New HDB flats to become cheaper

[specuvestor]

I guess you are as old as I am to remember this debate

Actually the variable cost of building is pretty straight forward around $100-150k per unit maybe more with inflation.

The trick is how you price the land and the subsidy. And how you account for the discount to market price. That is why Khaw recently unpeg the pricing with the market price which is the right thing to do IMHO, and a stupid idea in the first place.

And we still don't know what is the breakdown in cost of building a HDB flat...

[cfa]

I guess you are as old as I am to remember this debate

Actually the variable cost of building is pretty straight forward around $100-150k per unit maybe more with inflation.

The trick is how you price the land and the subsidy. And how you account for the discount to market price. That is why Khaw recently unpeg the pricing with the market price which is the right thing to do IMHO, and a stupid idea in the first place.

And we still don't know what is the breakdown in cost of building a HDB flat...

HDB lost billions every year

[corydorus]

If we are to include surrounding land mass of HDB, the actually cost is huge in market term whereas for private condo, buyer pays for it. However to the gov this is simply "free". Doesn't truly hit the budget since technically all land not owned belongs to them. They can make a place where bird don't lay egg into key central area. And that area land price will shoot.

As HDB is social project. i would expect certain level of subsidy. And when is one of the most important cost and impact to most people life. this makes Singapore wonderful isn't it ? So is ok to lose Billions to build it. Is not like Singapore cannot afford it. Hey civil servants can get average 4-5 months of bonus annually. Sorry for picking this folks. Just jealous me.

[pianist]

i bought mine many moons ago without any subsidy..
so how can it be considered a social project?

[CY09]

How is a HDB flat consider a subsidy?

Land Cost sold to HDB (determined by market value) + Building & Architectural cost - Selling Price = Subsidy.

The devil is the pricing of the cost of land sold to HDB by the govt. IMO this price is determined by market comparable and the closest comparable are land sold for EC developments. Unfortunately pegging land cost to the price EC developers pay is not really correct. This is because the EC market targets mainly household with monthly income of 8k to about 12k. While HDB BTO purchasers are mainly households whose income range from 2.5k to 10K.

It is an entirely different market and I am surprised I have not heard strong arguments on this point for how land are priced and sold to HDB. In fact, I will argue the subsidy given to BTO flat buyers is way much lower than stated in reports because private developers will not pay in the region of $300 psf ppr if their residential project is to target the income group of 2.5k to 10k households. This is because such households are not able to afford 700 to 800k 4 rm flats due to loan regulatory restrictions and of course their own income. I have done a quick analysis and developers are likely to bid about $130 psf for such lands at 15%-20% margin because the max they can sell to these households is a price range of 500-550k (Assumptions made: 30% Installment to income over a 30 year loan)

[smallcaps]

I think the real subsidy will only be known if stop building hdb flats entirely...

[cfa]

Many man in the street tend to be confused by the 99 years lease with private projects.
HDB lease only for the individual premises of the unit , whereas private projects include the land area which belong to the project under MCST.

[corydorus]

Exactly the devil is in the detail ! Private property includes land area outside living spaces. A good example is North Park. Only 1/3 area is unit space. 2/3 is facilities like garden, swimming pool, tennis court, carpark .... many people confuse why they pay so much for unit area of private 3BR (3 room + living) when they can get HDB 4 room at less than half price. Is not the same ...

Secondly, when Gov sell lands to HDB, and surrounding area is in development already. Obviously landprice shoots. That land they can use for other purpose ex. more condo. But they choose to sell to HDB. So that's the market price. Is real price not fake. if they go ask developer to bid them, they will get that price. So that' the subsidy.

So if you read my response, i am neither against or for on policies on this.

People who buy private, they are not over paying. People who buy HDB, they are being subsidised.

[CCUV]

Exactly the devil is in the detail ! Private property includes land area outside living spaces. A good example is North Park. Only 1/3 area is unit space. 2/3 is facilities like garden, swimming pool, tennis court, carpark .... many people confuse why they pay so much for unit area of private 3BR (3 room + living) when they can get HDB 4 room at less than half price. Is not the same ...

Secondly, when Gov sell lands to HDB, and surrounding area is in development already. Obviously landprice shoots. That land they can use for other purpose ex. more condo. But they choose to sell to HDB. So that's the market price. Is real price not fake. if they go ask developer to bid them, they will get that price. So that' the subsidy.

So if you read my response, i am neither against or for on policies on this.

People who buy private, they are not over paying. People who buy HDB, they are being subsidised.

I will like to pen a 2c worth,on all front left right centre,north park is perfectly priced with very little margin of error. At 1800 psf one can buy some old apartment in orchard with freehold status,maybe I am old,the way how people value things is something I can't comprehend. if money is not an issue,will you rather pay 1300psf for yishun leasehold or 1800psf for a orchard road apartment with freehold status. Even if we compare apple to apple 1300-1400 psf buy you some part of east coast with freehold status

[corydorus]

Not sure we are deviating from topic. Here's the link i found. Maybe it still boils down to $ as a concern.

http://www.stproperty.sg/articles-proper...-compare/7