Indonesian PR bought 4-room HDB flat for record $653,000
November 13th, 2009 | 
Author: From our Correspondent
An Indonesian PR had forked out a record high $653,000 for a 4-room HDB flat in Queenstown!
The four-year-old 969sqft unit at Forfar Heights, Strathmore Avenue, is just five minutes walk from Queenstown MRT station, and on the top, 40th floor of the block.
The price paid by the Indonesian buyer is about 2.5 times the $262,000 the seller and his wife paid a few years ago.
The four-year-old 969sqft unit at Forfar Heights, Strathmore Avenue, sold for $68,000 above valuation – a level determined by an independent valuer.
This works out to $674 psf, beating the previous record of $609 psf, achieved in January last year, by about 10 per cent.
Recent Housing Board data shows resale flat prices surged 3.8 per cent in the first nine months of the year, reaching a historic level – surpassing even that of the 1997 property peak.
The relentless influx of PRs and new citizens in the face of limited supply of flats is one of the reasons why the prices of HDB flats continue climbing up.
According to a ERA report released a few months ago, 40 per cent of buyers of resale flats are PRs.
Though PRs are entitled to less housing subsidies than locals, they are allowed to keep any profits they gain from the resale of their HDB flats.
As PRs and new citizens usually earn a decent salary to be able to work in Singapore in the first place, they are able to afford to pay a higher than market price for HDB flats.
Young Singapore couples are finding themselves increasingly squeezed out of the resale market by these cash-loaded PRs.
When they tried to complain about their predicament to the authorities, they were given a rebuttal (complete with statistics) by National Minister Development Mah Bow Tan in the state media that that they were too “fussy”.
Mr Mah then went ahead to urge Singaporeans to buy a flat which they can afford and “plan well ahead” before they decide to do so.
No explanation was provided as to why HDB did not increase the supply of flats between the years 2006 – 2008 which saw large numbers of foreigners coming to work and live in Singapore.
Despite evidence proving otherwise, HDB continues to insist that public housing remain “affordable” to the majority of Singaporeans, not withstanding the fact that the tenure of housing loans is now raised from 25 to 35 years.
With the prices of housing fast outpacing the meager increase in salaries, a substantial proportion of Singaporeans’ CPF will be used to finance the mortgage loan leaving very little, if any funds for retirement purposes.
Over 85 per cent of the Singapore’s population lives in public housing built by the HDB, a government agency under the purview of the National Development Ministry.
The government claims that it has provided “generous subsidies” to help Singaporeans afford a flat of their own.
As the prices continue to sky-rocket, it will be increasingly difficult for HDB to convince a skeptical public that HDB flats are “affordable”.
Related articles:
>> Home affordability: HDB versus the public
>> Demand vs supply: so many applicants, so few flats
>> Number of applicants exceed number of flats
>> HDB to increase supply of flats
>> Mah: don’t compare with prices in the past
>> ERA: 40 per cent of HDB flat buyers are PRs
Posted in Editorial
Coz it’s true to character of...
Why so crazy to pay so much..
Who knows if the indo pr is working for some company to make the resale price of flats higher and higher..?
to set a higher benchmark to other flats..?
Who knows? ?
omg the prices of HDB resale flats are so crazy
So now the selling price of NEW HDB flat will benchmark against this new ‘market price’ lor.
So expect the new batch of 4rm flat to be ’subsidized’ by HDB, and ppl can ‘enjoy’ a ‘discounted’ brand new 4rm flat for …. like $590,000?
it’s worth it lah. valuation told him how much his property is
could be ‘illegal’ money used to buy the HDB flat.
when sold, it becomes legal money.
it’s worth it lah. valuation told him how much his property is supposed to be worth as decided by the last 10 people who transacted there, and it comes with extra $60k renovation.
so he bought it at valuation + $60 so essentially he paid valuation lor. assuming the $60k renovation never depreciate.
the bubble is getting bigger, no tears shed for those who are silly enough to get into the game.
High prices are good, it will result in high pay expectation by the elite which will be used to benchmark the high pay for the ministers and top civil servants.
Otherwise how to justify pushing up the already high million dollar salaries.
Win win for the successful.
HDB was mass public housing meant for Singaporeans only. Now they let these cash rich foreign basxxxxs to come and drive up the resale market. Yes this is how strongly I feel about this issue. Mah should not be still trying to fool us with the numbers game that HDB flats are affordable.
