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Thread: HDBs more UNnaffordable than private homes

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    Thumbs up HDBs more UNnaffordable than private homes

    HDBs more unaffordable than private homes

    Mar 22, 2012 - PropertyGuru.com.sg
    By Romesh Navaratnarajah

    Housing and Development Board (HDB) resale homes in Singapore are more unaffordable than private homes, PropertyGuru can exclusively reveal. They are also classed as being ‘severely unaffordable’.

    Using a globally-recognised formula where the Median Multiple (median house price divided by the annual median household income) is used to calculate housing affordability, HDB resale flats are also classed as being severely unaffordable using a scale which was most recently published in the 8th Annual Demographia International Housing Affordability Survey.

    Housing affordability is evaluated based on the quotient deduced from the given formula, where a result of 3.0 and below would imply that houses are affordable, 3.1 to 4.0 (moderately unaffordable), 4.1 to 5.0 (seriously unaffordable), and 5.1 and over (severely unaffordable).

    Given that the international report centred on the mid-end market, PropertyGuru focused its attention on private apartments and condominiums within the Outside Central Region (OCR) and Rest of Central Region (RCR), as these areas are home to most of the mid- to high-end properties.

    The median multiple is based on calculations using the median household income from Singstat’s Key Household Characteristics and Household Income Trends, 2011, and the median price for all types of resale HDBs, ranging from one- to five-room and executive flats, according to data from the HDB and PropertyGuru.

    The median multiple for private properties is 6.03 which means they are ‘severely unaffordable’ but for HDB resale flats, the result is arguably shocking. The median multiple was found to be at a high of around 6.7, which lies within the ‘severely unaffordable’ bracket – and even more unaffordable than private properties.

    While private properties and HDB resale flats hit the ‘severely unaffordable’ mark, it has to be noted that the monthly household income for HDB dwellers is considerably lower than that of private homeowners.

    Tejaswi Chunduri, Regional Analyst at PropertyGuru, offered her insights on the findings. She said: “The data is reflective of the housing affordability issues the country has been facing the past few years. In the last five years the median household income in Singapore has increased by 42 percent whereas HDB resale prices have shot up by 84 percent according to the HDB price index. Private property has risen 58 percent when we look at the private property price index.”

    She added: “This is a great contradiction to HDB's role which is to offer affordable housing to the masses,” however she was quick to add that homes in Singapore are more affordable than Hong Kong which earned a rating of 12.6.

    Despite the high prices, private home sales in Singapore continue to skyrocket, rising 29 percent in February from the previous month. “It is yet to be seen if the multiple rounds of cooling measures and other policies introduced by the government will prove effective in making home prices more affordable,” added Chunduri.

    The HDB was contacted for an official statement but were unable to issue any comment prior to publication.

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    I have to admit the resale prices are kind of absurb. But the report should use BTO prices instead. The report seems very flawed to use resale prices when > 90% of Singaporeans buy BTO. Again, self interest I guess.

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    Quote Originally Posted by thomastansb
    I have to admit the resale prices are kind of absurb. But the report should use BTO prices instead. The report seems very flawed to use resale prices when > 90% of Singaporeans buy BTO. Again, self interest I guess.
    How can the report use BTO prices VS PC prices? BTO not everyone can qualify leh bro. Mostly first timers.

    If KBW dont set BTO affordable, PAP can say bye bye next GE
    Last edited by price; 22-03-12 at 15:43.

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    Willing buyers and willing sellers, so who to blame? Cm should target hdb resale. Hdb resale dun come down, how to expect pc to come down?

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    They should have a similar rating for cars. I think Singapore will be in a new category - "fxxking unaffordable."

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    Quote Originally Posted by avo7007
    They should have a similar rating for cars. I think Singapore will be in a new category - "fxxking unaffordable."
    I always say, Singapore is going to be a Rich Man's City.

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    Quote Originally Posted by Montaigne
    Willing buyers and willing sellers, so who to blame? Cm should target hdb resale. Hdb resale dun come down, how to expect pc to come down?
    With inflation and cost of building(labour & material, fee etc.) BTO price will not come down, therefore HDB resale will not come down, and PC will not come down.

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    Get Rich or Die Tryin' ...


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    Quote Originally Posted by Montaigne
    Willing buyers and willing sellers, so who to blame? Cm should target hdb resale. Hdb resale dun come down, how to expect pc to come down?
    Good point. It's like they been trying to poison the worms when they wanted to kill the birds in the first place...

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    ikan bilis is offline i'm Buaya ! Girls BEWARE !!...
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    if you buy pte condo... you pay 20% up front... remaining 20% in loan
    if you buy resale hdb... you pay 20%+about 10% COV upfront... remaining 70% in loan...

    so,
    800K pte condo,... 160K cash+cpf, 640K bank loan
    500K 5rm flat,.... 150K cash+cpf, 350K bank loan

    if can afford that monthly instalment... just get pte condo lah...

