Median cash-over-valuation (COV) for resale HDB flats

Mr Gerald Giam Yean Song asked the Minister for National Development if he can provide the figures for the median Cash-Over-Valuation for resale HDB flats by town and flat type in each quarter since 2nd Quarter 2007, with a breakdown of buyers by (i) Singapore citizen (SC) households (i.e. households with at least one SC owner) and (ii) Singapore permanent resident (SPR) households (i.e. households with SPR but no SC owners).

Parliament sitting date: 16 September 2013

Mr Gerald Giam Yean Song asked the Minister for National Development if he can provide the figures for the median Cash-Over-Valuation for resale HDB flats by town and flat type in each quarter since 2nd Quarter 2007, with a breakdown of buyers by (i) Singapore citizen (SC) households (i.e. households with at least one SC owner) and (ii) Singapore permanent resident (SPR) households (i.e. households with SPR but no SC owners).
Mr Khaw Boon Wan : Detailed Cash-Over-Valuation (COV) data, provided there are sufficient transactions during the quarter, with breakdown by town and flat type are published in the HDB InfoWEB and updated quarterly. HDB, however, does not monitor the detailed breakdown as requested by the Member.

We do have some breakdown of COV data by buyer group, as tabulated below:

Source: Singapore Parliament Reports (Hansard)

Waiting list for HDB subsidised rental flats

Mr Gerald Giam Yean Song asked the Minister for National Development (a) what is the current number of applicants on the waiting list for HDB subsidised rental flats; and (b) when will this waiting list be cleared.

Parliament sitting date: 16 September 2013

Mr Gerald Giam Yean Song asked the Minister for National Development (a) what is the current number of applicants on the waiting list for HDB subsidised rental flats; and (b) when will this waiting list be cleared.

Mr Khaw Boon Wan : There are 1,900 registered applicants on the waiting list for public rental flats. On average, the applicants will be allocated a flat within 7.5 months. However, the actual waiting time for each applicant differs, depending on the zone selected, the choice of flat type, as well as the EIP quota for the block and the neighbourhood.

Source: Singapore Parliament Reports (Hansard)

Parenthood Priority Scheme

If the goal of the PPS is to raise birth rates, then it might be necessary to also include married couples without children, because many of these couples may be waiting to get their own home before having kids. Can the Minister provide an estimate of when this backlog married couples with children is expected to be cleared, and when married couples without children can start to benefit from PPS?

This is a ‘cut’ I delivered in Parliament on 7 March 2013 during the Committee of Supply debate for the Ministry of National Development.

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In January 2013, the HDB introduced the Parenthood Priority Scheme (PPS) to give priority allocation for new flats to “first-timer” married couples with children. Under this scheme, 30% of BTO (Built-to-Order) flats and 50% of SBF (Sale of Balance Flats) flats will be set aside for this group.

I agree that Singaporean couples with children should get priority in flat allocation, because they not only have to house themselves, but also their children.

However, the proportion of flats set aside for all first-timers remains unchanged at 85% for BTO flats in non-mature estates . This means that other first timers, including married couples who do not have children yet, will effectively have a lower proportion of the flats set aside for them.

If the goal of the PPS is to raise birth rates, then it might be necessary to also include married couples without children, because many of these couples may be waiting to get their own home before having kids.

The Minister has said that once the HDB clears the backlog of first-timer married couples with children, the HDB can extend the PPS to married couples without children. Will this mean that all first-timer married couples—with or without children—will be allocated 30% of BTO flats and 50% of SBF flats, or will married couples without children have a separate allocation? I think more clarity on this will help prospective home buyers better plan their flat applications.

To get a sense of the size of the backlog, for the BTO launch in January 2013 during which PPS was first offered, what proportion of PPS applicants had unsuccessful applications for previous BTO launches?

Can the Minister provide an estimate of when this backlog married couples with children is expected to be cleared, and when married couples without children can start to benefit from PPS?

Lastly, will PPS be a permanent scheme or will it only be in place until the current backlog of flat applicants is cleared?

Pricing of HDB flats

Would HDB consider permanently delinking the price of new and resale flats, so new flat buyers are not at the mercy of resale flat prices? Could the Minister share with us what is the exact pricing formula used to string all these factors together to determine the selling price for new flats? More specifically, what is the formula used to calculate the discount or “market subsidy”?

