HDB as a public good should never have been marked to market. And like many things else, PAP has forgotten their original mission and engineered a regime of profiteering from its citizens.
Home Ownership, ex- PM Lee Kuan Yew:
My primary preoccupation was to give every citizen a stake in the country and its future. I wanted a home-owning society. I had seen the contrast between the blocks of low-cost rental flats, badly misused and poorly maintained, and those of house-proud owners, and was convinced that if every family owned its home, the country would be more stable… I had seen how voters in capital cities always tended to vote against the government of the day and was determined that our householders should become homeowners, otherwise we would not have political stability. My other important motive was to give all parents whose sons would have to do national service a stake in the Singapore their sons had to defend. If the soldier’s family did not own their home, he would soon conclude he would be fighting to protect the properties of the wealthy. I believed this sense of ownership was vital for our new society which had no deep roots in a common historical experience.”
In other words, Home Ownership was originally meant to underpin social cohesion and political stability as a young nation. And just as importantly, that in order to defend our country as NS men, we must have a direct stake in the country and in LKY’s words: “…notbe fighting to protect the properties of the wealthy or otherwise…”.
This is the raison d’être of Home Ownership of HDB – a place to call home, and a home to defend. And this is tied to the political philosophy of a Citizens’ Army.
HDB Affordability
Table 1
The key take from Table 1 above, is that if you are at the lowest end of the household income at $2000, the minimum ratio of your flat value to income is 5.268, up to a maximum of 7.254 if you do not qualify for any grant. This does not seem to be a progressive regime of managing affordability especially for the poorer segment.
In the report of the 10th Annual Demographia International Housing Affordability Survey 2014, Table 2 below shows that Singapore lies in the ‘Severely Unaffordable’ category with a ‘Median Market’ of 5.1, while Hong Kong is the worst at ‘Median Market’ of 14.9.
Table 2 (10th Annual Demographia International Housing Affordability Survey 2014)
Figure 1 (10th Annual Demographia International Housing Affordability Survey 2014)
Figure 1 above shows that Singapore also has among the smallest home living space, averaging just about 75sqm.
New Zealand Property Investors Federation executive officer Andrew King argued:
…that houses in New Zealand (also ranked “severely unaffordable”) could seem to be less affordable than other countries’ because prices included a larger land component and high building costs.
The high prices of New Zealand houses had a lot to do with the tax regime being favourable to home ownership and property investment compared with other forms of saving or investment, he said.”
Conclusion
The Business Times – January 22, 2014
S’pore scores in efforts to improve home affordability
Singapore homes remain “severely unaffordable” despite efforts to improve affordability, a survey has found. But the city-state achieved “stellar results”, unlike Hong Kong and Vancouver, where home prices have spiralled out of control.
Of course, if you don’t read the rest of the page but just the headline, it seems Singapore has done really well on home affordability. However, even after you have read on and if you are not discerning enough, you would feel that Singapore has achieved “stellar results”?
Seriously, do you actually have any doubts that the MSM is a mouth piece of the government? Anyway I digress.
What is home affordability?
For metropolitan areas to rate as ‘affordable’ and ensure that housing bubbles are not triggered, housing prices should not exceed three times gross annual household earnings. …. the Median Multiple should move from a Floor Multiple of 2.3, through a Swing Multiple of 2.5 to a Ceiling Multiple of 2.7 – to ensure maximum stability and optimal medium and long term performance of the residential construction sector.”- Hugh Pavletich, Performance Urban Planning.
And this is inline with Dr Liu Thai Ker, the Master planner for HDB and URA at his best. The old formula according to Dr Liu: ‘in those days, flats typically cost about three years of an owners’ salary… we looked at the per capita GDP growth, the sector of people eligible for public housing, their income, and then matching that to our selling price and to our flat sizes. It was really a very detailed study’.
The current predatory formula of HDB, ‘the prices of new HDB flats are set based on the typical household of families, the market price of similar resale flats in the vicinity, and the flat size and location.’
So, based on current assessment and conclusions of global professionals, and Dr Liu, who was the top planner for HDB/URA at its peak, the price to income ratio should only be 3 for housing to be called affordable.
How does the ‘Median Market’ formula which for Singapore is at 5.1, or a ratio of price to income at a minimum of 5.278 make our HDB affordable?
And this then goes to the core of LKY’s home ownership program. That we have a place to call home and a home to defend. Otherwise in LKY’s own words:
…If the soldier’s family did not own their home, he would soon conclude he would be fighting to protect the properties of the wealthy….”
HDB as a home builder is at the core of economic and social cohesion. This government has instead run it like a money printing machine, making asunder what was good, resulting in many young and old people questioning the concept of NS. HDB is no longer affordable, and there lies the collapse of LKY’s vision of a cohesive society with a stake in society.
BK