has a reasonable value, be cavalier about how it manages it, bearing in mind the limited land in Singapore?

    Therefore, the sale price of a new flat does not necessarily need to be equal to its price of construction, nor should one expect it to be. It can in fact, be at a) Market Value (no subsidy), b) a discount to market value (the so-called 'market subsidy'), or c) less than construction cost (aka loss-making). All 3 are in fact, acceptable, depending on what the purpose of the sale of the flat is and what the general populace feel the social aims of this subsidy should be and cost. Bear in mind, all subsidies come at a cost, either in increased taxes for everyone else or lost revenue (aka increased taxes). I am personally willing to bear higher personal income tax and GST so that first time flat dwellers and families get an easier access price point. Who's joining me in writing a petition letter to ask for that?
    Last edited by vince123123; 21st July 2008 at 06:30 PM.

  11. #31

    Default Re: How HDB flats are priced affordably !

    Quote Originally Posted by kietgnoel View Post
    Sounds good?
    too good to be true ......
    always the Light, .... always.

  12. #32
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    Default Re: How HDB flats are priced affordably !

    before IR is up & running we're already trying our luck (newbie) bidding for roofs our our heads!

    game of chance + $$ = gambling


  13. #33
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    Default Re: How HDB flats are priced affordably !

    Quote Originally Posted by vince123123 View Post
    The first flats were built with real cost subsidies. The newer flats are now built with market subsidies.

    In the past, flats were sold based on cost price. Now new flats are sold based on market subsidy, where market values of new flats are based on prices of "resale flats" in mature estates.

    In the past, new flats were S$X. Resale flats were priced higher due to better location etc, hence S$X + S$Y, where S$Y is the resale premium.

    Now, new flats are (S$X + S$Y) x market subsidy factor. Resale flats then are priced even higher because now you need to have ((S$X + S$Y) x market subsidy factor) + S$Z.

    The premium in resale flats have shifted from S$Y, now to S$Z, and the old premium is already incorporated in the new flat's selling price.

    Hence, over time, you can see an artificial upward price spiral
    Disagree. Assuming the above, HDB flat prices would then be insulated from real movements in the property market, which is patently untrue. You can have wildly varying open market prices for similar types of flats which bear no relation whatsoever on the initial sale price (or 'market subsidy'). The upward 'death spiral' is mythical and assumes that the 'market subsidy' results in an isolated HDB market (since the subsidy only exists for HDB flats) that is completely immune to market forces and prices are forever forced upwards. I have learnt from painful personal experience that HDB flats ARE influenced by the general market conditions (lending weight to the soundness of a 'market subsidy' approach) and that their prices DO NOT forever spiral upwards.

  14. #34
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    Default Re: How HDB flats are priced affordably !

    Quote Originally Posted by Simon_84 View Post
    looks like is better to purchase old re-sale flats instead, at least some of the 4 rooms are still bigger than the newer ones.
    tough times ahead...
    The price of the old re-sale flats are crazy..... so expensive......

  15. #35

    Default Re: How HDB flats are priced affordably !

    Quote Originally Posted by Parka View Post
    I understand perfectly well if the government would choose to value land at super high prices. That would mean Singaporeans have to work hard to be able to afford housing. That in turn makes the economy strong.
    ...but makes Singaporeans indentured servants?

  16. #36
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    Default Re: How HDB flats are priced affordably !

    so back to e question of affordability. will today's students afford 1 (single or married) roof over their heads by e time they plan to buy?

    projected inflation of (smallest) HDB unit vs projected income of low/middle income earners (single/combined)?

    i dread to see that far ahead...

  17. #37

    Default Re: How HDB flats are priced affordably !

    Is it only about affordability?
    What about acceptability?
    What is the true dollar value of an HDB Flat at year 60 or 70?

    $300K housing loan - Is affordable.
    Interest over 30 years = $125k
    Is it still as affordable?

    Are you earning $4.5k/month, and CPF along can take care of the housing loan?

    If yes, you also have $0 in the ordinary account at the end of 30 years.

    Total $425k to lease a flat for 99 years.
    + conservancy fee
    + Property tax
    + TV and Radio license fee.

    Bukit Timah, Hume Ave. Freehold + fully furnished = $800k

    When you buy a 40 year old resale flat, and stay in it for 30 years: Total 70 years.
    Do you think you can still get a buyer after 70 years, when the banks usually don't lend when the lease is less than 30 years.

    Also imagine, will a 30 year old you buy a 70 year old resale flat?
    At the age of 60, where are you going to stay?
    Last edited by Silence Sky; 22nd July 2008 at 01:03 AM.

  18. #38
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    Default Re: How HDB flats are priced affordably !

    Quote Originally Posted by Silence Sky View Post
    Is it only about affordability?
    What about acceptability?
    What is the true dollar value of an HDB Flat at year 60 or 70?

    $300K housing loan - Is affordable.
    Interest over 30 years = $125k
    Is it still as affordable?

    Are you earning $4.5k/month, and CPF along can take care of the housing loan?

    If yes, you also have $0 in the ordinary account at the end of 30 years.

    Total $425k to lease a flat for 99 years.
    + conservancy fee
    + Property tax
    + TV and Radio license fee.

    Bukit Timah, Hume Ave. Freehold + fully furnished = $800k

    When you buy a 40 year old resale flat, and stay in it for 30 years: Total 70 years.
    Do you think you can still get a buyer after 70 years, when the banks usually don't lend when the lease is less than 30 years.

