Minister of State for Manpower and National Development Tan Chuan-Jin has responded to a buzzy blog post on the increasing prices of HDB flats.
On Monday, blogger Gintai, self-described
as a Chinese Singaporean working as an SMRT train officer and living in the east, wrote a post titled “Is this my Singapore?My home and country?”
The first part of the post dealt with how the blogger learned that a colleague bought a brand new 4S (four-room simplified) HDB flat on the 16th floor of 221A Bedok Central a year and a half ago, and how another colleague couldn’t afford a same-sized flat at the same block recently because the price had gone up by $68,000.
“You will surely feel cheated and bitter over this $436,000 4S flat purchased as a first timer direct from the HDB,” Gintai said. “Will you support this government since you are so bitter and sore? I doubt so.”
The post had 305 comments as of Thursday early evening.
In a Facebook note posted at 3:48am on Thursday, Tan explained how flats are priced in Singapore.
Read Tan’s response in full below:
Providing a House...Building a Home
A number of you have forwarded to me a blog post written by netizen “Gintai”. He shares about his conversation on housing issues with two colleagues, before moving on to talk about the perceived inequities between locals and PRs in Singapore. He also asserts that he is not proud to be a Singaporean.
I will address the issue of PRs in another note. Let me just talk about the housing situation in Singapore. Is it really so dire? Is the HDB flat really so out of reach?
For a start, we need to understand why the flat pricing system works the way it does. Gintai seems unhappy that similar sized flats are not priced the same. When determining the prices of flats offered, HDB factors in the costs of building the flat as well as the prevailing market conditions at the time of the offer and the individual attributes of the flats. Therefore, a flat on the 16th floor and one on the 2nd floor would be priced differently. The price of a similar-sized flat in Jurong West and in Queenstown would differ. A flat near key amenities would be valued more than one with less.
Is there really a difference in value? Many Singaporeans who have sold their flats know that these different values would surface immediately in terms of the price their different flats can command. Should we therefore price them all the same? If they were, everyone would just wait for a flat on the top floors in a matured estate. And some would make huge capital gains compared to others when they sell.
Gintai's colleague, “Anak Abu”, lamented about his flat loan instalment payments. While I don't know Abu's full details, as a first time HDB buyer, Abu's flat's price would include subsidies and he would be eligible for the Additional CPF Housing Grant. These would reduce the subsidised selling price considerably. But even with the grant, it’s striking to note that on a stated income of around $1,850, Anak Abu chose to buy a four room flat (not a smaller one), at a Sale of Balance Flat exercise (and not a mainstream BTO flat), in a mature estate (as opposed to a non-nature estate), near the top floor (rather than lower down), and next to the town centre (and not further away).
This is a common scenario. At my Meet-the-People Session, my residents come to see me to appeal for a bigger flat at choice locations. I understand the desire to upgrade and to live well, but there is also a need to take a hard look at personal finances as well, and to make the right choices. It would seem that Anak Abu had over-stretched himself here. For him, there will be less to set aside for other needs. It’s a decision each family has to make.
In general, even as we allow the use of CPF funds to pay for the monthly instalment for a flat, the money in the Special Account and the Medisave Accounts is not touched. Criteria for Minimum Sum is also factored in to help ensure that some money is set aside for retirement. Retirement sufficiency would be determined by an individual's future income stream and his outlay on his home.
Eventually, when Anak Abu moves on in years, and when his children are older, he would own his Bedok flat. If he needs to supplement his retirement needs, he could rent out a room or move to a studio flat. If Anak Abu had bought a more affordable flat, he would have had more for retirement. If he had chosen not to buy the flat at all, he would have rented and would have more money in his CPF; but he would have had more cash outlay over the years and he would not have owned his own home.
Gintai also shared about another colleague, "Zaidi Blond" who was eyeing a similar unit in the same Bedok block as Anak Abu, but was now facing a selling price that is supposedly $68,000 more than what it cost a year and a half ago. He asserts that Singaporeans would feel “cheated and bitter”.
Why the difference? Over the course of one and a half years, the value of the flat may have shifted. HDB needs to price the flats with reference to their prevailing market value. The same rationale, as explained earlier, applies. Due to differing economic circumstances, there have been instances where flat prices dropped. When that happened, the ones who were angry were those that had bought earlier. It is human nature for all of us to want to get the best deal with the least risks.
Subsidies and grants remain in place for Singaporeans in order to keep a range of different flat types affordable for Singaporeans at different income levels.
Do buy within your means.
I know that these are emotive issues. But HDB does indeed cater to the vast majority of Singaporeans, from those in rental flats, to those who are comfortably in the middle classes. 80% of Singaporeans live in HDB flats. 90% of them own their own flats.
Would there be affordable and available options out there for you? The answer is yes. Our commitment is to ensure that for first time buyers, you will find a range of different sized flats in non-matured estates available, with subsidies, priced affordably for your respective income levels.
We will help provide you a house so that you can create a home.