How HDB flats are priced affordably !

[CYRN]

Have the complaining crowd seen the land mass of Singapore vs the population count?

Have anyone used Google Earth to see cities such as tokyo, NY, London, or even Chengdu?

The ability to expand have already been overcome by technology to have much higher population density.

 

[CYRN]

I vaguely remembered that someone at the helm mentioned that HDB do incur operation losses in the millions. However that statement was pretty vague as operational cost could mean a lot of factors.

 

[CYRN]

"Affordable" you mean ? HDB Housings are seldom affordable, they are just very long stretch of loans that tie you down.

I think the definition of "affordable" in this case means "as long as you can afford to pay the loan...regardless of the loan period.":bigeyes::bsmilie::devil:

 

[dkw]

1. For the so-called "subsidy", HDB imposes onerous conditions on the buyers (min occupation period, racial quotas, who you can rent your flats to, etc). If a private developer were to impose the same conditions on its buyers, I'm pretty sure they would have to price their condos at a substantial "discount" to the market price.

So I view HDB's so-called subsidy as a compensation for my acceptance of their onerous conditions rather than a "subsidy".

2. How does really subsidising HDB flats distort the market? Because if such actions will completely distort the market, then subsidies cannot be justified at all, since the functioning of a market economy will be impaired. Yey the govt subsidises education (from primary school thru NUS/NTU) and healthcare. Have the healthcare and education markets been completely distorted? Do you see prices in the private education sector, clinics and hospitals collapsing because of govt schools, clinics and hospitals.

I can tell you the healthcare market in Singapore is in fact very distorted.

3. How does the govt prevent people from being cheated by selling items at market price? How does selling things below market price to citizens who fulfill a particular criteria rob all future Singaporeans? Because if it does, then what the govt did many years ago, when they sold flats at a real subsidy to get poor Singaporeans to move from the kampongs to HDB flats, must have been a real terrible mistake that shortchanged you and cheated you and wronged you.

As a taxpaying citizen of this country, I expect our g-ment bodies to be responsible custodians of our national assets. That is, we need to get a reasonable return on what we have. There is a cost to heavily subsidising (and again, I am talking market subsidy) property. It may be worth the cost, but we need to look at it carefully.

4. You claim that I can realise my "subsidy" by turning it around and making a 20% profit. Ha! Why don't you try that? HDB will tell you to come back in 5 years, minimum. And suppose the market falls in 5 years, I don't make any money when I sell-- so where is my so-called "subsidy"? I take the risk, right? But you, Mr HDB, have already made a profit on your sale to me.

Well, > 80% of families live in HDB. If no subsidy existed, I suppose they would be just as well off buying private property, right? Another myth busted by reality on the ground.

So where is the so-called "subsidy"?

5. You may think that it's a good idea for govt agencies to make profits. I don't agree. The purpose of government is to provide services (security, education, defence, healthcare, etc.) for the people. To provide services, they have to raise revenues in the form of taxes. Govt revenues (whether from taxes, sale of land, investments, etc) are thus meant to cover the cost of providing services to the people, not to raise huge profits for the govt.

Taxes and other government fees and charges (incl. HDB flat prices) are a burden on the people, but a necessary one, so that the govt can function. This is an issue in mature democracies, where in fact many countries strive to balance the budget because tax revenues aren't sufficient.

Making profits in government, particularly huge profits, has been sold by our media as a wonderful thing because it adds to our "national" surpluses. Well, that's good propaganda, but the reality is that we are paying too much for our government services.

The principle is that a govt should strive for a balanced budget, so that it does not have to borrow, but neither does it have to over-burden the people.

Lets get this clear-- the govt should not make big profits, neither should it make huge losses. Anything else is cheating the people. The former is cheating the present generation, the latter is cheating the future generation.

I disagree. You ask them to walk a tight line. So in years of surplus, they should subsidise housing more, and in years of recession, subsidise less? Where is the price stability and fairness? Illogical

6. On transparency, it's very simple. When asked to state the cost of constructing a flat, state it. No ifs, no buts, no "it's not relevant to the pricing of a flat", no making a state secret of it. Why so evasive, Mr HDB?