Why are these foreign PR sucking our blood and even fighting with us for resale govt flats?
But some nice Singaporean family is going to pocket $653,000(before tax and other deduction). Finally their Ah Ma can stop collecting cardboard.
This is an example on how PR can screw-up the life of locals by jacking up the price of property!!!
ya and the rest of us will be priced out of the HDB resale market for one family to benefit. And of course the MCYS investigated and found the lucky flat belonged to ah ma plus how much she is going to pocket.
doesn’t sound right – peasants suffer cos they find themselves saddled with higher mortagages so that one ah ma family benefit – of course some people know better and have intimate information which we do not have.
ISn’t that PR married to a Singaporean?
nice try, janetnt, but pls try harder.
“ISn’t that PR married to a Singaporean?”
in the eyes of the gov,
singaporeans = pr and citizens,
so technically, the pr is married to a singaporean
and btw, 2 prs can buy a resale flat.
@hur,
Are you saying that the wife is not a singapore citizen? DO u haf any fact to back up yr claim?
btw nice article on ST that offer a solution, wish we have more such posting here.
Three ways to discourage property speculation
THE following are my suggestions to discourage residential property speculation:
- Impose a high stamp duty on property flipping: for example, 20 per cent within a year and 15 per cent within two years.
- Remove property tax exemption for unoccupied properties. Land banking and property squatting are economic waste.
- Impose capital gains tax on profit realised from investment property.
Demand for return and demand for dwelling are very different objectives. Hot money will find a better place to go in a jiffy when the situation changes, and Singaporeans will bear the burden of hugely inflated home prices. Singapore needs to fix this vulnerability.
Chua Yeow Chong
i personally think that HDB should not attempt to peg
new flats close to secondary market pricing for first-time homeowners,especially when the bulk of such home-buyers are mostly young newly married couples.
Its’ pricings should only reflect real inflation but not the “premium” prevalent in secondary markets for the HDB flats.
The secondary market should stand alone;at most be a source of alternative housing for those who can afford and in a hurry and not wanting to queue for two or more years.
This would motivate the young to get married and to some good extent,alleviate their effective cost of living and hence less
reservations to start a family.Thus,contributing to population growth hopefully as the chances are better when couples are young as they do not need to postpone marriage owing to insufficient funds in savings CPF to buy their first homes.
Simplest way to curb property speculation is to increase credit costs.
Our low real interests rates for savings here is funding cheap credit for asset speculation.
Current real interest rates are negative but local savings rates are still high because of CPF and other cultural factors.
This situation allows banks to profit from a yield spread even at the low lending rates of sub 4%.
For foreign investors sub 4% credit terms is stupid cheap.
Combined with no controls on capital flows, substantial amounts of hot money is parked here, in both assets like stocks and property or cash.
Attempting to curb speculation through taxation will only deter local speculators and the tax will likely be partially passed on to genuine home buyers, in the form of increased prices.
The most effective solution is to increase the cost of credit here. This will curb asset price inflation (spec demand for property is far more sensitive to credit costs than true housing demand), and thus reduce the debt burden on young singaporeans because housing is likely their largest leveraged purchase and directly increase disposable income.
Currently, banks operating here enjoy such low funding costs because real interest rates are negative. As the functional “Prime” risk free rate for savers is the CPF rate of 2.5%, banks have been able to offer stupid rates like 0.025% with impunity as there simply are no alternatives.
This is a construct of policy that drives savings into assets markets, it is unclear whether this is by design or an unfortunate side effect.
Enforced participation in asset markets has led to a disproportionately large profits for gatekeepers like securities firms, banks and property agencies.
These are transfer payments and only add economic value through the consumption multiplier and possibly the investment multiplier but NOT through actual value add.
It also results in the redistribution of wealth from genuine home owners to capital holders like banks. This problem is particularly acute as the “wonder/tyranny” of compound interest greatly increases the cost of housing for genuine homebuyers due to ever lengthening loan repayment timeframes because of inflated prices.
Before the artificially low rate environment can be addressed we must also look at our artificially high “savings” rate due to the CPF scheme. As CPF is largely now be used to pay for housing and often also to buy other paper assets like stocks, such enforced saving is actually direct asset market participation.
This translates to approximately a minimum of 33% of all income earned below $4500 here is actually supporting asset prices.
This situation is unsustainable unless long term population growth (and workforce participation rates + wages) can support the future demands placed on asset markets by retirees liquidating assets to fund retirement.
