Is the HDB overpriced?
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2) HDB issue. Is the HDB overpriced? Additional information here. HDB is running at a budget deficit if you have look at it's annual report. It is taking grant from the government every year. So, what are the plans?
Unless you have more details on why this budget deficit exist, you can draw any conclusion from this fact. By itself, it does not means HDB flats are not overpriced.
If HDB accounting practice books the flat price based on market value and sell them at "subsidized price", it will explain this deficit easily.
Before answering the question, we need HDB to tell us what is the cost of buidling HDB flats, and it is avoiding the questions.
The following letter was published on ST at around Aug 11, 2004. HDB never response to it.
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Flat buyers pay more than cost unless resale prices take a sharp dip
I REFER to the reply by the Housing Board, 'HDB pricing keeps new
flats affordable to most Singaporeans' (ST, Aug 6), in response to
Mr Mohamed Rafiq Hamjah's letter, 'Subsidy should be based on flat's
building cost' (ST, July 27).
Mr Desmond Wong said the difference between what the buyer pays HDB
for his flat and what it is actually worth in the market is a direct
and real subsidy.
Mr Wong also used the analogy of a first-time HDB buyer who is
indifferent between buying direct from HDB and from the resale
market. I think he has missed Mr Mohamed's point.
The dictionary definition of a subsidy is a form of payment to a
person. To me, this market subsidy is neither direct nor real. It is
more an opportunity cost than real cost, and it is indirect to the
extent that it does not physically deplete HDB's coffers as would be
the case if HDB really subsidises the price by giving a discount on
the flat's actual construction cost.
I think the public has a misconception with regard to the HDB
subsidy. Many think that the subsidy represents a true discount
given by the Government by footing the difference between what it
pays to the main contractor and how much it sells a flat for.
This is similar to the ongoing argument on whether companies should
expense stock options. By issuing stock options at a discount to the
prevailing market price, it actually costs the company close to
nothing other than depriving itself of the premium it could have
fetched through issuing shares to the public. The premium is the
difference it can derive from the share issue and the exercise price
of the options. It is therefore an opportunity cost rather than a
real cost.
What Mr Wong has done is explain HDB's long-established practice in
this subsidy matter but he has not answered Mr Mohamed's question as
to why HDB does not practise cost-based pricing.
Does this market-subsidy practice also apply to other public
services, such as health care? Does the Ministry of Health subsidise
the health-care cost of Singaporeans based on market prices of
commensurate services provided by the private sector?
What about previous reports that some hospitals and polyclinics
belonging to the two health-care clusters charge higher prices for
certain treatments and drugs than those in the private sector?
If I could answer Mr Mohamed, I would explain that the HDB subsidy
is never a cost subsidy. It is more like a price discount or simply
a market subsidy, as stated by Mr Wong. Unless the price of a resale
flat falls below the cost of building a similar flat in the
vicinity, which is extremely unlikely, the buyer will always have to
pay more than cost.
EE TECK SIEW -
HDB housing be given free to all Singaporeans
who are in SG for 3 generations
1st generation build SG
2nd generation gone through thick and thin with SG
3rd generation commit their future into SG -
You can read the HDB report below:
http://www.hdb.gov.sg/isoa031p.nsf/ImageView/AR0304C22/$file/finicial.pdf
I am not good enough to understand it fully. So, I hope someone with better background can decipher it for me. -
if paying for a house over thirty years and $200k for 3 room flats is consider affordable then singaporean are really the riches folks in the world.
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100% yes, HDB flats are overpriced!!!!Originally posted by sarek_home:2) HDB issue. Is the HDB overpriced? Additional information here. HDB is running at a budget deficit if you have look at it's annual report. It is taking grant from the government every year. So, what are the plans?
Unless you have more details on why this budget deficit exist, you can draw any conclusion from this fact. By itself, it does not means HDB flats are not overpriced.
If HDB accounting practice books the flat price based on market value and sell them at "subsidized price", it will explain this deficit easily.
Before answering the question, we need HDB to tell us what is the cost of buidling HDB flats, and it is avoiding the questions.
The following letter was published on ST at around Aug 11, 2004. HDB never response to it.
==============================================
Flat buyers pay more than cost unless resale prices take a sharp dip
I REFER to the reply by the Housing Board, 'HDB pricing keeps new
flats affordable to most Singaporeans' (ST, Aug 6), in response to
Mr Mohamed Rafiq Hamjah's letter, 'Subsidy should be based on flat's
building cost' (ST, July 27).
Mr Desmond Wong said the difference between what the buyer pays HDB
for his flat and what it is actually worth in the market is a direct
and real subsidy.
Mr Wong also used the analogy of a first-time HDB buyer who is
indifferent between buying direct from HDB and from the resale
market. I think he has missed Mr Mohamed's point.
