Are HDB Flats Affordable?

[yeokiwi]

That's a million dollar question, and those drawing million dollar salary should answer that. But if you want my humble view, I feel that the cost for building a flat in Pinnacle Duxton and building one in Punggol is the same, if both flats are of the same size and design. Perhaps the only difference is the land cost as obviously Duxton land is much more valuable than Punggol. However, the same flat will be able to sell at a much higher price in Duxton than Punggol not just because of the land value, but also because of the location. A private developer will therefore add a fat markup to the cost and people will still buy. HDB is taking the market value of a flat in that area, which of course is inclusive of the fat markup, and gives a "discount" as subsidy. My guess is that the selling price of a HDB flat will be more than enough to cover the cost of construction + cost of buying that piece of land. So that is why the term "subsidy" is really subjective, depending on which angle you look at it.

Anyway, going by the sell out response when Pinnacle was launched, obviously many Singaporean are able to afford it. The question of taking a 30 years loan or 3 years loan does not seem to matter.

You actually did not answer the question. Anyway,personal view is personal view. It doesn't have to be backed up with a million dollar salary.
If a view has to back up with a high salary, I think I better keep my mouth shut in front of my boss.

The path of having a resale HDB flat market has already be chosen many years ago. With a resale HDB flat market, it will become a lottery system to HDB flat applicants if the price of a flat in Pinnacle Duxton and a flat in Punggol are selling at the same price.
Given a choice of a flat in Pinnacle Duxton or Punggol at the same price, would you choose to stay in Punggol?

Besides that, it does not do justice to the rest of the Singaporeans if the HDB decides to sell the flat at Pinnacle Duxton at cost price without taking account of the land valuation. If HDB does that,it instantly creates a class of lucky owners that get to buy a $1 million flat with $200k purchase price.

There are many factors that result in current high HDB price but not all of them are controllable by HDB:
1) Lower interest rate environment. S'pore is at the mercy of global bond market. It makes no sense to keep the money in the bank and at the same time, it also lowers the monthly repayment for properties and that will encourage ppl to bid higher for their dream flats.
2) High saving rate. Due to the mandatory contribution of salary to CPF, it makes no sense to most people to keep the money in CPF without using the money to buy a property.
3) High influx of foreign workers into Singapore.
4) High HDB rental yield
5) Low flat supply in the last few years.
6) Relax of the requirements to rent out the entire HDB flat.

There may be other factors but as we can see, HDB can only deal with 4-6 and if you had read cif5000 attached link, the low number of flats being built by HDB in recent years is probably the main cause of a high HDB price.
Since it is not easy to get a new flat, it basically forces all those who want a flat to flood the resale flat market.
The immigrant policy in the last few years also results in a substantial increase in Singapore population and put pressure on the housing needs. Apparently, some ministries simply do not communicate with each other.

Lastly, the lowering of the requirements to rent out entire flat has also attracted many rich people to buy a HDB flat to rent out. Well, a 5% rental return is truely an awesome investment with a good possiblilty of flat value appreciation.

In conclusion, what can the gov do? With 8 out 10 Singaporean families having a HDB flat and many of them got their flats via resale market, it is impossible to do away with the resale market.

So, how to reduce housing price?

There were some suggestions by forummers in one of the threads in afralug:
1) 70 years lease. By reducing the lease, the land cost component will be reduced.
2) HDB 3-room 4-room, 5-room rental flats. If the peasants can't afford to buy a flat, a rental flat is still better but I doubt the government will go this path.
3) A new class of HDB flats that cannot be sold in resale market. The flat must be sold back to HDB.
4) Increase housing subsidy for lower income families.

Actually, any national policies for affordable flats must be selective. It cannot be applied to all citizens. There are many rich citizens in Singapore that are more than capable to live a decent life.
Giving them subsidies is depriving the rest of the lower income families.