26 May 2005

HDB Policy Change - One Fewer Reason To Be A Singapore Citizen

Years ago, the Singapore government threw its arms wide open to welcome foreign talent into Singapore. Life has never been the same again. The debate about foreign talent in Singapore has been loud and protracted, exploring many different perspectives and angles.

One aspect of the debate is whether Singapore citizens actually enjoy any advantages which foreigners and PRs in Singapore do not. It has been persuasively argued that in fact, it is highly disadvantageous to be a Singapore citizen in Singapore. For example, all male citizens are compelled to give up 2 years of their lives for full-time military service.

On the other hand, it has been pointed out that only Singapore citizens are eligible to buy new HDB flats. This is one of the rare advantages of being a Singapore citizen. Complete foreigners are not allowed to buy any kind of HDB flat, whereas PRs are only allowed to buy resale HDB flats.

However, it seems that this little benefit which citizens enjoy is also being eroded. The age-old HDB rules, once so sacrosanct, have changed. See the Straits Times article below.

For the first time ever, 100 new HDB flats have been offered for sale to PRs.

And who knows how many more new HDB flats will be offered to PRs in the months or years ahead? Don't forget - due to its previous miscalculations and highly flawed guesstimates, the HDB currently has a big glut of new flats on its hands.

What are the implications, if the HDB continues to ease its rules and offer more new HDB flats to PRs?

Firstly, due to the larger pool of eligible buyers (PRs as well as citizens), the price of new HDB flats may rise. Therefore Singaporeans may have to pay more for new HDB flats.

Secondly, if PRs are eligible for new HDB flats, fewer of them will be interested in resale HDB flats. If you are a Singaporean HDB flat owner, this means that the market value of your present home may fall. Especially if your present home is in the same areas where the HDB is handing out new HDB flats to PRs.

Either way, Singaporeans get poorer again.

You'll notice, of course, that the Straits Times largely skirted around the points I've discussed above. It is perhaps not very politically correct for the government-controlled Straits Times to mention that the new HDB policy benefits PRs at the expense of Singapore citizens.

But now you know why you must regularly come and read my blog, Commentary Singapore. It's because I read between the lines of the Straits Times. And I tell you the news - the way it really is.

    May 26, 2005
    Singles, PRs can now buy older, unsold HDB flats
    By Tan Hui Yee

    SINGLES and permanent residents who could only purchase resale Housing Board flats, have been given the chance to buy older, unsold homes.

    They can now buy about 100 in Jurong West, Bukit Panjang and Sengkang for starters, under a scheme the Housing Board has introduced to clear some of its large stock of these units.

    Most have been vacant since they were built about four or so years ago.

    The flats, all five-room or executive units, are being put on the market as resale units after repeated attempts to find buyers for them failed.

    Other groups of property buyers also stand to benefit if they plump for one of the units, which are being marketed by HDB subsidiary EM Services.

    Those who currently own a flat they bought directly from the HDB will not have to pay a resale levy, while private property owners will be freed from having to wait 30 months after they sell their home.

    If the scheme proves successful, the HDB said it could offer more unsold units and appoint more marketing agents.

    At September last year, it reported a stock of 10,000 vacant flats.

    Some of the 100 units are going for about $50,000 less than other resale flats in the three areas.

    The Straits Times understands that one of these unrenovated, ninth-floor, five-room flats in Jurong West is being offered for about $210,000.

    Typical renovated resale homes there would cost around $260,000.

    Housing agents interviewed expressed concern that the lower prices will drag down the value of resale units in the area.

    The managing director of C&H Realty, Mr Albert Lu, pointed out: 'Anybody considering buying a five-room or executive flat there will definitely go for these units because they're so much cheaper.'

    But the HDB expects any impact on the resale market to be 'minimal' because of the small number of units involved.

    Asked how the flats' prices have been determined, it said these are based on 'market value', determined by qualified valuers.

    It stressed yesterday that its various measures to clear its stock of unsold flats, like allowing buyers to book a unit on the spot, have been 'generally effective'.

    The new scheme is to move those which have been turned down 'despite repeated sales offers'.

    Some of the units have been offered to private developers as well as Nanyang Technological University, and declined.

    Singles like Ms Jessica Lee, who is in the market for a resale four-room flat, said she is open to getting a bigger unit.

    'This new measure is good,' the personal assistant, who turns 35 in July, said.

    'A resale flat is so expensive.'

Alternative Living For Singaporeans


Ellipsis said...

that was a rather interesting dissection of today's front page news.

Gilbert Koh aka Mr Wang said...

Thank you ..... I hope your dislike-the-world mood has passed.

tausarpiah said...

"But now you know why you must regularly come and read my blog, Commentary Singapore. It's because I read between the lines of the Straits Times. And I tell you the news - the way it really is."

yeah you are cool

jeffyen said...

Actually, I find it quite interesting that a 'good advantage' of being a citizen is to be able to buy a particular type of housing. Are there other countries which have similar policies? Or is this sort of thing 'trivial' in other places?

Gilbert Koh aka Mr Wang said...

I think that most countries have some form of restriction on foreigners owning their land.

Otherwise, the Japanese, for example, might effectively take over some island of Indonesia or some town in New Zealand.

However, the point is probably more relevant in Singapore, as far as HDB flats are concerned. This is because you have to bear in mind the origins of the HDB.

It was (is) supposed to be providing low-cost housing for the people of Singapore (I mean citizens).