The dictionary definition of a subsidy is a form of payment to a
person. To me, this market subsidy is neither direct nor real. It is
more an opportunity cost than real cost, and it is indirect to the
extent that it does not physically deplete HDB's coffers as would be
the case if HDB really subsidises the price by giving a discount on
the flat's actual construction cost.
I think the public has a misconception with regard to the HDB
subsidy. Many think that the subsidy represents a true discount
given by the Government by footing the difference between what it
pays to the main contractor and how much it sells a flat for.
This is similar to the ongoing argument on whether companies should
expense stock options. By issuing stock options at a discount to the
prevailing market price, it actually costs the company close to
nothing other than depriving itself of the premium it could have
fetched through issuing shares to the public. The premium is the
difference it can derive from the share issue and the exercise price
of the options. It is therefore an opportunity cost rather than a
real cost.
What Mr Wong has done is explain HDB's long-established practice in
this subsidy matter but he has not answered Mr Mohamed's question as
to why HDB does not practise cost-based pricing.
Does this market-subsidy practice also apply to other public
services, such as health care? Does the Ministry of Health subsidise
the health-care cost of Singaporeans based on market prices of
commensurate services provided by the private sector?
What about previous reports that some hospitals and polyclinics
belonging to the two health-care clusters charge higher prices for
certain treatments and drugs than those in the private sector?
If I could answer Mr Mohamed, I would explain that the HDB subsidy
is never a cost subsidy. It is more like a price discount or simply
a market subsidy, as stated by Mr Wong. Unless the price of a resale
flat falls below the cost of building a similar flat in the
vicinity, which is extremely unlikely, the buyer will always have to
pay more than cost.
EE TECK SIEW
Average materials and labourer for a 4rm and 5 rm cost is between 75K to 140K including piling, infrastructures like, water supply, sewer, lifts, power supply and etc. Depending on price fluctuation on materials and market tendering price. Design fee by HDB, I am not too sure.
There was one time the tender price fell to approx 57k for 4 & 5 rms flats (between 1999 and 2002) to that excluding piling, lifts and minor sewer, maybe electrical installation. (mind you, Plumbing, Sanitary and Gas are included)
I bought my Bishan design and built 5rms Flat at S$303, 800 in year 1997 january and took a loan of S$243,000 for 30 years. (I recalled back, why am I so stupid to tie myself down to become a slave to this flat??? so I gave up)
What I have gather from the contractor was that their tender which includes Design, piling and to last and every things included was at average per unit S$110K. (private consultants Architects, Engineer and M&E consultants included)
So you see the diference that I was paying??? Total built 838 units.
They said our HDB flats are heavily subsidised. I can't figure out what they are trying to subsidize.
The point (1)block that I lived is just only occupying the land area of 1000 sq. metres with total 136 units.
We are Siongaporen. If we don't live on our land then where can we be????WTF.
Then the rest of loan and repayment, I guessed you should know how to calculate hah....
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the way I look at it,we are subsidsing unsold flats sitting in some ulu area so that HDB can sustain its organisation.It is a ploy to plough all our wages in the flats that we live,being the average Joe,I can only afford a HDB flat or else where can I live? I can only become rich by selling my 5 room flat,withdraw all my CPF savings by renouncing my citizenship.
I have worked so hard all my life< i don't like the idea of someone trying to tell me how to run my life when I reach my retirement age.
I served my country for the past 16 years by doing my NS duties< I love my country amd want to be patrotic but I am running out of options.
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perhaps they meant comparison with the private sector la...
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Its known that a HDB flat (ie 1 unit) cost less than $10,000 to build. - From contractor to bangala...
But its selling for 250 000 plus minus... range.
then in between that $10,000, there are many layers to oil like the Mah Bow Tan (who is thinking of making yet smaller flats for smaller families - going against the pro family thing. Just look at the monstrosity of ERP/CEO he setup and installed when he was with LTA. He's a real piece of work) and the layers and layers of hierarchy to create ineffeciencies, problem, troubles and confusion in between. So that would work out your 250 grand. Where I would say a good 50 % would go to Mr Mah's salary. The reason our garment say was to ensure no corruption by paying them above the rate of any US president.
But PAP is so strong. Who dare to vote against them? Actually, will we get the chance to vote at all since everytime election comes, the GRC would be rearranged until its always a walkover, ie walkover the people's head loh... the PAP should be less hypocrite, Just need 2 GRC
- Everything under MM Lee/ SM Goh / PM Lee Empire and
- Others : Those who live in Singapore but feel like another country where they have to go without any facilities, public transport, funding and improvements but still pay income tax group. But they have hougang chalet nearby ... in case... -
i believe if the property market os completely freed up, singaporeans can then see for themselves how overprced the HDB flats are.
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Mistyblue, is not S$10,000. I was a contractor project manager before and I've built at least 4500 units of HDB flats 4rm to exec.apart.Originally posted by mistyblue:Its known that a HDB flat (ie 1 unit) cost less than $10,000 to build. - From contractor to bangala...
