How HDB Flats are priced - issit right or not?
-
Taken from http://groups.yahoo.com/group/Sg_Review/message/2382
I refer to your report "Mah to SDA: Want to build flats for me?" (May 2).
It has been rightly described that our private home prices are "obscene" while HDB flat prices are "sky-high". Indeed, the exorbitant cost for something as basic as a roof over our heads is a major factor behind our high cost of living.
Some 90% of Singaporeans (ranging from managers to low-salaried workers) are thus resigned to living in HDB flats. Hence, they have every right to know whether HDB flats are priced with a true cash subsidy or a cleverly-disguised profit.
Over the past five years, various writers in newspaper forums have rightly questioned why a new HDB 5-rm flat is priced upwards of $200,000 when its construction cost is around $50,000 (as revealed from actual HDB construction contracts).
As HDB flats are now built higher and closer together i.e. many units occupying a tiny plot of land, it is a lame argument for the HDB to say that the hugh difference of $150,000 is accounted for by land cost and other related costs.
The HDB's standard dodgy reply has been that a so-called "market subsidy" is provided for new HDB flats to make them "affordable" i.e. they are priced below their equivalent market value.
This is how the "market subsidy" pricing approach works. The HDB will first look at the prevailing market value of a 5-rm resale flat (say, $260,000) and then "pluck from the air" a slightly lower figure (say,$200,000) as the selling price of the 5-rm new flat --- never mind even if its total breakeven cost is probably around $120,000!
The HDB can then boast that the new flat buyer is getting a $60,000 "market subsidy" --- when there is actually no "true cash subsidy" at all.
Instead, from the example given, the HDB is raking in a handsome profit of $80,000 for each new flat sold.
Indeed, this ingenious "market subsidy" approach had resulted in new flat prices and resale flat prices chasing each other in an upward spiral --- to the detriment of all buyers of both new and resale flats.
During this election, our educated thinking voters were not amused (much less impressed) by the never-ending nagging and nitpicking over an administrative form-filling issue.
Compared to this childish hullabaloo, how HDB flats are priced is certainly a larger national issue related to First-World transparent governance.
Mr Mah Bow Tan should thus seize this golden opportunity to demonstrate to our citizen-voters his ministerial mettle and justify his handsome remuneration in providing simple honest answers to these pertinent questions:
> Since HDB flats are supposed to be low-cost mass public housing, why is the HDB not helping our citizens in home ownership by passing on to them the cost-savings from economies of scale in massive HDB developments through pricing new flats on a cost-recovery breakeven no-profit basis?
> Are HDB new flats priced with a "true cash subsidy"?
If the answer is No, say so directly and openly.
If the answer is Yes, convince the people with detailed numbers and indicate the amount of the true cash subsidy. -
Hey man, been missing from here eh.
-
If my memory serves me right, 2 or 3 years ago,
after much pressure from many quarters,
HDB finally stated they have S$14 billion in the
bank.
Whether this figure was watered down, nobody will
know for sure.
I need to get the link to confirm this figure. But I
do remember 14 because we joked about it.
If you are cantonese you understand what I mean!
(I am not cantonese)
I think this figure excludes their increasing
recurring revenues and properties values. -
Originally posted by miongisback:
It was published in Straits Times that HDB made $14 billion but no body was able to recall that publication as it was not published again. May be ST special editor has withdrawn it. Now it is for Minister Mah to say whether HDB has made the $14 billion. If he keeps quiet that silence is consent.
If my memory serves me right, 2 or 3 years ago,
after much pressure from many quarters,
HDB finally stated they have [b]S$14 billion in the
bank.
Whether this figure was watered down, nobody will
know for sure.
I need to get the link to confirm this figure. But I
do remember 14 because we joked about it.
If you are cantonese you understand what I mean!
(I am not cantonese)
I think this figure excludes their increasing
recurring revenues and properties values.[/b] -
Yeah, I have been a silent reader of this forum for a while.... more interested in something else as you are already aware....Originally posted by LazerLordz:Hey man, been missing from here eh. 
I thought the issue surrounding the pricing of HDB is very interesting and wonder how the hell a public organisation which main objective is to provide affordable accomodations managed to earn 14 billion? They are running like a profitable private company more than a public govt department trying to help Singaporeans getting affordable housing... Perhaps they should rename as HDB Inc or something.
Given such a big profit.. aren't that then become obliged to fix the all the lifts that are not stopping on each floor. Should they not also provide free upgrading? This is a board which should be run P/L neutral and not profitable. -
http://www.mnd.gov.sg/Newsroom/speeches/speeches_2006_M_03032006_01.htm
pricing is based on % income of 2 working adults, and also market valuation. -
deleted
-
Is he talking abt resale flats or new flats?
I till now have never heard of 1 new 4 room flat that cost $250K! -
Is it still true that HDB flat is subsidised if it is based on some % of income of 2 working adults and also on market value.Originally posted by yoongf:http://www.mnd.gov.sg/Newsroom/speeches/speeches_2006_M_03032006_01.htm
pricing is based on % income of 2 working adults, and also market valuation.
If it is subsidised as stated by Minister Mah: HDB Newroom formula should indeed have unequivocally stated as:
HDB flat sale price = (Cost of Construction at $$$$ or $$$ per square foot x area + Cost of Land Acquistion@@ ) -- $$$ of subsidy (From $14 billion profits already made over 12 years from 1990)
(@@ If cost of land acquisition is paid by public fund belonging to citizens, then this cost of land should not be added.)
