Perhaps a solution is to impose a progressive tax on the profits of flat sellers. For example, a profit of $100k can be taxed at 20percent, leaving $80k for the seller; while a profit of $150k can be taxed at 50percent, leaving $75k for the seller.

This may force sellers to reconsider their demands of high COV. Rather than the govt arbitrarily setting a price cap at which owners can sell their flats, a tax allows the market more freedom to negotiate their flat prices, which as mentioned can be due to genuine reasons for rise or fall in price.

the prices of resale flats should be settled by the market, rather than the govt. This is because some flats may have genuine increases in their prices, i.e. LRT addition, new shopping centre etc.

I see your point. But if you allow prices of resale flats to be settled by the market, you’ll be back to the exact situation we are having now, where COV is obscenely high and beyond the reach of many buyers. In addition, it doesn’t seem right that the govt (HDB) sells the flats at cost+, and then these buyers sell for a profit of say $150k+ five years later. How do you propose to work around this situation?

Of course, one could argue that if HDB sells the flats for cost+, the eventual resale price will also be less. But I won’t count on that.

For a start, in the spirit transparency, HDB should disclose the profits it makes from each project ─ by showing how much exactly it cost them to build the flats alongside the prices that they are being sold for.

Actually I doubt the HDB makes “profits” from every project. The HDB is not trying to be some profit-maximiser, but it’s just following a flawed policy.

Reducing the price of new flats will immediately make it more affordable for many more lower- and middle-income couples who do not have the savings to pay over $300,000 for a new flat. It would also have a knock on effect of slowly lowering the price of resale flats, which would also benefit home buyers.

Strongly agree with this point. Let’s say the HDB builds new flats in Jurong West, and places a cap on the prices i.e. 4R flat on 10th storey cannot be sold for more than $X etc. This will definitely allow first-time buyers to “feel” that HDB flats are affordable. Secondly, similar resale flats in the neighbourhood will face a downward pressure in prices because of 1) extra supply of flats and 2) price limit on these new flats. Hence the prices of resale flats in the area may drop.

Perhaps HDB is concerned that these homeowners will sell their flat 5 years later for an obscene profit in the open market. To prevent this from happening, HDB could require that the flats cannot be sold for more than 10% above the cost price (adjusted for inflation) for the first 10 years.

Hmm. I disagree with this point, because the prices of resale flats should be settled by the market, rather than the govt. This is because some flats may have genuine increases in their prices, i.e. LRT addition, new shopping centre etc.

Perhaps placing a capital tax will be a better deterrence for speculators?

HDB flats should remain no-frills public housing.

Strongly agree too. EC and DBSS should be scrapped. HDB flats in general are good enough for everyone. While the HDB has good intentions to offer more choices, it must go back to its original mandate of providing affordable public housing for EVERYONE.

Alan Wong – I think it’s quite clear from the calculations of the likely land and construction costs that HDB is still raking in a huge profit from most of its developments. They refuse to reveal their costs because it would be a very inconvenient truth for them.

Idiot – You’re right. This is a problem that the PAP government under Goh Chok Tong got us into, and now they have a responsibility to fix it and not pass it on to the next government. I’m not expecting that HDB causes prices to plummet. But they should at least prevent prices from increasing at the record pace that they are now.

I just want to touch on the PR part of the article. Upon getting PR, their employment is supposed to start contribution to their CPF account at a reduced rate for the 1st year.

This means PR will have very little CPF to help them buy a flat off the resale market. Furthermore,they cannot get HDB loan,they must use a bank loan if they need financing.

For banks to grant them a loan,they need to see minimum 6 months CPF contributions statements. They need to put up minimum 5% cash for bank loan too.

Therefore,the amount of cash a PR needs to prepare for a HDB resale in this case is 5% of purchase price plus any shortfall in their CPF and also COV. This amount of cash can be up to 3 times that as compared to a citizen buyer. Either they saved a lot of cash before they get their PR or usually..this money got to come from abroad.

They interest they pay to the bank can be an indirect contribution to our country too.

They won’t do anything. All that can be written and suggested has been already.