Rental rates depend on supply, demand

I do not get it. You have stated it does not include cost of lands and infrastructure. Obviously anyone who buy the flat have to include those cost isn't it ? Also have we include the inflation cost and opportunity cost if they have use the money to invest to something else.

Taking money from government is like taking money from tax payers. It will just comes back as someone has to pay for it.

Many people misunderstood that is between "me" and "gov". I like to add, 'gov" is supported by taxpayers. Every time someone ask for subsidy from gov,
technically speaking, tax payers paid for them. Not saying there shouldn't be subsidy but there is true cost attached. The question is how do we distribution them more equitably.
Is not an easy answer.

However continuous pushing the price up so that the younger generation hold them higher will not be sustainable. People just can't afford to have more children.

Actually, a number of us who worked in construction years ago figured that when HDB or gahmen mentioned losses in selling us HDB flats, they were talking about opportunity cost, and not a real financial loss.

Land was acquired in the 1960s at a teeny fraction of what land would cost in the 1990s or 2000s.

Public infrastructure was build with taxpayers monies. No one is taking/looting from the government. Period. We paid for all those infrastructure with our tax monies.

None of us ever saw any form of subsidy, aka government providing us housing at a real financial loss. We figured out the cost of the flat was $100k, it was leased back to us for $200k.

Cost of land is low because we build 14-15 stories flat, which more than compensates for land used for parking facilities and public greenery.

If HDB is in the red, then another government agency is in the black, kinda like setting up a 'bad bank' to ringfence the losses.

(31-01-2014, 10:23 PM)corydorus Wrote: I do not get it. You have stated it does not include cost of lands and infrastructure. Obviously anyone who buy the flat have to include those cost isn't it ? Also have we include the inflation cost and opportunity cost if they have use the money to invest to something else.

Taking money from government is like taking money from tax payers. It will just comes back as someone has to pay for it.

Many people misunderstood that is between "me" and "gov". I like to add, 'gov" is supported by taxpayers. Every time someone ask for subsidy from gov,
technically speaking, tax payers paid for them. Not saying there shouldn't be subsidy but there is true cost attached. The question is how do we distribution them more equitably.
Is not an easy answer.

However continuous pushing the price up so that the younger generation hold them higher will not be sustainable. People just can't afford to have more children.

Do one realises, every dollar spent on roads and infrastructures, can be spent elsewhere to benefit taxpayers, like healthcare, education, security, top-up your CPF account, etc. If the money is not there, money must be raised elsewhere.

Similarly, every piece of land that the government acquired "for a teeny fraction" can fetch real dollars which can be used to benefit taxpayers. We do not have unlimited land to sell, nor do we have rich oil or natural reserves to plunder.

Given the above, why would opportunity cost not be a relevant starting point in determining the pricing and subsidy of HDB flats?

P/s: Incidentally, since this is a value investing forum, if one receives a windfall inheritance from a rich aunt, would he invest the windfall money wisely and treat it the same as any other dollar he earned through work or investing, or would he consider it "free money" and since it cost nothing, he can just spend it freely?

Let me explain the concept of the opportunity cost of land.

Lets say there is a piece of land (10,000 Sq Metre) for residential GPR of 2.8. The government has two options: 1) Put it for GLS to private developers (99 years for condo) or 2) for Public Housing

Using option 1), the government may be able to fetch $8,300 per square metre of the built up GFA . However in option 2, the government can only sell the land at $4,000 per square metre of the built up GFA to HDB flat owners. So there is a loss of $4,300 per square metre of the built up GFA . In this example, it works up to a loss of State revenue of $120,400,000 ( 10,000*2.8*4,300).

To summarise, the government could have obtained a higher revenue if it sold this 10,000 sq metre land through option 1 to private developers than 2. Thus this opportunity cost is included in the building of public housing flats.

That's provided the gov is not the one who drives the price up without appropriate rules to the private developers.
If they release too few lands without sufficient units to meet population demands within each block, up the population, and then cry they doing huge subsidy, i think the logic is flaw.

Looking at another perspectives, HDB has social responsibility. The issue is equability of the subsidy. Alternatively the gov can requests all this HDB lands be released to private developers with clause like high number of floors and units that have to be build to meet housing demands within a land area as if it were HDB housing. And let them bid it. With enough supply and optimal units available, the price will be constrained to the appropriate levels in check temporarily. Again is back to demand and supply. Increasing the population without appropriate supply fails simple Maths.