    Also imagine, will a 30 year old you buy a 70 year old resale flat?
    At the age of 60, where are you going to stay?
    No need to go into details, I agree that SG house pricing is definitely getting to be very pricey. I do feel badly for the young couples struggling to get started. (Having said that, property prices, even after the current run-up, have yet to hit the peaks seen 10 years ago when I first entered the market and got severely burned ). However, Singapore is not alone in that problem. If you have friends in Hong Kong, you'll know how far your dollar can go (very little). I have colleagues in the UK whose children are struggling mightily on mortgage payments. Its cold comfort, but globalisation drives up property prices in globalised cities/countries, it is a given, and it is unavoidable. Try buying decent housing in Mumbai and Bangalore. And Singapore is very globalised. Although the HDB market is realtively insulated from foreign buying, it can't be insulated from the property market in general.

    Its instructive to read a ministerial statement from our friends up north in Hong Kong (ca. 2003);

    "Last November, I delivered at this Council a statement on housing policy, repositioning the Special Administrative Region Government's housing policy and proposing a series of measures to deal with the serious imbalance of supply and demand in the property market, with a view to restoring the confidence of the public and investors. I would like to take this opportunity to brief Members on the latest situation concerning the supply of private flats. I would also wish to explain how we are going to implement and consolidate the relevant policies and measures on the basis of the prevailing housing policy.
    Implementation of the Housing Policy
    In the Statement on Housing Policy announced last year, I clarified that the Government's role was to provide subsidised rental housing for families in need, and that the Government would withdraw from the role of property developer by halting the production and sale of public subsidised flats, thereby minimising its intervention in the market. We must also maintain a fair and stable environment to enable the sustained and healthy development of the private property market. The public have in general considered that it is the right direction."


    That a g-ment will continue to subsidise housing is not a given, in fact, in developed nations it is not very common. For a g-ment to house over 80% of the population in subsidised public housing (most of whom are owners by the way, not renters), is almost unheard of anywhere in the developed world.

    So yes, there is an affordability issue for some of the lower income. However, not all flats are $300,000. If you are not too fussy, you can still get a roof over your head without busting the bank. If you are looking at a $800,000 condo in Hume, then sorry, buy it if you can afford it, but that is not an entitlement. Can they offer the flats at a lower price? Sure they can, rather easily since it doesn't actually 'cost' money (just land). But would it be responsible land use? As a taxpayer with a stake in property in Singapore, I'm not so sure.

    For a forum that tends to rail against the 'nanny state', I find it rather amusing that so many forumers cry mummy when they want a hand-out. (and after they receive it, they call themselves indebtured servants)
    Last edited by dkw; 22nd July 2008 at 09:05 AM.

  19. #39

    Default Re: How HDB flats are priced affordably !

    Quote Originally Posted by Silence Sky View Post
    When you buy a 40 year old resale flat, and stay in it for 30 years: Total 70 years.
    Do you think you can still get a buyer after 70 years, when the banks usually don't lend when the lease is less than 30 years.

    Also imagine, will a 30 year old you buy a 70 year old resale flat?
    e n b l o c ? maybe $8,000,000 in 2070?
    always the Light, .... always.

  20. #40

    Default Re: How HDB flats are priced affordably !

    Quote Originally Posted by Silence Sky View Post
    Quoted from 'The Strait Time'

    "HDB adopts a market-based pricing approach so as to reflect the true subsidy that buyers enjoy.

    Under this approach, HDB determines the market value of the flat, based on its location, finish and other attributes. Then, it sells the flat at a discount to the market value.

    HDB buyers understand this, and appreciate that new HDB flats are priced lower than resale flats.

    Similarly, when they want to sell their flat in the open market, they do so at the prevailing market value, not at their cost of purchase of the flat.

    We also wish to highlight that this approach has enabled HDB to continue to price its flats affordably despite the current sharp escalation in construction costs.

    Currently, a new four-room flat can cost close to $300,000 to develop, taking into account land, building and other costs.

    This is significantly higher than the subsidised price of a four-room flat in Punggol/Sengkang sold by HDB at about $200,000 to $260,000.

    Through the market-subsidy approach to pricing, HDB has been able to keep its flats affordable for Singaporeans.

    On average, first-time flat buyers need to pay only about 20 per cent of their monthly household income to service their housing loan.

    This is well within the 25 to 30 per cent that is commonly cited internationally as the benchmark for affordable housing.

    Lower-income households can enjoy additional help in the form of the Additional CPF Housing Grant.

    Mr See commented that young couples have to wait as long as six years for new flats. This is incorrect.

    New Build-To-Order flats take about three years to complete from time of registration.

    Those with urgent housing needs can consider the resale market where there is a wide range of resale flats to match the preference and budget of buyers.

    Eligible first-time buyers can also enjoy a CPF Housing Grant of $30,000/$40,000.

    Kee Lay Cheng (Ms)
    Deputy Director (Marketing & Projects)
    for Director (Estate Administration & Property)
    Housing & Development Board"
    sorry i am dumb. i don't understand it.

    and i swear that there are MANY more people who don't as well.

    this miss kee should back her statement with actual facts. from where did she get that HDB buyer understand?

    names?
    got video as proof?

    no names no count. period.

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