This is a ‘cut’ I delivered in Parliament on 8 March 2013 during the Committee of Supply debate for the Ministry of National Development.

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The Minister said in February this year that the prices of new HDB flats have been “delinked” from resale flat prices by varying the quantum of discounts applied to the selling price. He said that HDB will continue with this pricing policy for as long as “property remains hot”.

What is the criteria he will use to determine if the housing market is cool enough, resulting in the prices of new and resale flats being “linked” once again?

Would HDB consider permanently delinking the price of new and resale flats, so new flat buyers are not at the mercy of resale flat prices, which the Minister has said he is not able to control?

I understand from the Minister’s earlier replies in this House are that the factors used to determine the selling price of new flats include the typical household income of the families who buy them, the market price of similar resale flats in the vicinity and the attributes of the flats including their size and location. He said that HDB applies a discount to this price and gives housing grants to eligible buyers.

Could the Minister share with us what is the exact pricing formula used to string all these factors together to determine the selling price for new flats?

More specifically, what is the formula used to calculate the discount or “market subsidy”?

For future launches, could HDB publish the price of each new flat before and after the discount, so that home buyers will have a clearer picture of the market price of the new flats, and discounts that they are receiving from HDB?

We have already lowered our housing expectations, Mr Minister

The current housing situation is not a result of Singaporeans having unrealistic aspirations, but a shortage of flats due to poor planning in accommodating the surge in population in recent years. In fact, compared to previous generations of Singaporeans with similar education and income levels, many young couples have already drastically lowered their housing expectations.

I wrote a letter to TODAY newspaper in response to a commentary by National Development Minister Mah Bow Tan last Saturday. An edited version of the letter was published on Thursday (21 October 2010) on TODAY Online under the title, What do newlyweds want in a flat? Below is the original letter which I submitted. The sentences in bold were left out by the paper.

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I refer to the commentary by Mr Mah Bow Tan (“Buying a flat? Choose wisely”, TODAY, October 15).

His quip about how some Singaporean men propose to their future spouses with the offer of an HDB flat application aptly reflects the strong desire among couples to own a home of their own once they get married. It is therefore regrettable that in the past few years, public housing prices—and hence these dreams—have soared out of reach from so many young couples.

Mr Mah contended that with growing affluence and education levels, Singaporeans no longer want only basic housing. He defines basic housing as simple and functional one- to three-room flats, as opposed to larger four-room, five-room and Executive flats. Mr Mah also distinguished between standard flats and premium flats—the latter referring to flats with better designs, better finishes and in better locations, like the Pinnacle@Duxton and Waterway Terraces at Punggol.

Although Mr Mah stated that that premium flats form only a fraction of the new flats offered, I question why there is a need for HDB to build premium flats in the first place. Why is it so important for a public housing agency to “set new benchmarks for waterfront living for public housing”, or to built flats in prime downtown locations? How does this achieve the purpose of providing affordable housing for the masses?

While Mr Mah is right that Singaporeans’ expectations have changed, they have not changed so drastically that they are now expecting condo-style living for their HDB flats. This is evidenced by the fact that every launch of new developments by HDB in the past year has seen massive oversubscriptions, even for those offering only standard flats. In addition, resale flat buyers are paying huge cash-over-valuation (COV) premiums for even old, basic flats in mature estates like Queenstown.

The current situation is not a result of Singaporeans having unrealistic aspirations, but a shortage of flats due to poor planning in accommodating the surge in population in recent years. In fact, compared to previous generations of Singaporeans with similar education and income levels, many young couples have already drastically lowered their housing expectations.

HDB should focus on building more basic, functional flats and sell them at truly subsidised prices, in order to meet the urgent housing demands of many young couples. As a taxpayer-funded agency, HDB should not be trying to set design benchmarks—or worse, boost their profits like private developers do.

Gerald Giam

‘Underwhelmed’ by Town Council report

Residents are personally affected by their Town Councils’ performance. If they feel that their MPs are not performing, they would have voted them out long ago. But the two opposition MPs have been returned to office again and again for the last 18 to 25 years–longer than any other PAP MPs save one. Why does MND suddenly feel the urge to tell residents what they should think of their TCs?

It is hard to contain one’s scepticism when reading the news about the Town Council Management Report (TCMR).

