Means testing for PRs to buy resale HDB flats
November 25th, 2009 | 
Author: OPINION
Last week, the Straits Times reported an Indian national and permanent resident in Singapore Mr Farook Ali Akbar who committed suicide together with his son.
Mr Farook came to Singapore to work as a database administrator in 2001 and became a PR two years later. His last drawn salary was $7,300 a month and he stayed in a flat in Bukit Batok. It is not revealed if the flat was bought or rented.
In another instance, an Indonesian PR forked out $653,000 for a four-room HDB flat in Queenstown when he can easily afford a private condominium. His monthly salary was not reported in the papers.
PRs are allowed to purchase resale HDB flats in the open market, but not new flats which are reserved solely for Singapore citizens.
According to a report by real estate agency ERA, about 40 per cent of the buyers in the resale market are PRs though this was disputed by National Development Mah Bow Tan who claimed that the figure is only 5 per cent without quoting any sources.
As PRs are usually mid-level professionals, they can well afford to pay above market rates for resale flats, thereby contributing directly to the escalation of prices.
Since the prices of new flats are pegged to the recent transaction of resale flats over the last three months in the vicinity, the sky-rocketing prices of resale flats will have a “trickle-down” effect on the prices of the new flats too.
With PRs flooding and “spoiling” the resale market, home owners have every reason to jack up their COVs to reap more profits from the sale of their flats.
Now, the question is: should PRs who earn well above $10,000 a month and can easily afford a private condominium or landed property be allowed to purchase a resale flat?
Means testing was introduced in Singapore hospitals not too long ago. Under the new system, patients are allocated classes of wards based on their household income.
For example, a rich patient with a monthly income of more than $8,000 will have to stay in a “B1″ ward and above instead of a “C” class ward reserved for the lower-income group.
According to the Ministry of Health, this helps to ensure that limited public resources are not abused and that the needy will get the help they deserve.
Similarly, HDB flats are considered public “resources” too whether they are new or resale flats.
By right, only citizens should be allowed to purchase public housing as in Malaysia and other countries.
Non-citizens will either have to buy a private apartment or rent a flat. They should not be allowed to compete directly with citizens for public housing.
The rising prices of HDB flats is one key reason why young Singaporeans are postponing marriage and starting a family thereby worsening the declining birth rates.
With a bulk of their salaries being tied up in the housing loans, many will have to contemplate twice to have children of their own.
Making HDB flats more affordable to young couples will encourage them to have more children.
The prices of HDB flats are unlikely to come down by much so long as PRs are permitted to buy and sell them freely without any restrictions.
Means testing should be imposed on PRs buying resale flats and those with a salary above a certain cap are disqualified from doing so.
Singaporeans buying new flats are subjected to similar conditions: a couple with a combined income of more than $5,000 has to buy a four-room or larger flat.
Three-room and smaller flats are only reserved for families from the low income-group.
With due respect to PRs, while they do contribute to the Singapore economy, their futures do not lie in Singapore.
When they finally pack up their bags and return to where they come from, they will stand to make a profit from selling their HDB flats, leading to capital outflow from Singapore.
In the meantime, Singapore citizens who genuinely need a place to stay are unable to get a flat of their choice due to the high prices.
Mr Mah stressed that PRs are allowed to buy resale flats because they also need a place to live:
“PR families are not eligible for housing subsidies that Singaporeans enjoy. They are not allowed to buy a new flat from HDB or enjoy any housing grant. However, PRs need to have a home in Singapore. Therefore, they are allowed to buy properties from the open market, including HDB resale flats.’
PRs can always buy a private property or rent a place to stay. If PRs need a place to live, what about Singaporeans, especially the first-time home buyers?
Between a PR who will leave Singapore in the near future and a citizen who will start a family in Singapore, who will have more stake in the country?
It is myopic of the government to give numerous benefits to PRs in the hope that it will entice them to settle down in Singapore for good.
Many simply take advantage of what the government gives them without additional incentives to take up Singapore citizenship.
As such, a more stringent criteria should be imposed to distinguish PRs who are here merely for economic reasons and those who are keen to become naturalized Singaporeans themselves.