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    Default PropertyGuru report is based on incomplete data

    Earlier this week, Yahoo! Singapore showed a PropertyGuru report “HDB flats are more unaffordable than private homes”. On March 23, the Housing Development Board (HDB) issued a response to the report. The letter from HDB is published in full below.
    HDB wishes to stress that the PropertyGuru report, “HDBs more unaffordable than private homes”, is misleading, as it is based on a simplistic analysis of incomplete data. We regret that PropertyGuru was not prepared to wait for HDB's response, in order to present readers with a balanced picture.

    Cross-country comparison of data is often fraught with challenges, as countries differ greatly in their policies, state of development, and physical context. In housing, for example, the extent of our public housing programme (one of the largest in the world) and the use of CPF for housing (unique in the world) make us quite special. As a result, our rate of home ownership, at above 90 percent, is the highest globally.

    PropertyGuru used the House-Price to Income (HPI) ratio to compare Singapore with other countries and cities. But the report missed out some important details.

    First, PropertyGuru relied only on the market prices of HDB resale flats. This is not an appropriate parameter for computing the affordability of public housing, as most Singaporeans buy their new flats directly from HDB via the Build-To-Order (BTO) programme. These new flats are deliberately priced considerably lower than comparable resale flats, to ensure affordability.

    Second, PropertyGuru did not factor in the substantial housing grants received by Singaporeans when they buy their homes, either directly from HDB or even through the resale market. These grants make up a significant portion of the purchase price.

    The Government is committed to make HDB flats affordable to Singaporeans. We do this through a three-pronged strategy:

    i. By offering a wide range of new flats, with different flat types (from 2-room to 5-room flat), in different locations (including both non-mature to mature estates), to cater to the different income groups.

    ii. By pricing new HDB flats affordably, and offering various forms of housing grants to help lower income families own a home.

    iii. By offering housing loans at reasonable interest rates.

    With careful pricing and generous housing grants, all homebuyers who make prudent choices will find new HDB flats within easy reach. Households buying new flats in 2011 used an average of 24 percent of their monthly income to pay for their housing loans. This is well below the international benchmark for housing affordability of 30-35 percent. And with CPF, the majority of the household can pay their monthly instalments entirely using their CPF contribution, with zero or minimum cash outlay:

    (Chart provided by HDB)
    Notes:
    1. Selling prices are based on flats in non-mature estates offered in 2011.
    2. The median income is based on first-timer applicants in 2011 in non-mature estates.
    3. Monthly mortgage instalments computed based on 90% of the selling price, at HDB current concessionary interest rate of 2.6% over 30 years.
    4. The Additional CPF Housing Grant and Special CPF Housing Grant are used to offset the 90% maximum loan where applicable, assuming that buyers have sufficient saving for the 10% downpayment.

    At the same time, the rise in HDB resale and private property prices in recent years is not sustainable. That is why the Government has been intervening with both supply and demand measures, in order to correct the imbalance. The market has moderated considerably. For all newly-wed first-timers, their access to a new and affordable HDB flat is now largely assured. This year, HDB will focus on second-timers. As we assist second-timers in getting a new HDB flat, the impact will be felt in the HDB resale market. Meanwhile, URA will continue to push out land supply for new private property development, to match the demand. The affordability of housing in Singapore should further improve in the months ahead.

    Regards

    Housing & Development Board

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    Quote Originally Posted by price
    How can the report use BTO prices VS PC prices? BTO not everyone can qualify leh bro. Mostly first timers.

    If KBW dont set BTO affordable, PAP can say bye bye next GE
    See. HDB listened to previous poster and use the FLAWED first-timer BTO to compare. Still can call propertyguru report quack...

    The yada yada about highest home ownership in the WORLD bla bla oh puhleeze repeated how many times liao fermented liao la worst than HK smelly tofu...

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    Quote Originally Posted by ysyap
    First, PropertyGuru relied only on the market prices of HDB resale flats. This is not an appropriate parameter for computing the affordability of public housing, as most Singaporeans buy their new flats directly from HDB via the Build-To-Order (BTO) programme. These new flats are deliberately priced considerably lower than comparable resale flats, to ensure affordability.
    HDB is really talking c**k. In 2011, there were a total of 25,200 BTO flats on offer of which not all were taken up. There were 24,633 resale transactions in the same period. KBW has revealed that PRs formed less than 20% of HDB resale flat buyers. So there were a minimum of 19,706 resale flat buyers who are Singaporeans. 19,706 resale vs 25,000 BTO. Can they conclude that most Singaporeans buy BTOs when a significant 19,000++ Singaporeans bought resale last year? Ha!

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    Quote Originally Posted by fclim
    HDB is really talking c**k. In 2011, there were a total of 25,200 BTO flats on offer of which not all were taken up. There were 24,633 resale transactions in the same period. KBW has revealed that PRs formed less than 20% of HDB resale flat buyers. So there were a minimum of 19,706 resale flat buyers who are Singaporeans. 19,706 resale vs 25,000 BTO. Can they conclude that most Singaporeans buy BTOs when a significant 19,000++ Singaporeans bought resale last year? Ha!
    Exactly... HDB trying to hard to retort and yet own self not based properly on facts and well thought out answer... exactly just like their sad policy making skills.

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