I disagree. They have stated it is market based. That is the true cost, and they have not hidden it.

Ciao!

 

[dkw]

One more point that seems to have been lost. I AGREE there IS an issue with AFFORDABILITY! Young couples are struglling for sure.

I just have an issue with all the half-baked harping on what constitutes a subsidy and whether the HBD is being transparent. C'mon people, are you really interested in tackling the real issue of affordability or are you just interested in bashing the HDB for nonsensical perceived slights?

 

[vince123123]

Vince, I suggest you don't make it personal. Neither you nor waileong have rebutted to any substantial degree any of my main points.

See below

1. For the so-called "subsidy", HDB imposes onerous conditions on the buyers (min occupation period, racial quotas, who you can rent your flats to, etc). If a private developer were to impose the same conditions on its buyers, I'm pretty sure they would have to price their condos at a substantial "discount" to the market price.

So I view HDB's so-called subsidy as a compensation for my acceptance of their onerous conditions rather than a "subsidy".

2. How does really subsidising HDB flats distort the market? Because if such actions will completely distort the market, then subsidies cannot be justified at all, since the functioning of a market economy will be impaired. Yey the govt subsidises education (from primary school thru NUS/NTU) and healthcare. Have the healthcare and education markets been completely distorted? Do you see prices in the private education sector, clinics and hospitals collapsing because of govt schools, clinics and hospitals.

I can tell you the healthcare market in Singapore is in fact very distorted.

Kindly substantiate this statement - why and how is it distorted?

3. How does the govt prevent people from being cheated by selling items at market price? How does selling things below market price to citizens who fulfill a particular criteria rob all future Singaporeans? Because if it does, then what the govt did many years ago, when they sold flats at a real subsidy to get poor Singaporeans to move from the kampongs to HDB flats, must have been a real terrible mistake that shortchanged you and cheated you and wronged you.

As a taxpaying citizen of this country, I expect our g-ment bodies to be responsible custodians of our national assets. That is, we need to get a reasonable return on what we have. There is a cost to heavily subsidising (and again, I am talking market subsidy) property. It may be worth the cost, but we need to look at it carefully.



4. You claim that I can realise my "subsidy" by turning it around and making a 20% profit. Ha! Why don't you try that? HDB will tell you to come back in 5 years, minimum. And suppose the market falls in 5 years, I don't make any money when I sell-- so where is my so-called "subsidy"? I take the risk, right? But you, Mr HDB, have already made a profit on your sale to me.

Well, > 80% of families live in HDB. If no subsidy existed, I suppose they would be just as well off buying private property, right? Another myth busted by reality on the ground.

So where is the so-called "subsidy"?

Private property has other advantages which you pay for - see WL's above post on restrictions of HDB flats.

Also, the term subsidy implies actual payment of money, not "market subsidy". Try using the word "market subsidy" outside of Singapore and see if anyone understands you. Many Singaporeans don't even understand the concept to begin with.

5. You may think that it's a good idea for govt agencies to make profits. I don't agree. The purpose of government is to provide services (security, education, defence, healthcare, etc.) for the people. To provide services, they have to raise revenues in the form of taxes. Govt revenues (whether from taxes, sale of land, investments, etc) are thus meant to cover the cost of providing services to the people, not to raise huge profits for the govt.

Taxes and other government fees and charges (incl. HDB flat prices) are a burden on the people, but a necessary one, so that the govt can function. This is an issue in mature democracies, where in fact many countries strive to balance the budget because tax revenues aren't sufficient.

Making profits in government, particularly huge profits, has been sold by our media as a wonderful thing because it adds to our "national" surpluses. Well, that's good propaganda, but the reality is that we are paying too much for our government services.

The principle is that a govt should strive for a balanced budget, so that it does not have to borrow, but neither does it have to over-burden the people.

Lets get this clear-- the govt should not make big profits, neither should it make huge losses. Anything else is cheating the people. The former is cheating the present generation, the latter is cheating the future generation.

I disagree. You ask them to walk a tight line. So in years of surplus, they should subsidise housing more, and in years of recession, subsidise less? Where is the price stability and fairness? Illogical

When the Governemnt has been posting huge surpluses for XXX years running, you still think there is stability and fairness? Isn't it lopsided?

