New beginnings at the Pinnacle

[Regulators]

Go and read the case law Yuen Chow Hin and Anr vs ERA [2009] SGHC 28 and pay close attention to the judgement and we can come back and debate about how this case law applies to HDB. The judgement can be applied to HDB simply because HDB is in a special relationship with home buyers and can be differentiated from other individual sellers and pte developers. the judgement does not just apply to middleman agents and go deeper than that if you would take the time to read it carefully.

The bone of contention is that there are two camps of thoughts, which do not see eye to eye.

I know where you are coming from.

Your view is that the HDB owes a duty to Singaporeans as buyers in general, especially the lower income group who have no choice but to purchase HDB flats; my view is that even though it owes such a duty, when it comes to the actual execution of the sale, this duty is difficult if not impossible to fulfill on an individual basis because the sale can only be made to one person, in this case Mr. Darien Loh, and he is already going to make a lot of money from it, on an individual basis.

And while from my perspective, nobody is forcing Mr. Darien Loh, as an individual, to buy that Pinnacle flat since it is "willing buyer, willing seller" and keeping the price low benefits only that individual buyer; your view is that the lower income group, as buyers in general, have no choice but to buy HDB flats, hence HDB has breached it's fiduciary duty to this group of people, as a whole, by ramming up the price of The Pinnacle so steeply.

I am sure this dilemma is also a headache to the HDB's policy decision makers.

[jlrx]

2) What justification does HDB have to raise the price of darien's flat by 66% from 2004 when economic fundamentals do not justify that?

The Paradox of darien's flat

What is darien's flat?

If darien's flat belongs to darien, then the price is justified.

If darien's flat does not belong to darien, then the price is not justified.

Before Mr. Darien Loh bought his flat, when it was just darien's flat, the price was not justified based on economic fundamentals, because it was not yet his flat. It was just a flat which HDB offered to the public, the lower income group of buyers who had no choice but to buy from HDB, and HDB had breached its fiduciary duty to this group of buyers by ramming up the price of The Pinnacle.

However, once Mr. Darien Loh has bought his flat, it becomes darien's flat, and the price is very justified. Not only Mr. Darien Loh himself, but anyone else who had bought that darien's flat, will be grinning from teeth to teeth.

It's like selling someone a sure-strike Big Sweep first prize ticket for $500.

Let's try to put the Paradox of darien's flat into one statement:

darien's flat's price is not justified until Darien purchases it and it becomes darien's flat. Just ask Darien!

[lancelot]

i think you miss his point totally ..

assuming in 2006, the 40th fl was sold at 300k ..
the 4th floor would say cost 200k ..naturally since it was a MUCH lower level ...BUT NOT SOLD ..

in 2009 ..prices all higher ..say moved up 100k ..

the 40th floor now worth 400k..4th floor SHOULD BE SOLD at 300k ..

BUT it was sold at 500k ... meaning the 4th floor moved alot more from point of first sale ..


doesnt that sound weird to you ?

On what basis did you conclude that lower floor prices moved up more than higher floor prices in the intervening period since Pinnacle was launched? Darien bought his 5th floor flat at $465k during the relaunch in 2008. The higher floors, which Darien didn't get a chance to choose, were even pricier. The highest price achieved for a 4-room Pinnacle flat at the same relaunch was $553k. In conclusion, Darien paid $465k for a 5th floor unit. Someone else paid $553k for a much higher floor.

[lancelot]

Here's what MM said last year about Pinnacle. Did you know HDB's market-based pricing isn't new but has been around in the last 30 years? And there is no question of HDB deliberately keeping Darien or later buyers in the dark about the original pricing of Pinnacle flats. The prices were announced publicly when Pinnacle was first launched in 2004.

Higher prices for Pinnacle reflect strong demand: MM
Byline: JOYCE HOOI

THE higher prices for The Pinnacle@Duxton during its second launch were a function of strong demand for the units, Minister Mentor Lee Kuan Yew said yesterday.