But its selling for 250 000 plus minus... range.
then in between that $10,000, there are many layers to oil like the Mah Bow Tan (who is thinking of making yet smaller flats for smaller families - going against the pro family thing. Just look at the monstrosity of ERP/CEO he setup and installed when he was with LTA. He's a real piece of work) and the layers and layers of hierarchy to create ineffeciencies, problem, troubles and confusion in between. So that would work out your 250 grand. Where I would say a good 50 % would go to Mr Mah's salary. The reason our garment say was to ensure no corruption by paying them above the rate of any US president.
But PAP is so strong. Who dare to vote against them? Actually, will we get the chance to vote at all since everytime election comes, the GRC would be rearranged until its always a walkover, ie walkover the people's head loh... the PAP should be less hypocrite, Just need 2 GRC
- Everything under MM Lee/ SM Goh / PM Lee Empire and
- Others : Those who live in Singapore but feel like another country where they have to go without any facilities, public transport, funding and improvements but still pay income tax group. But they have hougang chalet nearby ... in case...
For S$10,000 maybe for 3 rm flats during early seventies to early eighties. -
Overpriced is an understatement. "Inhumanely and insanely priced" might be a better word.
Better stay healthy until the day we die. Here in Singapore, can die but cannot sick. -
Not to mention that the flat is only a leased property, n the gahmen has the right to drive u out if u break the law.
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You may want to note that the govt also has the right to take back your HDB flat if you divorce or your parent whom you registered with dies (i.e. You do not have at least another family member staying in the same hdb flat).Originally posted by SnowFlag:Not to mention that the flat is only a leased property, n the gahmen has the right to drive u out if u break the law. -
migration, the way to go. after i finish my NS..i take it as repaying all that s'pore has given me, no more strings attached...i don't owe anything..i'm heading off for greener pasteurs.
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I really envy you of your freedom.Originally posted by vito_corleone:migration, the way to go. after i finish my NS..i take it as repaying all that s'pore has given me, no more strings attached...i don't owe anything..i'm heading off for greener pasteurs.
For me I am married with kids.
At times I thought it over. I regretted to have got married and have kids.
Most of the sleepless night, I will look at my children(3) asleep and in my deep thought; why I bring them here and knowing that they will have hard time in Singapore.signs
Provided my children all stay single, them maybe not too bad continuing here.
In singapore is unbearable. My wife always nagging at me for $$$ not enough. signs
Sometimes I feel like jumping down from 25 sty. -
take it easy dude, im sure you'll find a way out. i mean financially or whatever that is.Originally posted by Lowclassman:I really envy you of your freedom.
For me I am married with kids.
At times I thought it over. I regretted to have got married and have kids.
In singapore is unbearable. My wife always nagging at me for $$$ not enough. signs
Sometimes I feel like jumping down from 25 sty. -
I think freeing up the property market totally will worked... but the current HDB owners will suffer.
Part of the problem is the current valuation method that artifically maintain a high price, thus indirectly supporting the market from collapsing. -
What does "freeing up property market" mean?
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It's already a proven fact that they are overpriced.
Profit is not the only reason.
The real reason, however, can't be published. -
Why can't the real reason by published?
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They call it buying and owning a HDB flat but to me it's borrowing and
owing HDB for life. We're probably much better off staying out
most of the time and renting a cheap 1-room just to sleep. -
Even the HDB shops are overpriced.
One of my frens is a bankrupt cos he bought his shop at high price, (he was told to buy over the rented shop from govt) now unable to service loan cos business is poor.
Wanted to rent out, cannot find tenant.
Wanted to sell, cannot get cos price way below what he paid.
Even if the bank repossess the shop, he still owes them a lot of $$$ -
meaning??? Corruption???? Collusion??? Conspiracy????Originally posted by Parka: It's already a proven fact that they are overpriced.
Profit is not the only reason.
The real reason, however, can't be published.
Its funny that the garmen wants profit. Isn't it public service? -
Yeah, Bro you are smartest guy. As a commoner to buy a HDB flat or private apartment with high loan is a suicide.Originally posted by macjoe:They call it buying and owning a HDB flat but to me it's borrowing and
owing HDB for life. We're probably much better off staying out
most of the time and renting a cheap 1-room just to sleep.
Renting a flat:-
No property tax, no conservancy charges in long run you will save loads of $$$$$.
If I have a chance to migrate I will be very happy. -
you think owners who rent it to you is not going to cream you?Originally posted by Lowclassman:Yeah, Bro you are smartest guy. As a commoner to buy a HDB flat or private apartment with high loan is a suicide.
Renting a flat:-
No property tax, no conservancy charges in long run you will save loads of $$$$$.
If I have a chance to migrate I will be very happy.
I rent, and got creamed a couple of times and realise, really... the way out is , via airport.