Squeezed even harder

[mr funny]

http://www.straitstimes.com/ST%2BFor...ry_419808.html

Aug 22, 2009

HIGH HDB PRICES

Squeezed even harder


THE HDB resale price index has surged relentlessly since 2007. Since the first quarter of 2007, the index has increased 35.3 per cent and is now at a record high, even though the economy is still recovering from downturn.

This is an anomaly the Government should examine.

The recent Punggol Residences launch by HDB, which drew seven applications for every unit on sale, is another case to show the Government needs to increase supply to prevent housing prices escalating further.

While there is the additional housing grant to help the lower-income group, I urge the Government not to overlook the sandwich class group - those who are not eligible for subsidised public housing, yet cannot afford private housing. The escalation of mass market property prices has made the dream of owning a private property even more distant.

I urge the Government to reconsider the income ceiling of $8,000 as a criterion to be eligible for the Central Provident Fund (CPF) housing grant, which has been in place since 1994. Since 1994, the CPF Ordinary Account contribution rate has decreased from 30 per cent to 23 per cent and the HDB resale housing index has almost doubled from 75.5 to 140.2.

The supply of executive condominiums has also come to a halt. For those who aspire to condo living, Design, Build and Sell Scheme units launched by private developers range in prices from $550,000 to $720,000. Given the income ceiling of $8,000, couples who buy such flats must take huge loans which may not be proportionate to their income.

I urge the Government to look into the following to help the sandwich class:

# Raise the income ceiling of $8,000 to take into account the almost doubling of housing prices, as well as general inflation;

# Increase the supply of executive condominiums;

# Increase the supply of new public housing so unsuccessful applicants for new HDB flats will not put additional upward pressure on the resale housing market; and

# Implement anti-speculation measures to cool down private property prices.

Given that the HDB resale index may be a lagging indicator since resale transactions entered by buyer and seller may take up to three months before HDB approves the resale application, the housing price index is even higher than it appears. It is already common in the resale market for sellers to ask cash over valuation ranging from $15,000 to $30,000.

The Government is encouraging families to procreate, but imagine what future generations will have to fork out to own a place that they call home.

Chew Kim Cheer

[august]

Chew should ask HDB to open their books to reveal how much HDB flats really cost.

[mr funny]

http://www.straitstimes.com/ST%2BFor...ry_423412.html

August 31, 2009 Monday

How HDB keeps it affordable


WE REFER to the letters, 'High HDB prices: Squeezed even harder' and 'Two shortcomings: Public housing too correlated to private market, and HDB has not regulated supply' (both Aug 22); and 'Flat hunting: Why was cash over valuation ever introduced?' (Aug 20).

# Cash over valuation: Resale flat prices are the result of negotiations between willing buyers and sellers. Cash over valuation (COV) arises when buyers are willing to pay more than the market value of the flat, as determined by professional valuers.

However, for financial prudence, HDB and the banks will provide a loan of only up to 90 per cent of the market valuation. Therefore, if a buyer is willing to pay more than the valuation, the excess will need to be paid in cash, thus the term cash over valuation.

COV is not determined nor imposed by the Government. However, we can expect a flat seller to ask for as high a price as possible. On their part, buyers should first arm themselves with relevant information before negotiating with flat sellers.

To help buyers and sellers make informed decisions, HDB provides information on recently transacted resale prices and COV on its website. In July this year, 31 per cent of resale transactions were conducted with no COV. The median COV level was $7,000. Given the wide range of flats in the resale market, flat buyers should buy a flat they can afford.

# Supply of new flats: Besides resale flats, new flats form another part of the housing supply to meet demand. In response to rising demand, HDB has steadily increased the supply of new flats. From just 2,400 new flats in 2006, in the first half of this year alone, 4,300 new flats were offered. Given the continuing strong demand, HDB will increase the new flat supply under the Build-To-Order (BTO) system this year to at least 8,000 units.

