Govt Responsible For The Rise In Property Prices?

[CTN 0]

Since the Asian financial crisis 10 years ago,

1.By freezing land sales and not realeasing supply into the market, despite 70% of land owned by goverment.

2.By encouraging the influx of foreigners of all mold to work and set up businesses in Singapore.

Obviously the combination of the 2 factors would leventually lead to a supply crunch, resulting in price spirals witnessed currently. Is this not a case of planning deficiency? Launching land sales now will not help in the short term, as it takes time for construction to be planned and completed. The capacity of the shrunk construction industry to handle this sudden increase in demand is also in doubt.

[icer 0]

I would think that was planned strategically.

Since the Asian financial crisis 10 years ago,

1.By freezing land sales and not realeasing supply into the market, despite 70% of land owned by goverment.

2.By encouraging the influx of foreigners of all mold to work and set up businesses in Singapore.

Obviously the combination of the 2 factors would leventually lead to a supply crunch, resulting in price spirals witnessed currently. Is this not a case of planning deficiency? Launching land sales now will not help in the short term, as it takes time for construction to be planned and completed. The capacity of the shrunk construction industry to handle this sudden increase in demand is also in doubt.

[raincole 0]

But because of the crash, ppty prices came down too much. Now it is trying to find the balance, so I don't think the rise in ppty prices is a bad thing.

Beside, most of the goods have increased too and the 2% GST is to kick off this July, so can expect prices to raise further.

[Topspin 1]

The effect of the new Govt housing policy introduced in 1996 was underestimated by the minister in charge. It triggered the 10 years price slump. The annoucement of the IR was one means to undo the mistake.

[icer 0]

But how are the middle and low income people going to afford housing now that prices have gone rocket high and their salary is still the same? Aren't the govt going to do something?

How to get married and have kids when can't even afford housing?

[yoongf 11]

I would tink the vast majority of home owners will tell u that their property valuations have not moved much lately.

[TYM 0]

I think HDB has forgotten her roles and her Vision and Mission. 18 years ago, my parents can buy a 4-rm HDB flat for $62K, today I must pay almost $300 for my own 4-rm flat (but of much smaller size). With the combined income still set at $8k (unless we take bank loans, which is another set of problems), I am beginning to wonder how much longer can the lower/middle inccome earners "afford" to buy HDB flats, no thanks to its ever-increasing prices. Recent newpaper articles already reported young couples planning to get married and set up homes may have to hold back plans due to the property prices, HDB included.

Maybe it's time HDB be more transparent and reveal the actual costs of new buildings, and how much profit is made per unit (incidentally, not its core mission).

[yoongf 11]

HDB is operating at a loss annually, and the difference is covered by a Bil $ govt subsidy. All the figures are shown in the HDB annual report.

HDB is not getting the land for free. They pay SLA for land cost. Complaining about HDB profit is as good as barking up the wrong tree.

[TYM 0]

Left hand pay right hand?

[applefreak 1]

seriously i have my doubts over what hdb says

e.g. hdb claim that new flats are sold at subsidised prices, thus the levy. in my case, my unit is only about $15k cheaper than comparable units in the resale market. the resale units come with kitchen cabinets, toilet accessories and the works. so what subsidised price is hdb talking about???

[Relacker 1]

HDB is operating at a loss annually, and the difference is covered by a Bil $ govt subsidy. All the figures are shown in the HDB annual report.

HDB is not getting the land for free. They pay SLA for land cost. Complaining about HDB profit is as good as barking up the wrong tree.

HDB, SLA under the same unbrella, HDB pay SLA nothing more than taking from left pocket put to right pocket so that it is possible to justify the high price charge for HDB flat due to 'scarcity of land' and the higher 'land cost'. The actual cost is nothing more than construction cost actually.

[zirhk3355 1]

HDB is operating at a loss annually, and the difference is covered by a Bil $ govt subsidy. All the figures are shown in the HDB annual report.

HDB is not getting the land for free. They pay SLA for land cost. Complaining about HDB profit is as good as barking up the wrong tree.

Bro my company (I do not want to name) is also making a "loss" every year because they need to "pay" their mother company for this and that expenses. But my boss has been sitting there for at least 15 yrs liao and he is still getting his high 5-figure salary - if really making a loss, why is he not sacked?

Private companies do it for taxation purposes, GLCs do it to maintain its 'non-profitable' image. Remember HDB is no longer a stat board; they are a profitable organisation, but not to let the citizens accuse it of profiteering, they reported that they are "making a loss". But really lose money or not, only they know lor...

I believe in raising new flats' prices actually, because as new flats become more and more advanced and beautiful, they need to give the private sector a fair competition, otherwise all the developers will run. See how the recent HDB projects they are asking private developers to build? This is a strong sign that they are trying to attract property developers to stay in Singapore.

But the impending question is, since HDB pays SLA so much to buy land and build new flats, where is the money then? Surely SLA, which does not exists in the past and suddenly now earning so much money, must have channelled the money somewhere? If the govt can show a link where the money is actually channelled to help our needy and poor people, I have no complains. But I believe not...

[yoongf 11]

Remember HDB is no longer a stat board; they are a profitable organisation, but not to let the citizens accuse it of profiteering, they reported that they are "making a loss". But really lose money or not, only they know lor...

I believe in raising new flats' prices actually, because as new flats become more and more advanced and beautiful, they need to give the private sector a fair competition, otherwise all the developers will run. See how the recent HDB projects they are asking private developers to build? This is a strong sign that they are trying to attract property developers to stay in Singapore.