6. On transparency, it's very simple. When asked to state the cost of constructing a flat, state it. No ifs, no buts, no "it's not relevant to the pricing of a flat", no making a state secret of it. Why so evasive, Mr HDB?

I disagree. They have stated it is market based. That is the true cost, and they have not hidden it.

Market price and selling price is not the "true cost". There is a clear difference between "cost price" and "selling price", with the difference between the two called "profit".

To set "cost price" based on other people's "selling price" is a weird concept to begin with. To base your selling price on other people's selling price is fine. Do note the distinction.

And you disagree because HDB has posted the "cost price" before? I don't recall seeing any figures to date, simply because they are unwiling to for the reasons stated by WL earlier in the thread.

Please get the difference between "Cost price" and "selling Price" before replying further.

 

[vince123123]

I may not have, as economics is not my strong suit, but Wai Leong has

Vince, I suggest you don't make it personal. Neither you nor waileong have rebutted to any substantial degree any of my main points.

 

[CYRN]

Lets get this clear-- the govt should not make big profits, neither should it make huge losses. Anything else is cheating the people. The former is cheating the present generation, the latter is cheating the future generation.

On the whole, I agree. Except the quoted para.

It's ok for Govt to make big profits. But thru other sources of investments such as GIC, temasek..etc. But not from it's citizens...especially in areas of "basic" stuffs like housing.

then again, Singaporeans have themselves to take a portion of the blame too... why need a 5 roomer when a 4 or 3 room would suffice? Few do not take into consideration that a flat is "Fixed Asset" and is not that liquid and did not factor the possibility of economic downturn that might affect their ability to maintain their loan payments.

 

[waileong]

Well, > 80% of families live in HDB. If no subsidy existed, I suppose they would be just as well off buying private property, right? Another myth busted by reality on the ground.

==> Faulty logic. That's like saying more people buy Japanese cars than Continental cars, so Japanese cars are subsidised. The reality is that Japanese cars are cheaper, so there's more of them on the road. But both Japanese carmakers and Continental carmakers price to make profits, they don't subsidise.

I disagree. You ask them to walk a tight line. So in years of surplus, they should subsidise housing more, and in years of recession, subsidise less? Where is the price stability and fairness? Illogical

I suppose you don't understand that this is a long-term principle? I ask them to do balanced budgets, not tax to achieve surpluses, nor price govt services to achieve profits. Yes, there may be variations from year to year, but the aim is to be neutral over the medium to long-term, and if the record shows consistent surpluses, then it's time to reduce govt revenues.

Lets be clear-- govts should not exist to make money, they exist to provide public service. They should not overtax or overcharge the people.

 

[dkw]

Yes , HDB flats are no longer affordable. Lots of couples that I know , are putting off marriage due to this. Personally , I myself feel a huge pain in it too . :thumbsd:

How can anyone not be impacted by an institution that pervades SG society? Until very recently I lived in subsidised g-ment housing, 70% of my close relatives still do. Btw, I made a LOSS on my flat when I sold it, so much for the subsidy, huh? :bsmilie:

 

[dkw]

==> Faulty logic. That's like saying more people buy Japanese cars than Continental cars, so Japanese cars are subsidised. The reality is that Japanese cars are cheaper, so there's more of them on the road. But both Japanese carmakers and Continental carmakers price to make profits, they don't subsidise.



I suppose you don't understand that this is a long-term principle? I ask them to do balanced budgets, not tax to achieve surpluses, nor price govt services to achieve profits. Yes, there may be variations from year to year, but the aim is to be neutral over the medium to long-term, and if the record shows consistent surpluses, then it's time to reduce govt revenues.

Lets be clear-- govts should not exist to make money, they exist to provide public service. They should not overtax or overcharge the people.

Make money for whom? Is the g-ment reserve not PUBLIC money? Does it not have real benefits and impact on the economy and livelihoods that nice yearly surplus enables us to ride out the bumps that take place every so often? Does it not allow our g-ment to eliminate income tax for >70% of our workers? Does it not allow us to finance family friendly schemes? Whats wrong with good fiscal discipline?

