TR EMERITUS

From our Correspondent

The rising disgruntlement on the ground over exorbitantly priced HDB flats had to another round of “damage control” by the HDB through the state-controlled media.

Days after days, HDB officers wrote to the Straits Times Forum explaining painstakingly why HDB flats are still affordable and how the prices are being computed.

After yet another merry-go-round, we are none the wiser about HDB’s pricing policies and strategies as the key question on the minds of many Singaporeans remained unanswered – how much profit is HDB making out of the sale of new flats?

Finance Consultant Mr Leong Sze Hian made a crude estimate based on available figures:

“Since there will be 864 HDB flats, the average cost per flat, inclusive of communal amenities, site works and contingency works, is about $120,602 ($104.2 million divided by 864 flats).

With the latest HDB new 4-room flats at Punggol (Punggol Residences BTO) selling at an average price of $293,000 (price range of $264,000 to $322,000 divided by 2), does it mean that the HDB stands to make a profit of about $172,398 per flat, or a profit margin of about 143 per cent?”

[Source: Hardwarezone]

Is HDB making a profit of more than 100 per cent from Singaporeans for each new flat the sold?

The reluctance of HDB to come clean with the public will only fuel undesired rampant speculations on the ground.

HDB should reveal the following figures to Singaporeans and let them judge for themselves if HDB flats are affordable instead of repeating the same mantra without substantiating them:

1. What is the land cost, construction cost and miscellaneous cost of each unit of flat built?

2. How much does it cost HDB to build one unit of flat?

As HDB is a government agency, it should be accountable and transparent to the public by revealing the above figures on its website or annual report for otherwise Singaporeans will not be in a position to understand its pricing mechanisms.

HDB flats are supposed to be low-cost public housing easily affordable to the masses. Is it morally correct for HDB to make a profit out of it? If HDB thinks so, then it should at least have the basic courtesy to explain to the buyers why they should be over-paying for HDB flats when they are supposed to be entitlements to them as citizens of Singapore.

Furthermore, it has to account to the public where the excess profits are going to. Are Singaporeans indirectly helping to finance the government’s risky investments overseas? To withold the truth from Singaporeans is tantamount to deceiving them.

In the past when the prices are pegged to the construction costs, the flats are easily affordable and the price fluctuations minimal.

By pegging the prices of new flats to that of resale flats in the vicinity, the prices have rise astronomically over the last few years. While they may still remain affordable by HDB standards, they are no longer “easily” affordable.

The onus is on the National Development Minister to come clean with the public instead of hiding his head in the sand like an ostrich with the usual exhortations that HDB flats are affordable when they are obviously not.

Buying a flat is an expensive investment which entails a buyer to commit part of his/her monthly salaries to finance the mortage loan for the rest of his/her life.

At today’s prices, will Singaporeans still have sufficient savings in their CPF to retire comfortably in old age or do they have to work till they drop head to pay for a roof over their heads?

Home ownership accounts for nothing if Singaporeans are plunged into deeper and deeper debts just to pay for public housing.

In the first place, the government should not be involved in building public housing in the first place.

HDB has obviously outlived its usefulness as an agency to provide cheap and affordable housing for the people. Its current position will be untenable if it turns out to be true, as many Singaporeans suspect, that it is profiteering from the sale of new flats.

The government should open the public housing sector to private property developers with HDB being an overall regulatory authority instead. Allowing a few competitors in the market is the surest way of bringing down the prices and give Singaporeans more choices to choose from.

Related articles:

>> Drawbacks of using STIR as a bench mark to assess housing affordability

>> HDB flats will be “severely unaffordable using the Median Multiple as a benchmark for housing affordability”

>> Part 1: Singaporeans do not own their HDB flats

>> Part 2: HDB flats are unaffordable to most Singaporeans

>> Part 3: Rising prices of HDB flats does not create wealth

EDITORS’ NOTE:

If you like our work and would like to support us, please transfer your donations via paypal to our account ([email protected]). Any amount will be greatly appreciated! Alternatively, you can also help boost our advertising revenue by clicking on the ads displayed. Thank you!

Join our tweet at: http://www.twitter.com/temasekreview and facebook at www.facebook.com (search for “Temasek Review”)

15 Responses to “How much money is HDB making or losing from the sale of new flats?”