But the impending question is, since HDB pays SLA so much to buy land and build new flats, where is the money then? Surely SLA, which does not exists in the past and suddenly now earning so much money, must have channelled the money somewhere? If the govt can show a link where the money is actually channelled to help our needy and poor people, I have no complains. But I believe not...

I think need to get some facts right. HDB is still a stat board. they corporatised only a small portion of their organisation.

HDB is introducing more design into flats to meet rising expectations. The whole idea is to be just like any private developer, and any public assistance scheme is to be through a subsidy/grant that must be applied for, rather than given upfront or built into the price. A lot of ppl fail to realise.. private developer do not have to build roads/ bus interchanges/ land set aside for religious purposes., whereas HDB has to develop the whole township, hence the increased deveopmental cost.

SLA has always existed, formerly known as Land Office. The whole thing about HDB paying for land is thanks to the former Prez question.. "how much is the govt worth?" At that time, all HDB land was worth $1. SLA $$ goes straight into the govt reserves, because is treated as capital, not revenue. it does not become the govt's operating revenue. Thus.. last few yrs, govt operated in deficit because gains from SLA land sale not counted as income.

All these figures are in the open on MOF / HDB/ SLA website, and openly debated in parliament. I have to admit it takes a lot of energy to figure these things out. HDB is such a big organisation, if there is something fishy going on, I am sure there will be whistle blowers. The fact is.. these accounting practices of HDB paying SLA.. is really the right thing to do from an accounting point of view.

[TYM 0]

I think need to get some facts right. HDB is still a stat board. they corporatised only a small portion of their organisation.

HDB is introducing more design into flats to meet rising expectations. The whole idea is to be just like any private developer, and any public assistance scheme is to be through a subsidy/grant that must be applied for, rather than given upfront or built into the price. A lot of ppl fail to realise.. private developer do not have to build roads/ bus interchanges/ land set aside for religious purposes., whereas HDB has to develop the whole township, hence the increased deveopmental cost.

SLA has always existed, formerly known as Land Office. The whole thing about HDB paying for land is thanks to the former Prez question.. "how much is the govt worth?" At that time, all HDB land was worth $1. SLA $$ goes straight into the govt reserves, because is treated as capital, not revenue. it does not become the govt's operating revenue. Thus.. last few yrs, govt operated in deficit because gains from SLA land sale not counted as income.

All these figures are in the open on MOF / HDB/ SLA website, and openly debated in parliament. I have to admit it takes a lot of energy to figure these things out. HDB is such a big organisation, if there is something fishy going on, I am sure there will be whistle blowers. The fact is.. these accounting practices of HDB paying SLA.. is really the right thing to do from an accounting point of view.

To me as a layman and commoner, it is just smart accouting practices to justify that stat boards are non-profit organisation. But is the government really operating at a deficit? Nobody knows.

[zirhk3355 1]

I think need to get some facts right. HDB is still a stat board. they corporatised only a small portion of their organisation.

Sorry, my mistake. But I guess my post still stands corrected? As a stat board, HDB is even more leaning towards showing that they are non-profitable, and a 'bonus' if they are losing money.

HDB is introducing more design into flats to meet rising expectations. The whole idea is to be just like any private developer, and any public assistance scheme is to be through a subsidy/grant that must be applied for, rather than given upfront or built into the price. A lot of ppl fail to realise.. private developer do not have to build roads/ bus interchanges/ land set aside for religious purposes., whereas HDB has to develop the whole township, hence the increased deveopmental cost.

That's a whole wrong idea then. Why should HDB be "just like any private developer"? Remember their vision and mission? The fact that it has a household income capped at $8k should be sufficient to prevent the rich from leveraging on the cheap public housing, thus public housing should have been what it was supposed to be, CHEAP.

And frankly, it is WRONG to be factoring the cost of building the whole township into our flats; are we saying that the roads/bus interchanges/land/etc are to be used by those flat-owners only, people from other towns or private estate owners cannot use them? If it is supposed to be a public amenity, then let it be paid for by public funds (SLA/LTA/etc), not HDB.

SLA has always existed, formerly known as Land Office. The whole thing about HDB paying for land is thanks to the former Prez question.. "how much is the govt worth?" At that time, all HDB land was worth $1. SLA $$ goes straight into the govt reserves, because is treated as capital, not revenue. it does not become the govt's operating revenue. Thus.. last few yrs, govt operated in deficit because gains from SLA land sale not counted as income.

All these figures are in the open on MOF / HDB/ SLA website, and openly debated in parliament. I have to admit it takes a lot of energy to figure these things out. HDB is such a big organisation, if there is something fishy going on, I am sure there will be whistle blowers. The fact is.. these accounting practices of HDB paying SLA.. is really the right thing to do from an accounting point of view.

Oops, sorry my mistake again on SLA's status.

If what you said is true that $$ from SLA is treated as capital, then again its another WRONG. Who owns the land? Nobody. SLA acquires land at a cost, and sells to HDB - did they sell it at the same cost as they had procured the land for, or did they mark up? Ok, let's assume that sells the land to HDB at cost at no profits and take a look at the eg below:

For a HDB enbloc case, we are compensated by SLA at about 30% to 40% below market value of the flats. So SLA later "sold" it back to HDB again, assuming at the same cost as what it had paid to flat-owners, and HDB goes and build new flats on that land. The question is: Why did the new flats cost only 10% to 20% below market value??

We only have two answers: Either SLA did make a profit when selling the land to HDB, or HDB did make a profit when selling the flats to us. We don't know. But EITHER WAY, there is a profit made and that profit had hence disappeared into the govt "reserves" and classified as "capital".