So the decision to sell new HDB flats to PRs is a very significant change.

Anonymous said...

you know what? Maybe we should read between the lines of what mr wang says.
10,000 units unsold. HMMMM since mr wang is such a stickler for stats lets doa bit of math.
10,000 units let's put it that each houses an average family of 3-4, so that would mean housing for 30-40,000 people. Now where does mr wang suggest we find buyers for all these flats? hmmmm?
Another thing, the price of flats though subject to the market is also closely monitored by the government that steps as needed. More flats being sold ( to whoever) would mean a smaller deficit in HDB's budget, and thus possibly cheaper rents, flats in the future.
Also the flats on offer are in mostly outlying areas, not a blanket policy. So why don't you reserve judgement before jumping to conclusions. You're pretty critical of others for doing that, why not practice what you preach.

Gilbert Koh aka Mr Wang said...

Actually. I agree with Jason. He is absolutely right. The HDB does have a big problem on its hands. 10,000 excess flats is no joke.

However, the focus of my post was not so much on the HDB's errors and miscalculations, but the implications of those errors for the ordinary Singaporean citizen.

I do agree fully with Jason that the HDB has some big financial problems to think about. It is not unexpected. When statutory boards make big errors in their planning, wouldn't you expect something to go wrong?

One other aspect of Jason's comments I found interesting. He says:

"More flats being sold ( to whoever) would mean a smaller deficit in HDB's budget, and thus possibly cheaper rents, flats in the future."

I wish this were true. But we're dealing with the HDB here. Let's draw some comparisons with other government-controlled entities in Singapore. We've all heard SBS and the like say:

"This year has been a difficult year. The economy was poor and oil prices were high. So we have no choice but to raise bus fares for the public."

But have you EVER in your life heard them say:

"This year was a good year. We raised our efficiency and productivity. Oil prices and other operating costs stayed low. Therefore we decide to REDUCE our bus fares for the public."

HAHAaAHaha. What makes you think that the HDB will be any different?

Jason points out that the new HDB flats are all in outlying areas. I don't understand his point. Surely the vast majority of new flats must be in outlying areas? There's hardly any land in mature estates places like Ang Mo Kio or Clementi to build lots of new flats.

Jason points out that the HDB policy is not a blanket policy. I suppose what he means is that right now, the HDB is offering only 100 new flats to PRs and singles. I agree that 100 new flats alone may not have significant impact on a national scale. That is why I wrote in my post:

"What are the implications, if the HDB continues to ease its rules and offer more new HDB flats to PRs?"

The first step is the critical step. We're talking policy here. If the policy is simply no to PRs, then it's no. But once the HDB says, "Yes, it's possible", then it ceases to be a matter of absolute principle. It becomes a quantitative issue. This week, it's 100 new flats. Next month it could be another 200. Next year, it could be 5000. The policy would permit it.

There are other aspects of the matter that I did not comment on earlier. For example, the impact on the rental market. If PRs can buy new HDB flats, some will cease to rent accommodation from Singaporeans. So this hurts Singaporeans, not just the HDB dwellers, but those who live in condos (which corner the market for PR tenants) or own an extra condo as an investment property.

Interesting days lie ahead.

Jayce said...

I honestly dun think that the relaxing of the rules will have such a huge impact on us singaporeans. And HBD is opening up the sales for PRs and singles, not foreigners.

The PR criteria is important as these foreigners have been staying in Singapore for a certain length of time and they do contribute to our society, so I think that it's fair to offer them some relatively cheap housing and at the same time, help to get rid of the excess flats.

it's true that it's HBD's fault that there are so many excess flats around.. but since the problem already exists, we should be happy that at least they are doing something about it.

Also, the point about resale value going down. Shldn't that be good news for Singaporean?? finally we can afford to get flats in areas that we want to live in. This goes back to the age old arguement that flat-owners should not earn money from selling their flats which they buy at a discounted rate from HDB. of course all of us wants to earn a profit, but at the expense of who?

the rental market would not come into the picture, coz forking 200k for a flat and forking out 500 bucks a month for a place to stay in is a totally different thing. The first would be a almost lifelong committment (normal housing loan stretch from 20~30 years) whilst the other would at most be a 1~2 year thing.

look on the positive side, this relaxing of rules can help entice PRs to continue to stay on in sg and even apply for citizenship. Then they will be true Singaporeans and help contribute to our society. Our country is a small country, we need an inflow of foreigners to help us grow. We do not have the critical mass to have all sorts of genius and such, the least we could do is employ them from other countries which has an ample supply of genius and entice them to stay and make Singapore their home.

Gilbert Koh aka Mr Wang said...


I get the impression that you haven't really understood what I was trying to say. Maybe you'd like to read again and we can discuss further.

Of course the move is good for PRs and for the HDB. However, as I said, I was commenting from the perspective of the ordinary Singaporean.

On rental markets - it is relevant because many PRs working in SIngapore typically rent for years (in many cases, their companies pay for all or part of their rent). If these PRs start buying homes instead, well, that is why the rental market will be affected.

It's nice to know that you support the presence of PRs in Singapore. Today's newspaper reports that 30,000 Singaporeans who were professionals, executives, managers etc have been retrenched. If they cannot pay their mortgage, well, maybe the HDB can repossess their flats and sell them to the PRs instead. I guess the Singaporeans can just shift to the void decks.