“Even though prices of the flats at the second launch in 2008 were higher, the demand for the flats was still very strong. The higher prices reflect the demand for the flats; they reflect the market demand,” said Mr Lee during his speech at the key handover ceremony for The Pinnacle.

The 50-storey Pinnacle was first launched in May 2004. Some of the remaining units were re-launched in September 2008. Then, 111 five-room flats were put up for sale at $545,000 to $645,800. Even then, there were 372 applicants.

When the project was first launched in 2004, in a lukewarm property market, four-room flats started at $289,200 while five-room flats were offered for up to $439,400.


Mr Lee also emphasised the importance of pricing Housing and Development Board flats differently to reflect their true values.
“We cannot price a new flat in Punggol or Tanjong Pagar the same because when they are re-sold, we know there will be a tremendous difference in price,” he said.


“From the 1980s, we moved towards a market-based system. Home ownership of a HDB flat is a store of value that can be monetised when need be.”

[proud owner]

Here's what MM said last year about Pinnacle. Did you know HDB's market-based pricing isn't new but has been around in the last 30 years? And there is no question of HDB deliberately keeping Darien or later buyers in the dark about the original pricing of Pinnacle flats. The prices were announced publicly when Pinnacle was first launched in 2004.



“From the 1980s, we moved towards a market-based system. Home ownership of a HDB flat is a store of value that can be monetised when need be.”

did you based your question ( in red) on the recent statement ( in blue) ?

or did you already know that 30 years ago ?

[jlrx]

Originally Posted by lancelot
Here's what MM said last year about Pinnacle. Did you know HDB's market-based pricing isn't new but has been around in the last 30 years? And there is no question of HDB deliberately keeping Darien or later buyers in the dark about the original pricing of Pinnacle flats. The prices were announced publicly when Pinnacle was first launched in 2004.



“From the 1980s, we moved towards a market-based system. Home ownership of a HDB flat is a store of value that can be monetised when need be.”

did you based your question ( in red) on the recent statement ( in blue) ?

or did you already know that 30 years ago ?

I thought this issue was settled 25 years ago when Lee Kuan Yew demolished Chiam See Tong in parliament?

"Face-to-face ... Mr Lee stood up a few times to challenge Mr Chiam See Tong (back to camera), who doubted if there were a true value of land in Singapore. Mr Chiam finally conceded to Mr Lee's point that there was such thing as value of land."

Dr. Tan "In Marine Parade is a lovely piece of land fronting the sea, which was built by the Housing Board. Surely, would he deny that that land could have been tendered on the free market to a private developer for building luxury condominiums for several hundreds of thousands of dollars?"

Mr Lee (from his seat) "Is it, or is it not?"

Mr Chiam "Well, If... If... If the Prime Minister says so, it must be so!"

The House roared. And Deputy Speaker Tan Soo Khoon told Mr Chiam that he had exhausted his 10 minutes.

[lancelot]

did you based your question ( in red) on the recent statement ( in blue) ?

or did you already know that 30 years ago ?

Aren't you splitting hair? I certainly didn't know as far back as 30 years but I'm aware of HDB's market based pricing for at least 10 years now. The point is: this is not something new or just introduced 2 years or so ago although some forum members make it seem like it's a new policy now that property market is hot.

But the knife cuts both ways. During the downturn from 1996 to 2003, prices of new HDB flats fell or were stagnant, making HDB flats terribly unattractive to buyers. This resulted in a huge stock of unsold flats that took HDB all of 10 years to clear.

It's the usual paradox. When home prices are falling, nobody wants to buy even though it leads to rising affordability. But when prices rise, everybody wants to fight over a flat.

[proud owner]

Aren't you splitting hair? I certainly didn't know as far back as 30 years but I'm aware of HDB's market based pricing for at least 10 years now. The point is: this is not something new or just introduced 2 years or so ago although some forum members make it seem like it's a new policy now that property market is hot.

But the knife cuts both ways. During the downturn from 1996 to 2003, prices of new HDB flats fell or were stagnant, making HDB flats terribly unattractive to buyers. This resulted in a huge stock of unsold flats that took HDB all of 10 years to clear.

