The nature of HDB may need to change

In the past, the government may have needed to step in to be in the business of construction of homes.

It may be time to reform the HDB programme given our depth in property developers.

One possibility is that HDB gradually back away from constructing anything but truly housing the less well off (1 to 3 room flats). For the rest of us, leave it to the private construction industry. The market subsidies that the government says they give to citizens should be translated into outright cash gifts (or deposits into CPF for housing use) for Singaporeans to purchase housing from private developers. Government land sales will be direct to developers at market price - clearly preserving the benefit of such sales for all Singaporeans (as what the government now claims with the land sales to HDB). Make it truly transparent and let private industry compete for our business. Have the government get out of most of the housing business.

Interesting idea...

Govt already did experimented with private developers building our HDB flats - The result is what we got from Tampines. We also have the executive condos as benchmark.

We can also compare what HK and China private developers have done over there. China is not meeting it's "affordable" housing targets as the local government and private developers are not keen to develop "basic housing" - no much profit incentive for them.... In HK, the share of public housing is 50%; behind Singapore's 80%... Average middle-class Hongkongners have to buy private properties or rent.

In truth, if I am a private developer, I would prefer to focus on the higher value added projects. Building an "upmarket" 35 m2 studio can make more money than a "basic" 2 or 3 room HDB... (you just compare the per m2 prices!) So in a way, what you are suggesting makes sense for the property developers.

But I not so sure it will be welcomed by those who wants to own a 4 to 5 room HDB flat, but not willing to pay at DBSS prices. If sell at HDB prices, I not sure how many private developers are interested.... How many private property developers are under cutting HDB prices per m2 basis today?

So your idea is similar to HK system. Public housing is only for the "poor". Households earning more than SGD 5,000 (new ruling for 3 room HDB applicants) should take of themselves - pay private property prices. Trust the free-market pricing mechanism!

Jared Seah - I belong to the "poor" since I own a 3 room HDB bought from resale market.

Somehow, I just have a feeling this would lead to even higher prices than what 4 - 5 room prices already are?

When you leave it to the free market without any controls or policies to prevent just spikes to happen it would definitely happen as everyone is motivated by not small profits but huge profits......

Also can people afford a 4 - 5 room if HDB gets out of the picture.....would their pay increase in % in same way housing prices increase.....

Free (and by implication "competitive") market usually means better products at lower prices. In a free market, you are free to shop around and multiple vendors have to compete for your business. The only question is, "would the property market be sufficiently competititive and differentiated"? Just because a company wants "fat profits" doesn't mean it will get it.

The fact that a DBSS flat in tampines can go for a high price merely means that the developer thinks someone is willing to pay for it. Remember: willing buyer, willing seller.

If private sector only goes for high margin items, then we won't be seeing $800 laptops, $2 Daiso shops, $10 watches, $5 shorts, or ... you get the idea.

Some possibilities (to ensure variety of supply, and sufficient competition)

1. Some quasi government body to enter the market as a competitor. They tender for land like others and compete for customers like the private sector on price/quality/features. We already have a suitable model for this: NTUC income and its supermarkets.

2. As I mentioned, the government to continue to build flats for those with lower expectations or income. 1-3 or even 4 room flats. Those who can't or won't (a tip of the hat to Jared) pay high prices can continue to bid for HDB flats.

3. Some of the land sales can come with restrictions on land use. For example, stipulating income ceiling of buyers of any property built there. Otherwise, developers can do with the land as they see fit and can bid the appropriate price for the land.

There are good intentions behind these suggestions, but I fear the creation of subsidized housing for the really poor would be socially and politically untenable.

I'm assuming that the earlier posters were referring to subsidized housing for a minority of the population say, the bottom 10%-20%. Practically, this is likely to create pockets of poverty in Singapore, where the bottom XX% will probably be located at less desirable areas, near industrial estates, far away from amenities and transport systems etc.

Right now, two problems come to mind. The first is the sapping of the will of the inhabitants in these pockets, and exacerbating the social and economic problems that our wide income gap has brought. Faced with adversity, people here have been known to choose bearing with their circumstances (some with unhealthy levels of resentment and/or despondence) rather than self-motivation to try and get out of their slump. This segregation might further impair their ability to break out of their circumstances compared to someone living in more well-off district, with cleaner air, less noise, better transport systems etc.. It's like compounding, of the negative kind.

Secondly, highlighting the minority this way would have the undesirable effect of casting them in the spotlight, and it might be a bit too optimistic to expect the rest of the island's inhabitants not to view them as lower class citizens. Singapore was founded on certain principles, one of which is equality, and we should not give discrimination any room to surface in the public domain.

Hello tanjm,

Good discussion! I see your point.

It's a bit like medishield. Govt can support with basic medical insurance, but for those who prefer more frills, they can opt for private enhanced shield plans. Lots of competition (some bordering on unethical) on the private shield plans from financial advisers!

I am a believer in small government. (Greece with their bloated civil service is an eye-opener for me!)

But with the recent financial crisis, I am no longer so sure on the free market "self-policing" mechanism. So I would like a small but strong and efficient Govt to regulate.

So in a sense, HDB role will be more a regulator for those who aspire for HDB 4 rooms and above in your proposal? Hmmm....

Anyway, I am not vested since I am not in the market for HDB flat. But one intersting thing. If Central 8 is 2 times over-subscribed (Singaporeans find them affordable?), why should HDB "interfere" next time?

(23-06-2011, 02:31 PM)Jared Seah Wrote: Hello tanjm,

Good discussion! I see your point.

It's a bit like medishield. Govt can support with basic medical insurance, but for those who prefer more frills, they can opt for private enhanced shield plans. Lots of competition (some bordering on unethical) on the private shield plans from financial advisers!

I am a believer in small government. (Greece with their bloated civil service is an eye-opener for me!)

But with the recent financial crisis, I am no longer so sure on the free market "self-policing" mechanism. So I would like a small but strong and efficient Govt to regulate.

So in a sense, HDB role will be more a regulator for those who aspire for HDB 4 rooms and above in your proposal? Hmmm....

Anyway, I am not vested since I am not in the market for HDB flat. But one intersting thing. If Central 8 is 2 times over-subscribed (Singaporeans find them affordable?), why should HDB "interfere" next time?

Even if it happens, it cannot happen quickly. It would be more likely to happen first gradually for the bigger flats (more and more dbss type releases) and policies and methods can be adjusted.

In a country where nearly everyone has decent housing already, and with cheap housing for those who are not particular about location/features, a high priced private housing market is surely a case of willing buyer, willing seller.

Also, another point I have not mentioned. With this method, Singapore can give every single citizen the subsidy (amount dependent only on your income level). Then they just go and choose their choice of housing.

(23-06-2011, 09:05 PM)tanjm Wrote: Also, another point I have not mentioned. With this method, Singapore can give every single citizen the subsidy (amount dependent only on your income level). Then they just go and choose their choice of housing.

Then it becomes the government transferring wealth indirectly to private developers.

heehee, 10 yrs old , my sifu and me predicted our next generation HDB flat will reduce to 60 yrs leasehold... normal leh, China only having 70 yrs LH...Batam worse only 30 yrs LH

we expected HDB to touch 1 million.
if 99 yrs = 1 mill
then 60 yrs = 600k only...cheaper right

In economic term, Hyperinflation benefit the borrowers, am i correct?.

I demand, CHEAPER, FASTER, BETTER HDB FOR SINGAPOREANS!