And what is your definition or threshold for 'overtax' and 'overcharge'. Do you actually have a firm number or are we speaking theoretically only? Can you then plug that number into a model and see where that will leave SG in 20 years?

G-ment should exist for one reason, to make the best place for its people to live, sustainably. Whether they make a profit or not, or how much, is completely immaterial.

 

[CYRN]

Make money for whom? Is the g-ment reserve not PUBLIC money? Does it not have real benefits and impact on the economy and livelihoods that nice yearly surplus enables us to ride out the bumps that take place every so often? Does it not allow our g-ment to eliminate income tax for >70% of our workers? Does it not allow us to finance family friendly schemes? Whats wrong with good fiscal discipline?

I see the reduction of income tax as a positive side to our govt's good fiscal policies. Instead of taxing us on income they tax us on expenditures, so it's up to you how much you want to be taxed.

However, back to public housing.. does HDB flats incurs GST? IIRC private developers do charge GST.

 

[CYRN]

G-ment should exist for one reason, to make the best place for its people to live, sustainably. Whether they make a profit or not, or how much, is completely immaterial.

I believe the the sustainability that everyone is concerned now. You can never predict how much inflation you'll encounter for the period of loan you need to pay to sustain your family.

 

[dkw]

==> Faulty logic. That's like saying more people buy Japanese cars than Continental cars, so Japanese cars are subsidised. The reality is that Japanese cars are cheaper, so there's more of them on the road. But both Japanese carmakers and Continental carmakers price to make profits, they don't subsidise.

Your car analogy is completely wrong. If you look at the buying patterns of HDB flats vs Private, you would see that the choices made are based on VALUE and not PRICE alone. If in the same zone, a HDB flat provides more VALUE than private property, who has 'subsidised' that VALUE? Take a guess, its 3 letters......

 

[sORe-EyEz]

Make money for whom? Is the g-ment reserve not PUBLIC money? Does it not have real benefits and impact on the economy and livelihoods that nice yearly surplus enables us to ride out the bumps that take place every so often? Does it not allow our g-ment to eliminate income tax for >70% of our workers? Does it not allow us to finance family friendly schemes? Whats wrong with good fiscal discipline?

And what is your definition or threshold for 'overtax' and 'overcharge'. Do you actually have a firm number or are we speaking theoretically only? Can you then plug that number into a model and see where that will leave SG in 20 years?

G-ment should exist for one reason, to make the best place for its people to live, sustainably. Whether they make a profit or not, or how much, is completely immaterial.

dunno make for whom la, but our huge reserves still not able to cushion the various rise in prices in basic commodities like food (excludes gourmet food) & public transport, electricity & water bills.

neither can i show any figures (no graph, no chart) on how fast the prices of a HDB unit 20yrs ago has appreciated today, but it has. yet there is a huge reserve dunno for whom. i turn into ashes den use? :bsmilie:

 

[waileong]

1. Really? "Public" money? Impact on the economy? How? Our govt already said they can't really do pump priming because of the open nature of our economy.

Ride out bumps? Giving handouts? Give Progress Shares? That's basically redistribution of wealth, taking money from one group of people and giving to another group of people. Does that really help the economy? The net amount of money in Singapore remains the same. In fact, it's worse off for everyone because we have to cover the cost involved in the redistribution.

But in case you think such help is uniquely Singapore, in other countries people call it welfare and unemployment benefits

Finance family-friendly schemes? If they taxed people less they wouldn't need to finance such schemes! How do you expect people to have more children when HDB flats are so expensive, and the rooms so few and so small? Today's generation not like your grandfather time, when kids willingly slept 5 to a room, on the floor.


2. Don't confuse fiscal discipline with revenue philosophy. Fiscal discipline is expected of any govt, that's why they have auditors to scrutinise the accounts of public agencies, that's why the Budget must be debated and approved by Parliament, which theoretically is made up of representatives of the people.

The philosophy-- that surpluses are good for the country-- that's a different thing, has nothing to do with fiscal discipline.


3. I'd have to have access to lots of state secrets before I could come up with a figure for you. But suppose we can run govt services comfortably without loss even at half of today's tax rates. I think I would cut the tax rates.