So is Minister Mah indeed telling us citizens the truth about HDB flat sale price subsidy as claimed by him for years when HDB now has clearly shown it was not subsidised at all but worked out from : % of Incomes of 2 working adults + market value (plain and simple) -
whatever stated in the website ... does not seem to be what he has projected to be in real.Originally posted by yoongf:http://www.mnd.gov.sg/Newsroom/speeches/speeches_2006_M_03032006_01.htm
pricing is based on % income of 2 working adults, and also market valuation.
someone pls save the website before they take it off -
Potong pasir going to get $80million for upgrading if its won by the pap. Where the hell that kind of amount of money come from?
-
you will be surprised how much certain GRCs have.Originally posted by ditzy:Potong pasir going to get $80million for upgrading if its won by the pap. Where the hell that kind of amount of money come from? -
i tot upgrading is borne by the people...
-
Should we also question how HDB flat had rose in the last 10-20years???
-
Upgrading will be priority to smcs and grcs won by the pap this election, the walkover ones have to wait, coz they had no fight, no fight means no rewards.Originally posted by mistyblue:i tot upgrading is borne by the people...
Remember the yishun hospital that was being planned and planned about 10 years back? Guess what. They released designs for it today! -
the way the HDB is going :
- build closer (lack privacy - see into each other's house. Feels like sardines)
- built smaller (does not encourage couple to start families - against family policy)
- price increasing psf
- so many regulations just to buy a unit
Then it only makes more sense to buy private. Public house don't make sense any more .... and any time the carpark can be acquired by URA for $1 and who knows the policy might just change against the people. -
They keep the spare change, so they can use it to upgrade your lifts to serve every floor, every 5 years.Originally posted by dolphin_century:Should we also question how HDB flat had rose in the last 10-20years??? -
well, it was only too clear that when someone mentioned he looked at the opposition accounts and said that they had a deficit. I realise, the main party's account was not known and really the person making that statement was not credible as he mentioned we should pay more to ensure the GLC/TLS linked companies do not bleed. But one year later, the company made a huge profit.Originally posted by ditzy:Upgrading will be priority to smcs and grcs won by the pap this election, the walkover ones have to wait, coz they had no fight, no fight means no rewards.
Remember the yishun hospital that was being planned and planned about 10 years back? Guess what. They released designs for it today!
When the main party promised upgrading to Chiam's area with such gusto. In the next media short, the MP MBT said, everything will be priortised based on a list of factors. It sounds as if the made sense. But effectively, the parties are also in conflict and eating their own words. For past 20 yrs. Bedok Reseervoir never had any major upgrade until recently.
Everything can be promised. But it will be done when it can be used as a tool to benefit their ends. If without all these actions/promises to entice people that was put up of late. If the field was more even, would the main party gain as many votes?
We all see things on TV but there are also a lot not reported. -
This is a theory which has never been brought up.
Why is the government so game about upgrading old HDB flats?
Our HDB apartments are new, thye just need painting regularly.
Can you all remember Teh Cheang Wan, the former HDB boss?
He almost cost the collapse of PAP.
He paid a heavy price to avoid being charged in court
for massive corruption,
and all his ministry's wrong doings exposed.
What has that got to do with upgrading?
If you know the construction business well, material costs
can make the difference between profit and loss for contractors.
Sticking to strict building rules can too.
Could it be Government is fearing many of our older flats have
been short changed, with cheaper materials and
poor workmanship - and may crumble one day?
So, we have upgrading as a disguise. It is actually the only
way to check the safety of our HDB flats.
Because if one HDB flat collapse, PAP will collapse too, I am sure -
Actually, there's another fear involved in reducing the price - the fact that the entire secondary market might collapse. Now *that* would have terrible consequences upon the popularity of the ruling party.
-
Privatisation, dr. watson. Privatisation. It's all heading to privatisation where the big bucks are.
-
It's a subsidy off the market price, not a subsidy off the cost price.Originally posted by robertteh:Is it still true that HDB flat is subsidised if it is based on some % of income of 2 working adults and also on market value.
If it is subsidised as stated by Minister Mah: HDB Newroom formula should indeed have unequivocally stated as:
HDB flat sale price = (Cost of Construction at $$$$ or $$$ per square foot x area + Cost of Land Acquistion@@ ) -- $$$ of subsidy (From $14 billion profits already made over 12 years from 1990)
(@@ If cost of land acquisition is paid by public fund belonging to citizens, then this cost of land should not be added.)
So is Minister Mah indeed telling us citizens the truth about HDB flat sale price subsidy as claimed by him for years when HDB now has clearly shown it was not subsidised at all but worked out from : % of Incomes of 2 working adults + market value (plain and simple) -
It is funny GCT tonight has again accused Chiam See Tong as "misleading of the public" referring to Chiam's ability to upgrade all lifts in PP as misleading. On the other hand was he misleading the public when he claimed to be able to withold or delay estate lift upgrading (if ruling party candidate is not elected) from citizens who pay the same tax from the common fund of the government owned by all citizens in equal share.Originally posted by yoongf:It's a subsidy off the market price, not a subsidy off the cost price.
Do residents of PP not have a right to know more about this infringement of their constitutional right?
So is GCT not behaving as dictator or "misleading the public"?
Is GCT able to confirm that Minister Mah is not misleading the public when telling people that HDB is subsidising the selling price of HDB flats when HDB itself actually revealed that its flat selling price is based on "% Income of 2 working adults and market value". There is no true subsidy at all as HDB is making monies as much as $14 billion over 12 years from 1990.
If GCT wants to accuse any one of misleading the public his own ministers should not be quilty of the same. -
to say 14 billion is an understament, don't forget HDB has to pay the "Land Authority" that's why sometimes they say HBD earn "not much" is a half truth statement. Assume a unit make $100K times that with 500K units. This will be much more than 14 billion. Most of Govt revenue comes from here, rather than from income tax or gst.