# Affordability: HDB aims to make public housing affordable for eligible first-time households. These households are generously subsidised for their purchase of new or resale flats. On average, first-time households used 21 per cent and 25 per cent of their monthly income to service their loans on new and resale HDB flats respectively in non-mature estates. These figures are well below the international affordability benchmark of 30 per cent.

The monthly household income ceiling of $8,000 allows a vast majority of Singaporean households - about 80 per cent - to qualify for subsidised housing. Households whose income exceeds this ceiling can buy resale flats, where there is a wide range of supply to suit varying budgets.

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, it would need only about 15 per cent of its income to service its loan.

Ignatius Lourdesamy

Deputy Director (Marketing & Projects)

Housing & Development Board

[mr funny]

http://www.straitstimes.com/ST%2BFor...ry_423282.html

August 31, 2009 Monday

Draw up guidelines to determine COV for resale flats


CASH over valuation (COV) for a Housing Board resale flat may indicate demand for the property, but property agents' commission is also based on COV plus the house valuation. This means the higher the COV, the higher the agent's commission.

COV cannot be paid from an individual's Central Provident Fund account. If a buyer cannot raise enough cash to pay the COV, he is out of the bid.

There are no official guidelines to determine the amount of COV - it is totally dependent on market demand.

There are always plenty of willing buyers waiting in line if a buyer wishes to haggle over the COV.

The Government should step in and introduce guidelines on COV. Perhaps basing commission paid to property agents only on house valuation would be a good start.

Loh Ching Tiam

[dfstan]

Chew should ask HDB to open their books to reveal how much HDB flats really cost.

i felt chew is full of sh1te and wasting straits times article page.

[mr funny]

http://www.straitstimes.com/ST%2BFor...ry_425607.html

Sep 5, 2009

AFFORDABILITY OF HOMES

Do the criteria reflect reality?


I REFER to Monday's letter by the Housing Board, 'How HDB keeps it affordable'.

The HDB states that flat prices are determined by willing buyers and willing sellers. In land-scarce Singapore, the notion of 'willing buyer, willing seller' has little practical meaning.

Suppose I want to buy a flat in Ang Mo Kio to live close to my parents but the HDB is not building any new flats there. I have no choice but to buy from Ang Mo Kio resellers.

Suppose too, I need to set up a family now and cannot wait for the build-to- order scheme to kick in, what choice do I have but to buy from the resale market?

So 'willing buyer, willing seller' is not a realistic picture of what is happening now.

If there are sufficient new flats available for people to choose from, where and when they like, who would be 'willing' to buy from the resale market?

Thus, the notion of 'willing' buyers stems from the reality that the HDB is not building enough new flats where Singaporeans want them.

The reply also stated that the market value of flats is determined by professional valuers. Is this realistic either?

Valuers base their valuations on recent transactions, which is as good as being determined by 'willing buyer, willing seller', with all its associated problems I have described.

In explaining how it arrives at its criteria for supplying new flats, it would be helpful if the HDB could detail how it takes into account the number of immigrants Singapore has admitted, as well as the number of marriages over the period in question.

The inclusion of these statistics will help answer the question of whether supply can meet demand, which Monday's reply did not address.

The HDB uses the international affordability benchmark to rationalise affordability and concludes that homes are priced reasonably.

The international poverty line is commonly defined as US$1 (S$1.44) per day. If Singaporeans earned US$10 per day, would we consider Singaporeans to be well above poverty levels?

Clearly, US$10 per day is extreme poverty by Singapore standards, yet it is well above the international poverty line.

A more realistic benchmark would be to use international city rankings of house price-to-income ratio which is an affordability measure similar to the one used by the HDB.

As the accompanying table illustrates, Singapore has one of the priciest property markets in the world, relative to income - even dearer than Tokyo, Toronto and New York.

Ng Kok Lim

[mr funny]

http://www.straitstimes.com/ST%2BFor...ry_425608.html

Sep 5, 2009 Saturday

Solve key concern - soaring resale prices


I REFER to Monday's letter, 'How HDB keeps it affordable', and wish to highlight the following:

# While cash over valuation (COV) is not determined by the Government, rising COV is an indicator that housing demand exceeds supply. Buyers of resale HDB flats are now squeezed by high COV and asking prices demanded by sellers.

