Income ceiling stays - buy resale if you can't afford private, replies HDB
http://www.straitstimes.com/ST%2BFor...ry_421336.html
August 26, 2009 Wednesday
Structural changes needed
RECENT reports suggest that property prices are now about 19 times the average annual household income.
Can an average Singapore household afford even the low- to mid-end private condominium with the current going rates of $800 to $1,200 per sq ft? Based on a typical household size of 3.5 persons and median household income of $5,500, a four- to five-room apartment of say 1,200 sq ft would cost around $960,000 to $1.44 million, or an average of $1.2 million.
That would work out to a ratio of 19 times the median annual household income. Even if we were to use $8,000 as the median monthly household income, which is the salary limit which bars one from buying an HDB flat, the ratio is about 12.5 times.
However, if we were to use only 35 per cent of one's income to service a housing mortgage, which is the recommended percentage under prudent financial planning, then the ratio becomes 52 times and 36 times respectively, assuming 100 per cent mortgage financing and zero interest. Is this sustainable?
Structural changes to our property sector are required and I have four suggestions:
# The Housing Board should abolish the $8,000 gross monthly household income ceiling so that the sandwiched class need not be forced into the private property market;
# The HDB should relax all rules governing ownership and transferability such that the public housing market operates in the same way as the private property market, but HDB continues to sell subsidised flats to first-time Singaporean applicants;
# The Inland Revenue Authority of Singapore (Iras) should introduce a property gains tax which taxes only profits in a progressive manner that will impose higher taxes for higher profits. Alternatively, the Iras can tax property gains except for owner-occupied properties; and
# The Urban Redevelopment Authority (URA) should release land for sales continuously based on projections of economic activities and the population census, so that property developers can plan with certainty about supply. The URA should also mandate developers who tender for a project to develop it within a certain period of time.
Ee Teck Siew
Income ceiling stays - buy resale if you can't afford private, replies HDB
http://www.straitstimes.com/ST%2BFor...ry_430777.html
Sep 17, 2009 Thursday
Income ceiling stays - buy resale if you can't afford private, replies HDB
WE REFER to the letter by Mr Ee Teck Siew, 'Structural changes needed' (Aug26). With regard to income ceiling, the Government is committed to ensuring that public housing remains affordable to the majority of Singaporeans. This is achieved through proper targeting of subsidies and calibrating supply to match demand.
The income ceiling ensures that the Government's limited public housing subsidies are given to those who need them more. At the current ceiling, about eight out of 10 Singaporean households qualify for housing subsidies.
Those with higher incomes can buy HDB resale flats, where there is a wide range to suit varying budgets. They need not buy private property if they cannot afford it. For example, if a household with a monthly income of $10,000 buys a five-room resale flat in a non-mature estate at the average price of $364,000, only about 15 per cent of their income is needed to service the loan.
As for owner occupation, the HDB has relaxed its policy over the years to reduce the restrictions on transactions of HDB flats in the resale market. However, HDB flats are primarily meant for owner occupation. Hence, policies are put in place to achieve this, as well as prevent abuse of housing subsidies. For example, there is a Minimum Occupation Period before owners can sell their flats. If we liberalise the HDB resale market to the same extent as private property market as suggested by Mr Ee, it would lead to speculation and price escalation.
Finally, we agree with Mr Ee that land should be made available regularly by the Government to meet the needs of our growing population and economy. The Government has been doing this via the Government Land Sales Programme, which is reviewed half-yearly, taking into consideration market conditions. Developers are also required to complete their projects within a stipulated Project Completion Period, which is typically six years for private residential sites.
Lily Chan-Wong (Mrs)
Deputy Director (Policy & Property)
for Director (Estate Administration & Property)
Housing & Development Board
Loh Teck Hee
Deputy Director, Property Research
Urban Redevelopment Authority
