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Posts Tagged ‘Khaw Boon Wan’

HDB: “affordability” and “market-based land costs” redefined”?

In Political governance, Property on 27/10/2011 at 5:51 pm

“Mr Khaw said that a typical two-room Build-To-Order flat, which has an income ceiling of S$2,000, would cost less than three years of income, factoring in the grants available. Meanwhile, larger four or five-room flats – with an income ceiling of S$10,000 – cost less than five years of income,” it was reported last Friday. (Translated into $. 2-room flats: $72,000, 5-room flats up to $600,000.  All before subsidies.)

Err who can devote 100% of monthly salary for 3- 5 years to pay for flats? More likely kanna strech payments for 30 years (Comrade Mah’s assumption). So talking of the cost of flats in terms of salaries for 3- 5 years sounds like another variation of Minister Mah’s, “No cash outlay” where he forgot to mention the more and for a longer duration money is deducted from CPF accounts, the less home owners have to retire on.

Remember Minister’s Mah rants about “reserves being raided” if the land on which HDB flats were built were not valued at “market-based land costs”? Well Minister Khaw may have redefined “market-based land costs”, without the “reserves being raided”.

The possibility that there is a new definition of “market-based land costs” was spotted and commented on by a ST journalist, Li Xueying (Good for her).In a piece on 20 October 2011, “Chance lost on clearing hows and whys of flat pricing”, she wrote, Mr Khaw spoke of how, since May, the Government had stabilised the prices of 13,000 flats in three [Build-to-Order] launches. This, even as prices in the private and resale market rose, albeit at a slowing pace … ‘We have moderated price changes such that after adjusting for differences in location, amenities and other physical attributes, the May, July and September BTO prices were roughly comparable to the prices of similar units in the April BTO launch.’

The BTO launch next month will repeat this pattern, he promised … ‘As long as construction costs do not rise dramatically, the BTO prices will stabilise.’

As long as construction costs do not rise dramatically. This raises a question.

What about the second component that the Housing Board factors in in pricing its new flats, that is, land costs?

More specifically, market-based land costs – a formula that has drawn so much angst in the past, given that it is pegged to the gyrations of the private market.

(Market-based pricing of land is done based on prices of state land located within HDB estates sold to the private sector.) …

But it is telling that Mr Khaw also spoke of how his ministry had moderated the prices of the BTO projects such that the prices of those launched last month were comparable with the prices of those launched in April, even though prices in the private market rose over the same period.

Has the market-based pricing formula been quietly tweaked behind closed doors? Or did the Government just decide to deploy an interim measure of pegging new prices to April’s levels, given the unhappiness over spiralling flat prices? …

But the speed with which the minister has done so – never mind the market – does raise questions on how exactly the Government prices its flats.

… MP Zainudin Nordin also queried this, calling for the pricing formula to be as transparent as possible.

Doing so will assure Singaporeans that ‘the Government is not out to make a profit through the sale of public housing’, he said.

Unfortunately, Mr Zainudin and his colleagues did not manage to seize the opportunity to seek this clarification from Mr Khaw yesterday.

She ends with remarks that the prime minister especially should take heed of, Going ahead, the need to be more open and transparent with information will continue to be an imperative that the Government has to struggle with, given a more questioning electorate.

Voters no longer want to be told just the answer – the what. They also want to understand the hows and the whys.

 

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