theonlinecitizen

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Why does HDB need to increase prices of flats so rapidly?

Posted by theonlinecitizen on September 26, 2007

By Leong Sze Hian

I REFER to the article, ‘HDB launches sixth build-to-order project in Fernvale.’ (ST, Sept 21).

The HDB’s pricing policy recently has increased the prices of new flats, and may lead to Singaporeans having to incur higher mortgage liabilities.

This may result in lesser CPF funds for retirement, more mortgages in arrears, defaults, etc.

For example, the prices of four-room flats in the HDB’s latest build-to-order project (Coral Spring) in Fernvale are between $188,000 and $252,000, compared to Fernvale Vista Phase 2 ($145,000 to $200,000) in May, and Fernvale Court ($138,000 to $177,000) two years ago.

Based on the average prices of the three projects, which are in the same location, the increase is about 40 per cent from two years ago, and 28 per cent from just four months ago.

On an annual basis, the increase is 18 per cent per annum over the last two years, and 75 per cent per annum over just the last four months.

Why does the HDB have to increase its prices by so much so rapidly?

 

 

Below is the reply from HDB to Sze Hian’s letter (as published in the Straits Times, Oct 2, 2007):

Oct 2, 2007

Fernvale flat prices: Comparisons inapt

I REFER to the letter, ‘HDB flat prices in Fernvale rose too rapidly’ (ST, Sept 26), by Mr Leong Sze Hian.

Mr Leong compared the selling prices of HDB’s latest build-to-order project, Coral Spring, with the selling prices of Fernvale Vista and Fernvale Court launched in May this year and September 2005 respectively.

The comparisons are inappropriate, as they did not take into account prevailing market values and the different design features of the flats.

Coral Spring is a Premium project while the two earlier projects cited by Mr Leong are Standard projects.

HDB’s Premium projects come with enhanced architectural designs, landscaping and better-quality finishes, compared to Standard projects.

In addition, the flats at Coral Spring also come with many improved design features, such as bay windows and planters, as well as a larger floor area.

The Fernvale area has also undergone significant development since the launch of Fernvale Court two years ago. With the LRT system in operation, improved road network, as well as more amenities and established facilities, the flats in the Fernvale area have appreciated in market value. This can be seen from recent resale transactions in the area, where four-room flats were transacted at between $275,000 and $287,000.

We would like to reiterate that HDB has continued to price its flats such that they are affordable to the vast majority of flat buyers.

New HDB flats are priced below their equivalent market values so that buyers can enjoy a substantial subsidy from the Government.

In addition, the Government has recently revised the Additional CPF Housing Grant Scheme for first-timers to allow households earning up to $4,000 in income to qualify, with the highest-tier grant increased from $20,000 to $30,000.

Kee Lay Cheng (Ms)
Deputy Director
(Marketing & Projects)
For Director
(Estate Administration & Property)
Housing & Development Board

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7 Responses to “Why does HDB need to increase prices of flats so rapidly?”

  1. Robert HO said

    RH:
    1. The first idea is to “keep the citizens poor while keeping the government rich” so as to control them better, as advised by Machiavelli.

    2. The second idea is to lock citizens in a virtual monetary prison from which they cannot escape because, short of selling everything and migrating, they will have to toe the line and swallow whatever the PAP decides to make them swallow. And LKY boasted that “>80% of Singaporeans CANNOT migrate” so this policy works — for him.

    3. The third idea is to make the tiny pigeonhole flat the citizen’s biggest or better still, ONLY asset. This makes him vulnerable to the standard PAP election threat to punish any HDB precinct that votes against the PAP by NOT upgrading that precinct while upgrading the others voting PAP, thus reducing the value of all flats in the punished precinct.

    4. Since all citizens have their money confiscated through the CPF and totally locked in their miserable flat, this removes any possibility of voters voting OUT the PAP since LIE KY LHL PAP have totally destroyed any credible Opposition that could conceivably form a competent govt and the only remaining [allowed] Opposition are pretty third rate and are incompetent to govern. Plus elections are rigged when lost.

    5. The exorbitant prices of HDB flats swell the reserves, gives LIE KY’s GIC and Temasek’s HO Ching CHEAP FUNDS, nay, FREE MONEY, with which to play Warren Buffet with, or George Soros, to buy here, buy there, getting into Forbes as “the most powerful man or woman, etc” and most important of all, GETTING A BIG WELCOME FROM ALL COUNTRIES’ LEADERS WANTING SOME OF THEIR INVESTMENT DOLLARS, which are all our monies but from which only LIE KY and FamiLEE and Cronies are benefiting. Hence LIE KY’s seat on several big corporations. Even LIE HY is on Rolls Royce so SIA will buy their engines.

    *Comments edited by moderator for irrelevant remarks.

    **Robert, please be reminded not to post your NRIC number here. Thanks.

  2. anon said

    Raising cost of public housing knowing full well that most citizens have no choice but to tap into CPF funds shows that this is another form of “taxation” and indirect way for them to get hold of your CPF money.

  3. mr wang says so said

    I expect it has something to do with the rising cost of sand for construction.

  4. Truly Singapore said

    I remember reading somewhere the increased cost of construction due to sand is quite small.

    Did a quick search and found the following:

    “When compared to an estimated 2 per cent increase in development cost due to price hikes in sand and granite, increases in construction cost do seem negligible.”

    [http://news.asiaone.com/News/The+Business+Times/Story/Building+costs+climb+with+industry+boom.html]

    2% increase in construction costs due to sand cannot explain the 28% price increase in flats calculated by Mr Leong …

  5. jabez said

    Mr Leong,

    any reply ywt from HDB to your questions?

  6. Leong Sze Hian said

    HDB’s Reply in Straits Times Forum, October 2

    Cheers

    Leong Sze Hian

  7. sarek_home said

    http://www.straitstimes.com/ST%2BForum/Story/STIStory_163246.html

    With the LRT system in operation, improved road network, as well as more amenities and established facilities, the flats in the Fernvale area have appreciated in market value. This can be seen from recent resale transactions in the area, where four-room flats were transacted at between $275,000 and $287,000.

    Translation:

    Market rate “subsidy” in action.

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