Only those who are willing to hedge their futures on Singapore are allowed to purchase resale flats. One way of assessment is the length of stay in Singapore.
PRs who have been here only for one or two years should be barred from the resale market altogether.
Only those who brought their families here and have stayed for more than 5 years can buy HDB flats and even then, they must be subjected to means testing.
HDB flats have come to be regarded as symbols of Singapore citizenship. A clearer distinction must be made between PRs and citizens.
It is already very generous for us to allow PRs to buy resale flats. They should not add to the housing problem by depriving Singaporeans, especially the younger generation, a chance to own a home of their own.
Posted in Opinion
I agree that they need to be means tested. After all, the govt uses $$ as a KPI for everything. Why not the purchase of HDB houses?
Like or Dislike:
0 
0
Re: “Last week, the Straits Times reported an Indian national and permanent resident in Singapore Mr Farook Ali Akbar who committed suicide together with his son…Mr Farook came to Singapore to work as a database administrator in 2001 and became a PR two years later. His last drawn salary was $7,300 a month and he stayed in a flat in Bukit Batok. It is not revealed if the flat was bought or rented…PRs can always buy a private property or rent a place to stay.”
It’s in VERY poor taste to use the example of someone who’s died to fight for a cause like this.
And the writer even admits, “It is not revealed if [Mr Farook's] flat was bought or rented”.
It’s the crassness, such as racism, that dominates many FT-related issues that turns MANY people off from throwing their support behind the cause even when they agree with it; they just don’t want to be associated with such crassness.
Like or Dislike:
0 
0
@admin,
This is a well-written and well-thought out article. I think its got some great suggestions that could genuinely improve the current property situation. You should send this to the ST forum and a copy to HDB too!
Like or Dislike:
0 
0
We need to thank
nee ah mah (rich pap) minister for MND for creative accounting
resale price of flat – subsidy = selling price of new flat
This useless person, can create skyhigh resale prices thus super high price for new flat.
The subsidy is just paper loss for HDB. (note no change hand of monies)
By allowing super rich PR to buy resale flats- increase the price. They can be PR in just two years, buy a flat within one year.
While you wait for new pricier flat min 3 years wait.
These PRs can just depress your new flat values by mass selling their resale flats( if you paid by 30 year mortgage).
In the end you will have negative asset value (resale value is lower than loan & interest paid).
Do you still want to vote for PAP? after they mess up your future homes and lives?
Like or Dislike:
0 
0
It is a great idea to impose means testing on resale HDB.
Singaporean couple with combined income of more than 10k should also be barred from buying resale flat too. This way, there will be less demand for resale flat and hence lower resale price.
Means testing for resale HDB is a good topic in parliamentary discussion.
Like or Dislike:
0 
0
The CPF was meant to be a Financial “Safe-Haven” FOR RETIREMENT YEARS After 55!!!… As…
Old man Lee as PM then had said on TV that HE “had worked out that 25-25% IS enough”. I wondered what he meant as like MBT… he absolutely gave NO Clues AS TO HOW he arrived at ‘his’ figures!!!… Questions are…
1. Enough FOR WHAT?
2. Enough FOR WHO?… As wages were low and employers likely could tkae up 25%. And COL (Cost-Of-Living) was also low and workers are helped with CPF to pay for their PAP HDB FLATS.
3. Enough FOR HOW Long in Retirement after paying up for HDB flat at least???… Meaning some guideline “Benchmark” number of years for Life Expectancy then!!!… ABSOLUTELY CLUELESS WE WERE…AS LIKE NOW AND ALWAYS!!!…
4. And so… Medical… Education… etc were by and by included for payment with CPF For “RETIREMENT”???
5. And why wasn’t A National Insurance Fund created of of the CPF Pool???… likely because the pappy want their NTUC Income and other Insurance Corps. to grow in pirvate enterpirse and so didn’t want to “jolt them???