What would you do?

Make money for whom? Is the g-ment reserve not PUBLIC money? Does it not have real benefits and impact on the economy and livelihoods that nice yearly surplus enables us to ride out the bumps that take place every so often? Does it not allow our g-ment to eliminate income tax for >70% of our workers? Does it not allow us to finance family friendly schemes? Whats wrong with good fiscal discipline?

And what is your definition or threshold for 'overtax' and 'overcharge'. Do you actually have a firm number or are we speaking theoretically only? Can you then plug that number into a model and see where that will leave SG in 20 years?

G-ment should exist for one reason, to make the best place for its people to live, sustainably. Whether they make a profit or not, or how much, is completely immaterial.

 

[waileong]

Your car analogy is completely wrong. If you look at the buying patterns of HDB flats vs Private, you would see that the choices made are based on VALUE and not PRICE alone. If in the same zone, a HDB flat provides more VALUE than private property, who has 'subsidised' that VALUE? Take a guess, its 3 letters......

Are you a marketing expert to talk about "value"? That's a huge concept which marketers have written many books about.

By your logic then resale flats should be the same price as private apartments. Doesn't work, right? Does the resale flat seller subsidise the buyer? Obviously he wanted to sell it for as high a price as he can get, so why would he subsidise anybody?

 

[dkw]

1. Really? "Public" money? Impact on the economy? How? Our govt already said they can't really do pump priming because of the open nature of our economy.

Ride out bumps? Giving handouts? Give Progress Shares? That's basically redistribution of wealth, taking money from one group of people and giving to another group of people. Does that really help the economy? The net amount of money in Singapore remains the same. In fact, it's worse off for everyone because we have to cover the cost involved in the redistribution.

But in case you think such help is uniquely Singapore, in other countries people call it welfare and unemployment benefits

Finance family-friendly schemes? If they taxed people less they wouldn't need to finance such schemes! How do you expect people to have more children when HDB flats are so expensive, and the rooms so few and so small? Today's generation not like your grandfather time, when kids willingly slept 5 to a room, on the floor.


2. Don't confuse fiscal discipline with revenue philosophy. Fiscal discipline is expected of any govt, that's why they have auditors to scrutinise the accounts of public agencies, that's why the Budget must be debated and approved by Parliament, which theoretically is made up of representatives of the people.

The philosophy-- that surpluses are good for the country-- that's a different thing, has nothing to do with fiscal discipline.


3. I'd have to have access to lots of state secrets before I could come up with a figure for you. But suppose we can run govt services comfortably without loss even at half of today's tax rates. I think I would cut the tax rates.

What would you do?

Well, we can disagree, can't we. Of course mr vince will say that I have copped out .

Fiscal discipline has got nothing to do with auditing, and has everything to do with whether you are saving for a rainy day.

Cut the tax rates? Yay! Government tax revenues are a matter of public record, give it a go, I'd be interested to see.

 

[vince123123]

The HDB flat clearly loses out in terms of raw value compared to private property. Hence it is priced cheaper.

I don't see anything wrong with your Japanese car analogy. Basically you pay more for a better product.

I suppose dkw thinks that our HDB flats are as good a product as private condominiums.

Lifts which don't stop at every floor, no swimming pool, restrictions on selling etc etc.

Are you a marketing expert to talk about "value"? That's a huge concept which marketers have written many books about.

By your logic then resale flats should be the same price as private apartments. Doesn't work, right? Does the resale flat seller subsidise the buyer? Obviously he wanted to sell it for as high a price as he can get, so why would he subsidise anybody?

 

[vince123123]

If two sides have made their points and there is nothing left to rebutt, then there is no copping out.

If one side makes a substantive point in robust rebuttal to another's initial point, and the other side says "Aiya I don't want to bother to explain to you, you already fixed in your mindset", then that is copping out.

Kindly don't quote me out of context.

Well, we can disagree, can't we. Of course mr vince will say that I have copped out .

Fiscal discipline has got nothing to do with auditing, and has everything to do with whether you are saving for a rainy day.

Cut the tax rates? Yay! Government tax revenues are a matter of public record, give it a go, I'd be interested to see.