To further compound the problem, because of the wealth effect
generated by artificially inflated assets prices, consumption will tend to be front loaded – driving inflation.
In other words, since the majority of household wealth is tied up in assets and actual cash savings is much lower than reported, without a massive influx of future buyers for those assets in the future, funding singaporean retirements will likely be impossible.
Also, funding that retirement will likely require a reverse mortagage of you home if you have no other hard assets.
This is an excellent example of how the PAP govt has sucked our hardwork:
1. even a citizen from a poor country has enough monies to buy and even jack up our hdb flat prices (which is supposedly for ordinary Singaporeans,
2. when our average Singaporean couldn’t even afford (as demonstrated by the constant complaint about housing prices) a similar flat in a similar location,
3. the idonesian govt pales in comparison in how efficient they are in sucking their people dry compared with PAP.
Wouldn’t it makes more sense to let these people have worker pass and make them pay for rent?
Bermuda does that.
How come we are not doing that? Why must we give PR – ship so easily?
Reason:
PAP needs them to drive up property prices so that they can sell land at a higher price.
PR married to Sporean is still a PR and a foreigner at that.
convert to citizenship then we talk.
HDB is not for cash-rich foreigners, PR or not, married to Sporeans or not, to inflate govt housing beyond local’s reach.
Saw Sentosa Cove on razor TV? the lawyer family who came here from HK and enjoy life here? Go buy Sentosa Cove and stop fighting an unlevel playing field with poorer Sporeans!
The “lower-hdb-valuations-or-build-more-affordable-hdb-housing-for-singaporeans” petition is still up!
http://www.thepetitionsite.com/1/lower-hdb-valuations-or-build-more-affordable-hdb-housing-for-singaporeans
How about Singaporean married to a PR bought a flat at $653k? Some people will read the article differently. Or are you saying any singaporean who married a China Bride should not be allow to buy HDB?
fpc on Sat, 14th Nov 2009 10:53 am
My advice – go study economics.
Capital (money) is mobile. It either goes this way OR that way.
ALL countries hope to attract capital (investment or money). Money creates money i.e. multiplier effect i.e. employment.
I only have an ‘O’ level. And I have to teach you economics.
Therefore, which way do you want the capital to go – from Singapore to Indonesia or Indonesia to Singapore? Remember no country practise capital comtrol today without sinking.
Just use your brains and answer please.
P.S. If you don’t have the grey matter please refrain from writing because Singaporean readers are well-educated people.
Just ‘O’ on Sat, 14th Nov 2009 8:19 pm
No country allows foreigners to buy subsidized housing meant for citizens so easily. This is uniquely Singaporeans. Most of this foreigers, who get PR very easily, don’t even bother staying in Singapore but rent out the flat.
Young Singaporean couples are unable to afford to own a flat. This is insane.
You seem to beat around the bush, insult people but fail to answer the question. Sadly, your behaviour is the same as your masters and that is why people want change.
PS. Answer the question of how having a 4 room HDB flat will help Singaporeans or please remain silent.
“It is better to remain silent and be thought a fool than to open one’s mouth and remove all doubt.”
Abraham Lincoln
Just ‘O’ on Sat, 14th Nov 2009 8:19 pm
No country allows foreigners to buy subsidized housing meant for citizens so easily. This is uniquely Singaporeans. Most of this foreigers, who get PR very easily, don’t even bother staying in Singapore but rent out the flat.
Young Singaporean couples are unable to afford to own a flat. This is insane.
You seem to beat around the bush, insult people but fail to answer the question. Sadly, your behaviour is the same as your masters and that is why people want change.
PS. Answer the question of how having a 4 room HDB flat cost $653,000 will help Singaporeans or please remain silent.
“It is better to remain silent and be thought a fool than to open one’s mouth and remove all doubt.”
Abraham Lincoln
The Singaporean who sold it can now get a nice condo or top up some for a semi D in Hougang or Woodland?
Die la like this. We newly wed first time buyers can go sleep by sidewalks or in longkangs or set up tent at east coast park and wash our dishes and clothes by the beach.
And to hell, I’m not going to give a rats a** about having more children. If government doesn’t want to help us, why should we help them? Besides, Spore is over populated with China people who come here and wreck people’s marraiges! And our jobs are being taken by philipinos and Chinese nationals who can’t even speak a word of English! Is this what the government wants? Higher divorce rates and jobless/homeless citizens?