6. If so… why couldn’t they have got these private one involve in a National and Collective Effort of our good?
Of course it can be said that now in hind-sight we are the wiser to question. But then, has it not ALWAYS been pappy knows best??? Who then can suggest, let alone propose ideas for the pappy & pappies to deliberate…
In Short, pappy has NEVER been a Collective Consultative Administration as WE ALL KNOW FOR SURE… Once again…
These following few quotes prove this point beyond the shadow of a doubt as they came directly for the horse’s mouth…
QUOTE…
1. “I am often accused of interfering in the private lives of citizens. Yes, if I did not, had I not done that, we wouldn’t be here today. And I say without the slightest remorse, that we wouldn’t be here, we would not have made economic progress, if we had not intervened on very personal matters – who your neighbour is, how you live, the noise you make, how you spit, or what language you use. We decide what is right. Never mind what the people think.” – Lee Kuan Yew, Straits Times, 20 April 1987
2. “I make no apologies that the PAP is the Government and the Government is the PAP.” – Lee Kuan Yew, 1982, Petir
3. “If I were in authority in Singapore indefinitely without having to ask those who are governed whether they like what is being done, then I would not have the slightest doubt that I could govern much more effectively in their interests.” – Lee Kuan Yew, 1962.
UNQUOTE
Like or Dislike:
0 
0
Admin,
Your suggestion is simply a knee jerk reaction to the rising property prices. As nationalistic as it sounds, your suggestion does not adequately address the root causes of the issues – (1) insufficient supply of public housing (supply factor); (2) loose immigration policies in granting PRs and citizenships (demand factor); (3) HDB is both the (the biggest) landlord and developer in Singapore (demarcation of control).
Your suggestion for means testing will simply push these PRs into the rental market for HDB and mass market condos, which will in turn also push up demand and prices. Instead, I humbly suggest your writers consider ways to address these 3 root causes so that public housing prices will return to a sustainable and affordable level.
Like or Dislike:
0 
0
In true Singapore style, normative statements will get you nowhere. Stop sleeping at the polls!
Like or Dislike:
0 
0
I’m opposed to means testing of any kind. However, PR should not be able to purchase any flats until after a certain number of years. Also, after a certain number of years of being PR, if the person does not convert to citizenship, his privileges should also be revoked.
Like or Dislike:
0 
0
I fully endorse the author of the above article.And wish to further add,the NUISANCE VALUE of PR staying in HDB estates whether bought or rented.Most of these PR or foreigners had never lived in a high rise building such as our HDB flats in their own country.Nor had they an experience of sharing public facilities meant for the use of all.Whereas sharing public housing and its facility had been in the psyche of locals for at least two generations.
HDB public housing is unlike a private condo.Private condos has its own security with it’s own management to boot.HDB had left such matters to the good sense of its inhabitants with some public campaigns every now and then.Till this horde of foreigners arrived as our neighbours.
PR and foreigners take it for granted that so long as they own or rent a HDB unit they cant treat it in anyway they want.Causing constant sleepless nights and days to their neigbours.Locals are greatly disadvantaged because neither the HDB/Town Council nor Police handle such nuisance as one deem it is the job of another.But having to work night shifts and having children studying at midnights the peace at your own home turns into nightmares.Sleep deprivation for prolonged period could lead to psychological problems.
And ears plugs is not a solution.
Like or Dislike:
0 
0
HOW HOW A MORATORIUM like what hdb imposes on true blue citizens who are first time buyers disallowing PRs from selling their resale flats until after 12 years,following swiss yardstick of granting citizenship?
don’t just impose tough rules on loyal citizens,flex your
usual muscles on others just so to be wee bit fairer!
integrity of varying policies need to be consistent.
we,locals,are merely asking for the minimum fair treatment from you,the gah”men”.
Like or Dislike:
0 
0
@googler – Admin,
#quote$
Your suggestion is simply a knee jerk reaction … the root causes of the issues – (1) insufficient supply of public housing (supply factor); (2) loose immigration policies in granting PRs and citizenships (demand factor); (3) HDB is both the (the biggest) landlord and developer in Singapore (demarcation of control).
……….t public housing prices will return to a sustainable and affordable level.@end of quote#
1) supply cannot be top up immediately. You don’t import HDB flat like ready made goods such as candy.
