HDB Didn't Build Enuff Flats

This is the email I sent to TODAY newspaper on Sunday 3 Jan 2010 in response to reading about an article on how a HDB is an asset with an interview with Minister for National Development Mah Bow Tan.

I am writing to give my opinion of the article "Asset that keeps growing" published on 30 December 2009.

From 2001-05 the HDB built over 50,000 dwelling units, an average of 10,000 units a year. However from 2006-08, only an average of 3,650 were constructed annually, a reduction of 63%.

Given that the number of marriages over the same period remained steady at about 24,000 annually, additional factors, like the influx of PRs and greater investment in property after the financial market crash, added on to the normal demand for HDB flats. It was inevitable and forseeable that the HDB's reduced flat supply from 2006 onwards has bearing on the housing market situation today. A simple case of supply and demand. In fact, the situation was obvious much earlier with price increases causing a steep uptrend in the Price Index of HDB Flats from since the start of 2007.

In addition to the BTO sales planned for 2010, perhaps the HDB should look into two current policies that frustrate some flat buyers.

Firstly, some cash-over-valuation (COV) demands for flats in the resale market have gone into ridiculous excesses. One housing agent I spoke to was asking for $90,000 over the valuation price of $460,000 for a 5-room flat. I am not sure how this expectation that buyers have lots of cash sitting around came about. This situation is putting buyers who do not prefer to wait for BTO units to be completed in 3-4 years' time under great financial pressure. The Balance of Flats sale conducted in October 2009 (where buyers do not need to fork out any COV) was 10 times oversubscribed - an indication that buyers do not wish to be subject to the whims and fancies of property agents and their sales commissions. Perhaps the HDB should introduce guidelines or even curbs to limit cash-over-valuation requirements.

Secondly, I feel that the sale of flats to singles from the age of 35 onwards is no longer relevant. If the intention behind this policy was to encourage marriage and subsequently an increase in the birth rate, it is clear that it has not worked. The number of marriages has not greatly increased and our total fertility rate remains well below replacement levels. Since most Singaporeans enter the workforce by age 25, extending the responsibilities of adulthood should include finding a financially-viable roof over their heads. It is also quite plausible that that singles with a home will pursue marriage and start a family more readily. The HDB can extend the concept of 'growing an asset', an important life lesson, to young adults here by allowing them to purchase flats perhaps after 5 years of steady contributions to their CPF.

Gurmit Singh Kullar

References
- HDB construction stats from the HDB Annual Report 2008-09 at http://www.hdb.gov.sg/fi10/fi10221p.nsf/0/d4a0f107613b79944825766200236310/$FILE/index.html
- Price Index of HDB Flats seen at http://www.hdb.gov.sg/fi10/fi10201p.nsf/WPDis/Buying%20A%20Resale%20FlatStatistics%20-%20Resale%20Price%20Index?OpenDocument
- Marriage stats from http://www.singstat.gov.sg/stats/themes/people/marriages.pdf
- Population growth rates calculated from data at http://www.singstat.gov.sg/stats/themes/people/hist/popn.html
- Fertility rates data from http://www.nps.gov.sg/files/news/Population%20in%20Brief%202009.pdf
- Workforce data from http://www.mom.gov.sg/publish/etc/medialib/mom_library/mrsd/ms.Par.95462.File.tmp/mrsd_singapore_workforce_2008.pdf (Slide 8)