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.
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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
100% yes, HDB flats are overpriced!!!!
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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