2) government one track mind in bringing PRs and giving citizenship can only be stopped by incoming opposition member to parliament. If that does not happen, no solution.
3) hdb is the biggest loser in building HDB’s flat. The more they build the more deficit they get. With sufficient opposition members in parliament, the opposition will show why there is no deficit.
Bringing down public housing prices is not a very daunting issues, it can be done, you can start by bringing in opposition party into parliament to speak up for you.
The issue at hand is not that the government cannot bring prices down, out of their own interest they don’t want to do it and no amount of writing and suggesting could change a thing. The power is in their hand, it is for them to abuse. To curb their power, you need to send in sufficient opposition members into parliament to build up a critical mass of opposing voices to shape and make things right in Singapore.
We are the big boss on polling day, if we don’t do it, don’t ask why people don’t do it.
Like or Dislike:
0 
0
Hello CitizenofSG,
I absolutely agree with your comments.
However the debate here is whether TR’s suggestion (of implementing means testing for PRs when they purchase HDB flats) will help to lower the price of public housing in the short or long term.
Seems to me it will not, as it will only push these PRs to the rental market, which will also indirectly drive up prices due to demand from buy-to-let investors. Furthermore it will create unnecessary complication in the secondary sales market. For example, should an S&P agreement be void if a PR buyer subsequently fails the means test?
The point is that there is no quick fix for this situation the PAP has created. Knee jerk policies such as these are unlikely to help and could complicate matters. Only with a new government can the 3 issues (supply, demand, demarcation of landlord-developer roles) be adequately addressed.
Like or Dislike:
0 
0
i agree with googler that we should treat the causes and not the symptoms. Means testing for PRs will just distort the market further.
Like or Dislike:
0 
0
disappointingly myopic considering TR wants to be a leading critic of the government. and how can so many failed to see the ingenuity of our government housing program?
though i agree there maybe risks of destabilization of asset values because of the large number of speculators in the property market(today’s owners occupied homes are ALL speculators in my view because, especially PRs, they may cash out when they are done with sg years later. and even worrying as the gov is building more thus increasing the number of foreign ownership in sg – probably by then, half of our properties are owned by foreign born people), but in the short term, a healthy wealthy property market is offering social relieves for the government.
but if ill managed and the property market collapses(government yielding to myopic citizens with opposing interest pressuring to destabilize the property market for a bite of the cherry themselves)this country will sink like the titanic and humpty dumpty may find it hard to regain the confidence of investors and our poor kopi drinking aunties and uncles may have to turn to social services in drove and may even bankrupt our government by then.lol.
Like or Dislike:
0 
0
PR not allow to buy any HDB flat at all,
but they can rent from Flat owner.
win-win situation for all.
More income for SG home owner, since they get rental income.
Price stable as 1 SG couple can only allow to purchase 1HDB.
PR got a place to stay too
Richer PR buy Private & dun compete with SG on subsidy HDB.
if not HDB build more Flat & they will lose more money as claimed recently….
so all 3 sides win.
HDB dun lose more money building extra flat
Local earn more in rental income & can buy cheaper flat
PR can have a place to stay or stay Condo, more high class if they are richer.
Like or Dislike:
1 
0
Dear freecomment,
Ingenuity of our government housing program you say? ..Where got lah !
Who is the ultimate beneficiary of this ever increasing property prices ah ? You and me !..Pleeaz lah
You happy because your 3RM flat bought for 10k in the now fetches 300k right?Than what would you do to have another roof above your head once your HDB hole is sold?..Buy another 4RM at @450K?..Ok ,granted you pack your bag and quit this country..What would you children do to have a home?..Each buy another 3RM flat at 300k and forking out another 20k in cash?
Now,any 1st year economic student will tell you what in meant by ‘value’ of a property.Pure supply and demand that is.Therefore there is no such thing as asset value.Assets such as a car usually depreciate but landed property usually appreciate..But the question is why should a 99 year lease hold which what our HDB flat is appreciate unreasonably with only 60 years of lease left for 40 yr old HDB.Can you answer this?
I will.Simply because the government controls the entire property market.Valuation and etc are means to the end.Therefore foreigners are needed to increase the demand curve.While supply is controlled by HDB.
