WILL RAISING OF HDB INCOME CEILINGS AFFECT HOME PRICES? Part 5

WILL RAISING OF HDB INCOME CEILINGS AFFECT HOME PRICES?

Part Five

PROPERTY BUYER’s PROPOSAL

We do NOT agree with PM Lee’s statement that people are marrying later and hence allowing a high income ceiling helps them to own a house. Happy pictures or interviews (as shown in Straits Times) showing people being happy for this new policy change may be taken from a skewed sample.

Instead, we strongly recommend that PM Lee looks into why people are marrying later.

Many people we have spoken to mentioned the high cost of living (Not high standard of living) and high cost of HDB flats as major contributing factors for delays in getting married. Not only that, having to wait for 2 to 3 years for an over-priced BTO flat (in their opinion) further adds to hesitation of getting married.

How to Make HDB more affordable?

Rather than raise income ceiling for new HDB flats, the government could instead impose an income eligibility ceiling of say $12,000 (for Singaporeans) and $15,000 (for Foreigners with Singapore PR) on resale HDB.

This would immediate cut off demand from the high income earners from competing in HDB resale flat.

(Currently Resale HDB has no income ceiling - this means that the very high income earners can compete in the HDB resale market, driving up prices of resale HDB)

This would nudge PR into private properties and retain HDB resale flats for Singaporeans.

New HDB flat income ceiling should NOT be raised!!!



Although there is a price differential of 20 to 30% (According to PMO) between Resale and new HDB prices, raising Income ceiling on the new HDB flats will allow new HDB flats to rise in price, rather than for resale prices to come down.



At the same time, HDB must double up it’s speed on building cost effective HDB flats, not BTO and not DBSS. It is the Shortage of Supply that is driving up prices.

Do away with DBSS, as there is too much froth built into the price by these private developers and they will pay too much for government land (in expectation of future profits), involuntarily ending up as "tax collectors" for the Singapore Government. Since they may corner the market forming some form of a cartel, a monopoly or duopoly or tri-poly, they can effectively pass on the higher land cost to the new HDB property buyers.

Do away with BTO as supply is in the catch up phase. Price new HDB flats lower and impose more restrictions if required (to create fairness), to make it more affordable for newly weds.

When the gap of the HDB resale and New HDB prices closes, this will lead to a more orderly market. And we don't mean for HDB new prices to go up to HDB resale level to close the gap. We prefer for resale prices to come down so as to close the price gap between HDB resale and New HDB prices.

Once a balance is reached, HDB should NOT indulge in BOOM and BUST supply cycles of HDB ever again.

Because from 2006 to 2010, the supply has been badly managed. There is absolutely no excuse.

DO AWAY WITH CASH OVER VALUATION

Last but not least, REMOVE the Cash-Over-Valuation system. A Valuation that is not really a valuation makes a mockery of the valuation professionals. If you use the benchmark method, then surely the price increase should be reflected in the price and hence the valuation, and not in the "Cash over Valuation".

We see the Cash Over Valuation as a means to help HDB home owners upgrade to Private properties if they sell their HDB flats (this is a form of social engineering).

We have no objections to helping people upgrade from HDB to a more comfortable Condominium living (now that they can pay the downpayment) , the only question is,

Can their incomes afford it?

If they can, how many years of loan tenor do they need? Have they really checked through in a home loan calculator?

What will happen to these hapless buyers when they lose their jobs in a recession?