It's the usual paradox. When home prices are falling, nobody wants to buy even though it leads to rising affordability. But when prices rise, everybody wants to fight over a flat.

great

i asked that question cos i have no idea ...

honestly ..alot of questions i asked re HDB in this forum is for my information .. cos i really have no idea

cos i never own a HDB

[Reporter]

The Pinnacle a Talking Point
Esther Ng
TODAY
Monday, 15 March 2010, 1048 hrs


The Pinnacle@Duxton. -- Photo: TODAY

It is now a highly-prized HDB development.

But the Pinnacle at Tanjong Pagar might not have been built if National Development Minister Mah Bow Tan had not won over his colleagues in the Cabinet.

With the prime land slated for residential development, "the question facing us was whether we should have built private property - that means tender out the land for private property - or built HDB", Mr Mah revealed on Sunday night on Talking Point, a news analysis programme on Channel NewsAsia.

Mr Mah "convinced" his fellow ministers of the need to rejuvenate the area - "that we continue to have younger people moving into that area and that HDB owners are still able to live in a relatively expensive area in downtown".

While one viewer had found it "unbelievable" that Pinnacle flats were being sold between S$500,000 and S$600,000, Mr Mah said it was a question of location and of the Housing and Development Board (HDB) catering not just to the low income.

"Our housing (income) ceiling goes all the way up to S$8,000, which is, by any standards, upper-middle income, and that's why we have to build many different varieties of flats, and the Pinnacle is one of them," said Mr Mah.

HDB will also build more executive condominiums - now about 10 per cent of flats built - if demand goes up.

But the majority of flats will still be three-, four- and five-roomers in non-mature estates. And "we make sure we don't overbuild because once you overbuild, you'll make flat prices in future go down, and that's not what we want", he said.

Public housing prices was one of the key issues in the special 45-minute show, hosted by Channel NewsAsia's chief editor Debra Soon, which also featured Member of Parliament Lim Wee Kiak (Sembawang GRC) and Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

High cash over valuation (COV), in particular, has been a bane to some home buyers, especially those with ample Central Provident Fund (CPF) money but not cash, said Dr Lim, who wondered if the valuations given by private valuers to HDB need to catch up with the market.

But COV could also act to "retard" price growth, Mr Mak told MediaCorp, "since most buyers have limited cash to pay for the COV".

"If the valuation of the flat is growing at a slower rate, the rate of growth of resale prices can decelerate," he explained after the show.

As to whether valuations are moving too slowly, Mr Mah said the time gap has been "shortened considerably" to a "matter of weeks".

A more fundamental question is whether Singaporeans want the government to control resale flat prices, said Mr Mah.

"When people talk about controlling COV ... they're talking about dampening prices, they're saying let's ban COVs," Mr Mah told Dr Lim, who asked for "a little bit more" in grants to those who buy resale. "If we control resale flat prices, we're actually moving away from the free market, which fundamentally would not be in the interest of homeowners."

On the recent measures to curb speculative demand in the resale market - increasing the Minimum Occupation Period from one to three years - Mr Mah said that it was not a "blunt instrument" as Mr Mak felt, but "very calibrated, very measured".

While some people might want the Government to do more so that prices fall faster, Mr Mah stressed that only a specific group of people who are not buying for home ownership and the long term were being targeted.

"You can call it speculation - some people can say they just want to buy short term, some people want to buy for rental yield," he said.

While the numbers in this group are small, they are starting to grow, so HDB raised the hurdle for them.

As to why HDB owners are allowed to buy private property, Mr Mah said, "This is an upgrading opportunity I think all Singaporeans would like to have. They would like to see their lifestyles improve."

According to Dr Lim, there is "grumbling on the ground" about people buying HDB flats and not living in them.

To which Mr Mah said the HDB would "take drastic action" against those who exploit the rules.

"When you hear of those cases, you let us know," he said, two days after the HDB announced it had repossessed one flat for unauthorised subletting, following a tip-off.