Now consider this.Suppose if all HDB houses are priced relative to wages earned.Who is the looser?Of course you may cry I want my investment in a HDB unit to increase in value or why than invest.Than ask yourself is the purpose of public housing is for speculation or to provide the general population with a decent home.Therein lies your answer.
All this crap about asset enhancement is an illusion we are sold to.If a war breaks out between China and Taiwan tomorrow your HDB hole may worth next to nothing.That shows how fragile our real estate is.
But the government earns regardless.Because it sells HDB at increasing prices.And washes it hands dry.While you hold the commitment to pay for the next 20 to 30 years.
Similar to CLOB and minibond saga.They sell but the onus is entirely yours to pay and pay.Comprende !
Like or Dislike:
0 
0
I an against mean testing, bad idea that create more problem then it solve.
Rather PR unable to buy HDB unless convert to Citizen is fairer.
BTW, my 25 year old HDB is fully paid for and now collecting rent from PRC to fund my new condo. Thats life of a middle class citizen.
Like or Dislike:
0 
0
I think means-testing is an overly magnanimous offer.
PRs are foreigners aka aliens. They should not be allowed to enjoy public housing at all in the first place, but sadly, PAP had prostituted public housing to these aliens at the expense of Singapore Citizens.
Public housing is largely paid for using Singapore Citizens’ money. Even the administration of public housing by the HDB is paid for mainly with Singapore Citizens’ money. The HDB should not be wasting the nation’s resources and valuable manpower to serve aliens. If ERA’s claim that 40% of the resale transactions involve aliens, it would mean that some 40% of the HDB resale operations is devoted to serving these aliens.
If PAP had really intended to attract talent, those aliens who are eligible to reside in Singapore should be those who can afford to rent or buy private property without impinging on public housing meant for Singapore Citizens.
Apparently, PAP is neither interested in guarding the interests of Singapore Citizens nor good at recognising talented aliens.
For the sake of your homes, your family and future, please vote against the incompetent PAP.
Like or Dislike:
0 
0
LOL.You are so naive and presumptuous. Tell me which government in developing countries do not capitalize on housing and land? Yes, it is the conspiracy of the rich or modern feudalism if you like but we are not here to debate over philosophical expediency. Furthermore, there are state strategies we shouldn’t divulge. LOL however, i suggest you go beyond textbook thinking, which I am sure will be extremely challenging for you considering you tend to seek ….dead end arguments . LOL.
that said, your concerns are well heeded.
Like or Dislike:
0 
0
Another case of TR confusing simple statistics.
You equate “40% of buyers” with “5% of owners”. It is as clear as day that the two categories are not the same.
Buyers are people who are looking to, or have recently bought. Owners are people who own a flat, including those from 10-40 years ago.
Like or Dislike:
0 
0
Wonderful idea by TR.
Another great one.
I didn’t even need to read it and I love the idea already.
thank you once again for another great idea.
Like or Dislike:
0 
0
//freecomment
Why should a sinking hdb market cause problems to Singapore?
If one that keeps increasing in price by 10% per annum was good for Singapore, then why didn’t PAP just let the price keep raising?
Of course, they know it won’t work : just look at the US housing market.
Then why can’t they keep the price flat for a long time, say 7 years?
HDB price used to be flat with small jumps over a 10 year period.
Without these jumps in prices, do you think Singapore can afford to pay these clowns in white millions of salary a year?
We have not even counted the cost of their pension.
Like or Dislike:
0 
0
//Googler
The fact is
if there are no sharp increase in FTs, there is no shortage of housing.
This is because we have a greying population and yes, housing price under such a situation should fall.
Driving the market up higher and higher doesn’t solve the problem.
It just make it worst.
They should have just strive to keep it flat.
Like or Dislike:
0 
0
Dear freecomment,
Resorting to ad hominem do not make your circular argument logical.You’re saying state strategy are always right and makes no mistake because the government says so, the government is right because their strategy dictated it, and we all know that state dictated it because their strategy says so. That’s circular logic, no different than saying ‘Lee is right because He says He’s right.’”