Funny! But i think it's the truth. Singapore so damn small that our neighbour call us a "A Little Dot" Because it's really a "Little Red Dot" Singaporeans are micro managed easily unlike HK. NY, Shanghai, London...etc..
Tell me which lucrative businesses are not owned by NTUC, GLCs, Too-Much-Sick, Hospitals, SMRT, Taxi, Comfort Delgro, and yes HDB... etc....

And all these companies are indirectly or directly linked to our G.
i think it's O. K. if the people's living standard are getting better and better.
You have to judge for yourself base on your own standard.

Even though most of you(ordinary wage earner) have to work till 62, 65 and beyond now.
i am not sure whether most of you want to work till 65 and beyond though.
But living in Singapore, do most of us have a choice? (May be except the Elites).
Go and ask our G, why like that?

sounds really bad on one glance...
but, it could be a blessing in disguise...
I couldn't imagine the alternative of struggling without a job at 65
and depending on others to take care of me...
at least I am able to work...healthily...

Salom



A Life not Reflected is a Life not Worth Living.

Do you realise that nobody is talking about a free lunch?

The money spent on roads and infrastructures come from taxes we pay. So why bring this up as though the government or politicians are digging into their own savings to pay for the public infrastructure?

Next, opportunity cost is not a subsidy or a real loss. A real financial loss is when you sell below cost. Period.

HDB, which I think is ringfenced as a 'bad bank', has been claiming it makes a financial loss in selling HDB flats. Their claim is based on the simple formula of sales - cost = negative number. It is that simple. Let's not try to muddy that up.

I dislike it when people bring in opportunity cost as an excuse to jack up prices, or to use it to claim they made a financial loss trading with you when they clearly haven't. If the politicians, acting on behalf of the country, feel cheated selling HDB flats to its own citizens at lower prices, please feel free to ban the sales of HDB flats altogether and reserve the land strictly for private housing and condo.

Next, with regard to the 'teeny fraction', there are some of us who were forced to sell the land against our will at prices way below market rates, simply because of the Land Acquisition Act, which gives us hardly any legal recourse but to accept that freehold is only freehold as long as the government does not eye our land. That's how you get the 'teeny fraction'.


For most Singaporeans, everything that we had, we paid for it at a profit to someone else. We did NS and reservist - talk about opportunity loss in career, income lost and participation in competitive sports or arts. We pay by far, the highest in the world for car ownership. I can accept it if the huge car taxes goes towards creating a reliable public transport service. But that didn't happen. Trains break down nowadays so frequently. Buses are often packed. We pay full price for food and gas and electricity - We don't have any oil or rice subsidies. We also don't have welfare. If you are in serious trouble, you are basically on your own. Social services usually kick in when you are at poverty level.

So, when you make hints about us plundering the government, you are seriously insulting all Singaporeans. Nobody is asking to plunder or a free lunch. Many of us lost ours lands and farms at rock bottom prices in the name of nation building. So, it is a slap in our faces when you price the acquired land at 50 times you bought it from us, and then still claim you feel cheated in the name of 'opportunity costs' because you could have sold it 100 times higher instead.

No one is talking about plundering the government or state coffers. We only ask not to be plundered!!

(01-02-2014, 11:07 AM)wee Wrote: Do one realises, every dollar spent on roads and infrastructures, can be spent elsewhere to benefit taxpayers, like healthcare, education, security, top-up your CPF account, etc. If the money is not there, money must be raised elsewhere.

Similarly, every piece of land that the government acquired "for a teeny fraction" can fetch real dollars which can be used to benefit taxpayers. We do not have unlimited land to sell, nor do we have rich oil or natural reserves to plunder.

Given the above, why would opportunity cost not be a relevant starting point in determining the pricing and subsidy of HDB flats?

P/s: Incidentally, since this is a value investing forum, if one receives a windfall inheritance from a rich aunt, would he invest the windfall money wisely and treat it the same as any other dollar he earned through work or investing, or would he consider it "free money" and since it cost nothing, he can just spend it freely?

Hah? Opportunity cost cannot be ignored. Neither should social goals be ignored. The right way is somewhere in between.

But investor101, just so you know, your strident language will find it hard to get an audience amongst those not converted to your view, ditto to those evangelistic pro-pap types.

I am a swing voter type and i can see why voter participation in some countries are so low... There are just no good choices sometimes.

@investor101 +1 for your post.

HDB should operate based on clear guideline for flat pricing. The market prices of private properties is determine by the top 25% income earners Singaporeans + foreigners.

How could we pegged the cost of HDB to market prices at a discount? It is downright wrong. I disagree with the use of opportunity cost to price HDB provide housing for the 75% of the people (from the bottom). If that is not the mandate of HDB, then what is their mandate?