# Information on recently transacted resale prices on the HDB website may have little relevance since they were concluded three to four months ago. Given the current market frenzy, it is a challenge for today's buyers to find flats that can still be transacted at prices which prevailed three months earlier.

HDB pointed out that first-time buyers used 21 per cent to 25 per cent of their monthly household income to service their loans on new and resale flats respectively in non-mature estates, which is well below the international affordability benchmark of 30 per cent. For a more meaningful comparison, average figures based on mature and non-mature estates should be used, which is more reflective of general affordability.

More important, I urge HDB to address the ultimate concern of current HDB flat buyers - the soaring resale prices.

Chew Kim Cheer

[mr funny]

http://www.straitstimes.com/ST%2BFor...ry_425617.html

Sep 5, 2009 Saturday

Ban it?

'The issue here is cash over valuation.'

MR JASON ZHENG: 'As a young couple, my fiancee and I cannot compete against buyers with access to cash, which is what most sellers ask for now. I have failed in my attempts at half-yearly sales, so the only option is resale flats. The issue here is cash over valuation (COV). The HDB discourages it because of financial prudence, and refuses loans to cover it. Yet most sellers demand substantial COV. Given the situation, why not ban COV? Alternatively, let HDB loans cover COV.'

Undersupply

'Should the HDB build 19,000 flats a year instead?'

MR STEVEN YEO: 'How did the HDB determine that building 8,000 new flats a year is sufficient to meet demand? There are seven applicants for each new flat. For example, there were about 24,000 marriages last year, which means only one-third of newlyweds will get a new flat. The other 16,000 must buy resale or private property. If 80 per cent of the population qualify for subsidised flats, should the HDB build 19,000 flats a year instead?'

Three-room flat

'What percentage of income will a single Singaporean earning $2,500 a month pay?'

MR LOO FOOK KAY: 'The HDB said a household with a monthly income of $10,000 uses only 15 per cent to service the loan on a $364,000 HDB flat. As the cheapest three-room flat costs about $200,000, what percentage of income will a single Singaporean earning $2,500 a month pay to service his loan?'

Missing factors

'Home affordability fails to factor in opportunity costs.'

MR HOON TZE MING: 'Home affordability, when computed based on a cost-to-income ratio, fails to factor in opportunity costs associated with access to employment, quality of public schools and environmental conditions. For example, a flat in Woodlands may be 'affordable' according to traditional calculation, but opportunity costs like transport cost and travel time are not factored in. The HDB might consider adopting the Massachusetts Institute of Technology Centre for Real Estate's Housing Affordability Index, which takes these factors into account.'

[dunatos]

http://www.straitstimes.com/ST%2BFor...ry_425608.html

Sep 5, 2009 Saturday

Solve key concern - soaring resale prices


I REFER to Monday's letter, 'How HDB keeps it affordable', and wish to highlight the following:

# While cash over valuation (COV) is not determined by the Government, rising COV is an indicator that housing demand exceeds supply. Buyers of resale HDB flats are now squeezed by high COV and asking prices demanded by sellers.

# Information on recently transacted resale prices on the HDB website may have little relevance since they were concluded three to four months ago. Given the current market frenzy, it is a challenge for today's buyers to find flats that can still be transacted at prices which prevailed three months earlier.

HDB pointed out that first-time buyers used 21 per cent to 25 per cent of their monthly household income to service their loans on new and resale flats respectively in non-mature estates, which is well below the international affordability benchmark of 30 per cent. For a more meaningful comparison, average figures based on mature and non-mature estates should be used, which is more reflective of general affordability.

More important, I urge HDB to address the ultimate concern of current HDB flat buyers - the soaring resale prices.

Chew Kim Cheer

I wonder if he/she thought through about his/her parent's flat resale value as well. There are still more HDB owners than HDB buyers.
If his/her parents are already living in private housing, then he/she is a little narrow minded.