Dear contrarian ,
Please do not obfuscate the obvious..Granted you are right that the definition of ‘buyers’ and ‘owners’ are indeed world apart.So what!..In any dynamic market situation.The presence of 40% potential buyers make a gigantic difference..Even if it is only just 1% who bids at unreasonable high prices can make a strategic difference to the entire market.Take for example the PR who bought a 4RM at 640k..Tell me honestly will his neighbor settle for 450K ?
Like or Dislike:
0 
0
you are truly funny true singaporean. when did i say “state strategy” was right or for that matter, always right? LOL. the state approach, if i may stand corrected, has always been to exploit whatever means within the perimeter of legal pragmatism to keep the profitable end status quo going.
fpc, the way i see it, the gov is optimizing market sentiments without overtly favoring the rich or increasing the burden on the not so rich.though increasing supply may have dampen exuberance demand but i fear the supply model may lead to a colossal collapse in future.
i prefer a close knit family model than a “all are welcome and let’s party together” model.
party animals are usually not very faithful.
Like or Dislike:
0 
0
someone suggest don’t allow PR to buy HDB … only allow for renting …. do u know condition of those HDB flat which are used for renting purpose … these flats are so dirty most of the Singaporean dare to enter there .. people are so greedy for rent money but don’t bother to give minimum service … as they are not living in those flats …. I am wandering are the tenant filthy creatures coming from some slum would be used for some rental income !!! and HDB rental is not that low ….
Like or Dislike:
0 
0
Writter is going nowhere with this. Just a poor topic.
PR = longer term commitment than work permit holders. Which brings in stability and brings in competition. If you are lazy, even a $50k hdb / condo it makes no different. Singapore today is competing with NY, Tokyo, London and HK not KL, Bangkok, Manila and Jakarta.
It is not about if PR leave, just look at Europe, its not capable to support the greying populations especially the developed and thats why they needed EU to bring in balance from the Eastern block.
If to blame, blame the ambition and prop agent who, “This is the best deal sir, if not I have a buyer with $50k cask.Pls confirm by today” Thats how the prop market is spoilt. This is a “creative” lot.
Newly wed can apply for new HDB with / without subsidy, the main reason for delay is bcoz the society today is full of temptation. Unless thed writier favour arranged marriage???
Like or Dislike:
0 
0
In Hong Kong , PR are allow to purchase 2nd hand govt subsidy flats but must also pay additional $$ to cover the land subsidy. which is about one third of the housing price.
This make a different between a PR and a local, and not bubbling the govt subsidy flats.
Like or Dislike:
0 
0
What of the Minister’s and MPs pensions at HALF their LAST DRAWN Salaries FOR LIFE after just serving 2 GE terms as I’ve ‘heard’???… Likely this is part of pappy’s “Self-Renewal packaging???… and why so high high high salaries!!!…
Confirmation, further details and facts anyone???
Like or Dislike:
0 
0
yeah.
I think the life payment part is true.
But I think the payment is 100K.
AND LHL loves to have ministers around him.
I think he had more ministers than his father did.
So, the pension bill of these clowns is huge.
If they performed like the 1st generation did, I think it is still ok.
However, they cannot even act.
Not to mention their policies sucked and failed.
A real nightmare in the making.
Like or Dislike:
0 
0
//jame
you should have seen some of the flats “owned” by the Chinese PRCs.
Incredibly dirty and he is using it for himself.
Dirt is not specially reserved for Singaporeans.
The PRCs are very (or at least can be) dirty.
Like or Dislike:
0 
0
//from HK
This is a sensible strategy from HK govt.
The Singapore govt just want to suck its citizen of monies to finance their failed investments one after another.
They should have just spend the monies on food.
Then they will die sooner.
Like or Dislike:
0 
0
//freecomment
The govt is optimising only the price of the land that it can sell on the open market by driving up the resale price of hdb flats nearby.
It is not optimising for your interest (unless you are a minister).
They should have just strive to keep hdb prices flat for a long time say 7 years.
They are not doing that.
They need the extra cash to cover their funding gap.
Like or Dislike:
0 
0