Rental rates depend on supply, demand

[investor101]

Thanks for the feedback. Will dial down my tone next time. I know many people don't really care, because what happened to some of us decades ago doesn't affect most people today.

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.

[wee]

Hi investor101, happy new year to you.

I don’t even know where to begin. Somehow I seem to be judged pro-government and anti Singaporean, and have insulted Singaporeans who has served NS, paid taxes, paid for COE (I’ve insulted myself apparently, unknowingly). You seem to be greatly aggrieved by the government’s policies. I don’t mean to add to your pain. But just note that I’m commenting very narrowly on how I would look at the costing of HDB flats. I just don’t think the alternative of using actual cash outflow works better (it may make some feel better though). I’ve not commented on the entire government urban planning policy including their land acquisition laws. Other than the above, I shall refrain from commenting further as the discussion it has gotten emotional.

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!!

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?

[CityFarmer]

It seems the discussion is getting more emotional. Please be reminded that all views are welcome, but no personal attack is allowed. So far the discussion seems alright, except that it might be too emotional in some posts.

Thanks

Regards
Moderator

[kichialo]

@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?

Agree with you. I see the opportunity cost argument as just an excuse to fleece the people.

[investor101]

My apologies if I was emotional in my reply.

[godjira1]

while veering off topic a little, i did give some thought about the whole hdb/market price conundrum.

i thought an interesting mechanism would work something like this:
a) provide public housing at construction cost + admin cost + some pre-determined margin.
b) people who buy such flats can only sell it back to the hdb, maybe using the CPI as an inflator/deflator.
c) this idea is similar to a long term lease idea.
d) use fresh land in the outskirts for this scheme, else you are screwing all those who paid up big $ for expensive HDB flats in Bishan/Toa Payoh/etc.

Advantages:
a) there will be a tendency for people will be less leveraged.
b) you can make a CHOICE whether to go for public housing at a low number or private housing with its ups and downs, booms and busts.

Disadvantages:
a) loopholes will be aplenty. some gov mandarin needs to figure this part out but i don't think it's undoable.
b) 2 tier hbd market will exist, maybe it's no big deal.
c) the whole idea of "asset ownership" and "asset enhancement" is called into question. although i think this is an idea that is no longer suitable for singapore anyway.

[corydorus]

Yes I am quite disappointed with some posts that seems a little emotional over land acquisition policies.
However it appears there are unintended intention to link them to HDB apartment price which i do not think is appropriate.

I do standby that it has to be priced to market. And to bring the price down, the policies need to gear towards bringing the market price down for all property not just HDB. Using this logic, we can avoid the discussion on cost because the market has already determine the most competitive one.

However i need to reiterate that not meeting demand with supply is the main culprits in the issue today.
Is better to be oversupply than under imo. since housing is one of the single most detrimental to happiness and family life. I fail to understand why our dear policy makers can't see that.

[angtc11]

The opportunity cost argument is not very sound to me. Hdb is using the price point of 20% of the land catering for the well off to price the other 80% catering for the not so well off. Using a thought experiment, if Hdb does not exist and all the land is to be sold to private developers, will they get the same (average) price point?

[yeokiwi]

while veering off topic a little, i did give some thought about the whole hdb/market price conundrum.

i thought an interesting mechanism would work something like this:
a) provide public housing at construction cost + admin cost + some pre-determined margin.
b) people who buy such flats can only sell it back to the hdb, maybe using the CPI as an inflator/deflator.
c) this idea is similar to a long term lease idea.
d) use fresh land in the outskirts for this scheme, else you are screwing all those who paid up big $ for expensive HDB flats in Bishan/Toa Payoh/etc.

Advantages:
a) there will be a tendency for people will be less leveraged.
b) you can make a CHOICE whether to go for public housing at a low number or private housing with its ups and downs, booms and busts.

Disadvantages:
a) loopholes will be aplenty. some gov mandarin needs to figure this part out but i don't think it's undoable.
b) 2 tier hbd market will exist, maybe it's no big deal.
c) the whole idea of "asset ownership" and "asset enhancement" is called into question. although i think this is an idea that is no longer suitable for singapore anyway.

There is nothing difficult creating tiers of public housing. Before HDB flats were available for resale, all flats were sold back to HDB.
The only problem is the long term management of those who opt for the lower tier. It simply creates another gap in wealth for those that are unable to invest(which forms the majority) if Singapore is able to maintain growth at an average of 3% in the next 20 years.
Even in the current mode of public housing scheme, there are already multi-tiers available. Those who are in the lower-income brackets are getting more grants to offset the cost of the flats.

http://www.hdb.gov.sg/fi10/fi10321p.nsf/...enDocument

Personally, for a family with a monthly income of $1500 or less, paying for 3 room flat at $308 per month is rather reasonable and the loan repayment sum comes out from the CPF totally.

Maybe to some of you, $308 is a tad too much. I have no answer for that. Everyone has their own benchmark and what I think is right may not necessary be right for you.

[CityFarmer]

My apologies if I was emotional in my reply.

Once in a while, seems inevitable, especially on issue of housing, a key issue in everyone life.

It is the duty of moderator to send out gentle reminder.

Thanks also for other buddies' help in "moderating" the flow of the discussion.

Happy CNY

Regard
Moderator