The Straits Times reported on Friday:

The two best performers are Ang Mo Kio-Yio Chu Kang led by Prime Minister Lee Hsien Loong, and Tanjong Pagar headed by Minister Mentor Lee Kuan Yew, according to the government’s Town Council Management Report.

The two worst performers are run by the opposition: Hougang, by the Workers’ Party’s Low Thia Khiang, and Potong Pasir by the Singapore People’s Party’s Chiam See Tong.

Isn’t it interesting that the two Town Councils (TCs) that “top” the report are the ones “headed” by the PM Lee and MM Lee, and the two “worst performers” are those headed by opposition MPs? (Technically the two Lees do not head their Town Councils. They have delegated that less glamorous job to their backbencher MPs.)

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WP Forum Speech: We can make public housing affordable again

This is the speech I delivered at the Workers’ Party public forum, Youthquake, on 15 May 2010.

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Youthquake speakers

The drastic increase in the cost of public housing over the past 20 years, and in particular the last two years, has caused a financial squeeze for many Singaporeans, particularly young couples who desire to own their own homes when they get married.

In just the last two years since 2007, the median price of resale flats has risen almost 44 per cent.[1] This has far outpaced inflation and wage increases. The resale flat cash-over-valuation (COV) has shot through the roof. In the fourth quarter of last year, the median COV was $24,000[2].

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Low Thia Khiang urges Govt to “seriously look” into housing options for homeless

How can we aspire to be a First World country with a world class public housing programme if we have homeless citizens camped out in public parks? The HDB’s proposition for those who are unable to purchase a HDB flat or to qualify for a HDB rental flat is to seek help for accommodation from family members. The HDB should know well that with the size of HDB flats, most families do not have a spare room to accommodate another distressed close family member’s family. The end result would be strained relationships between family members which could adversely impact the family structure as a basic unit of our society. Is the creation of more strained family relationships desirable?

This was a cut delivered in Parliament on 5 March 2010 by Workers’ Party Secretary-General Low Thia Khiang during the Committee of Supply debate, on the budget for the Ministry for National Development (MND).

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It was reported by the Straits Times that the number of homeless people has doubled. When I read the report, I was thinking whether this is more a social problem or a housing problem?

My own experience from Meet-the-People sessions is that it may be less a social problem and more of a housing problem. This is because while many of these cases of residents who lost their homes do involve dysfunctional families, quite a number are still financially viable and could afford to stay together as a family if they could afford the rental of a house. Many ended up without a home because of strict HDB rules on rental housing and obtaining HDB subsidised housing loans.

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Straits Times questions Ministry’s stand on LUP

Straits Times article was reflective of the overwhelming sense of indignation felt by Singaporeans that the PAP’s antics in those two wards had crossed the line of common decency.

Straits Times political desk journalist Sue-Ann Chia expressed in today’s papers what any rational-minded Singaporean knew to be right: That the elected opposition MPs should be the ones managing the Lift Upgrading Programme (LUP) in their ward, not the PAP candidates who lost in the last election.

In her article headlined “‘Adviser over MP’ raises many questions”, Ms Chia questioned the flawed reasoning of the press secretary to the National Development minister, who said last week that town councils should not be considered a local government. She deftly pointed out that over the past 12 years, Mr Lee Kuan Yew, Mr Goh Chok Tong and Mr Lee Hsien Loong had all stated in one way or another that the town council were designed for voters to choose their local representative, not just MPs to the national Parliament.

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Reducing cost of public housing: Some policy suggestions

The drastic increase in the cost of public housing over the past 30 years has caused a financial squeeze for many Singaporeans, particularly young couples who desire to own their own homes, and families forced to downgrade because of financial difficulties.

The drastic increase in the cost of public housing over the past 30 years has caused a financial squeeze for many Singaporeans, particularly young couples who desire to own their own homes, and families forced to downgrade because of financial difficulties.

A three-room resale flat in the prime area of Tiong Bahru used to cost just $6,000 back in 1975. Now three room flats in that area are selling for as much as $322,000! This 5,266% price increase is simply mind-boggling! It has far outpaced inflation and increases in salaries over the past 30 years.

The cash over valuation (COV) that buyers are now having to pay is also shooting through the roof, and threatens to get even higher when the casino resorts open next year.

National development minister Mah Bow Tan claimed that one third of resale flats are “transacted at or below” COV. This claim is almost laughable if you ask any home buyer or real estate agent.

Continue reading “Reducing cost of public housing: Some policy suggestions”