Of HDB flats and Executive Condominium

Prices of property – private or public has continued to increase despite various measures implemented by the government.. The people from Redas have been making a lot of noise about the government’s curb on property. They are warning of dire consequences should the government increases the curbs. What dire consequences? And to whom? Redas warned that quote “decline in property prices might lead to “undesirable consequences” as 90 of Singaporean households are homeowners”. Really? How?

I am a HDB flat owner. As far as I am concerned, it does not matter what my unit will fetch. So what if its goes up to a $1m. Can I cash in on it, sell it and buy a similar size unit for less and keep the profits? Can I go to the bank and take out a loan on the value of the property? The truth is unless I am prepared to downgrade, whatever value my property appreciate to is of no use to me. What if it goes down then? Obviously if I sell it, I may loose some money but if I stay put, does it really matter? Will the banks call upon me to top up the loan? I really doubt so. So I don’t think there are any undesirable consequences of a slight decline in property prices. If anything, the only undesirable consequences will be the bottom line of the developers who have been bidding sky high prices for the land and trying to squeeze blood from the buyers. What with the penthouse and million dollar price tag for an Executive Condominium? 

Me think the government should continue to implement more measures to curb property prices. Maybe first start with the Executive Condominium scheme. Last I checked, EC are for the sandwich class – the people who earns not more than $12,000.00 and cannot afford private property and do not qualify for HDB subsidised housing. But if developers are building million dollar EC and people are snapping them up then maybe these people surely they don’t belong to the sandwich class? I say for a start - scrap the EC scheme. Why should the government allow developers to buy land on the cheap and sell them high? Next remove the subsidy for EC since there appear to be no more price disparity between the EC and the low end condominium. 

And while we are on the subject of measures, I think the government is not doing enough to curb the rising prices. I for one could like to see more restrictions on the rental of HDB market. One of the reasons for the increase in HDB prices is that somehow despite the rules, many HDB owners are renting out their flats and staying in private property. This is something I don’t understand. HDB should not allow HDB flats to be used for passive income. It should be solely for the owner’s own occupation unless there is a really valid reason like overseas posting. If a person can afford both HDB and private property, then the person must stay in the HDB flat and rent out the private property and pay higher rated tax on it. Blocking this avenue of income should hopefully ease the pressure of some HDB units which are perceived to be favoured by cash rich PR for rental income.

Speaking of rental, the IRAS has announced that property tax for HDB flats will increase this year because rental value for them has increased. What! Again I am dumbstruck! According to HDB, in the third quarter of 2012, about 43000 approvals were granted for sub-letting and it is based on these data that the so called market value has been revised. That is like how many % of the total stock of HDB flats? Again according to information, there are currently about 900,000 units of HDB flats not counting those under construction. That makes it errrr 4.7% of flats rented out. Then how can the minority’s actions affects the majority’s pockets? Granted that the government is going to give a subsidy equivalent to the increase in tax to cover the increases. But why go through this charade in the first place? 

And while we are still on the subject of rental, HDB has about 45000 rental flats available for direct rentals to needy and those in transit. This is not enough to meet the demand and there is a 6 months waiting list. So why the hell is HDB renting out its flats to corporation to house their foreign workers? Like the SBS bus drivers. Something is wrong somewhere if the need of our citizens are not given priority over foreign employees of local corporations. Surely these companies can afford to build their own dormitories for these workers instead of competing with our needy for them. I can’t imagine the plight of these families who have to share a small apartment with strangers while foreigners sleep soundly on their own double decker bed!

Minister Khaw – can you do something about these ridiculous affairs?