Leong Mun Wai says that land cost should be taken out of pricing of HDB flats

[Huat Zai]

 

SINGAPORE — Non-constituency Member of Parliament (NCMP) Leong Mun Wai opines that the pricing of flats built by the Housing Development Board (HDB) should only account for construction costs and price differences between locations and not include land costs.

This was said by the NCMP from Progress Singapore Party (PSP) in a Facebook post on Thursday (8 Dec) in response to the latest statement by HDB on the breakdown of the development cost for HDB flats over the past three fiscal years.

“This was arguably the case in the late 1980s, when the total land cost accounted for a substantially lower share of the total price of an HDB flat.” wrote Mr Leong.

In contrast, Mr Leong pointed out that the latest data released by HDB shows land costs accounting for almost 60 per cent of the total cost of building HDB flats.

“In contrast, net government subsidies, which included CPF housing grants, only accounted for 12% of the total cost in Fiscal Year (FY) 21/22,” wrote Mr Leong and added that the 12% can be interpreted as the “discount” from the market price that HDB applies to Built-to-Order (BTO) flats.

“We must ask ourselves, is this 12% discount really very generous and enough to make HDB flats affordable? Notice this is the discount to the total cost which is the market price for HDB flats estimated by HDB.”

“The actual subsidies received by Singaporeans is the CPF Housing Grant which is only 4.7% of the total cost, which is much smaller than 12%.”

Mr Leong also wrote, “We also have no idea how the market price was estimated although it is likely that the land cost was derived from it.”

HDB, in its statement on 7 Dec, noted that its flat pricing approach is totally separate and independent of the BTO projects’ development costs. It instead prices the flats’ market value by considering the prices of comparable HDB resale flats nearby as well as the unit’s individual attributes.

In response to former MP for Potong Pasir SMC, Chiam See Tong’s queries in 1988, the government released similar data on the land cost, construction costs and subsidies for 4-room HDB flats in four towns (Pasir Ris, Hougang, Bukit Panjang, and Toa Payoh).

Mr Leong points out that in the 1980s, the subsidies from the government were not only more generous at 23 per cent, but also covered a much more significant proportion of the land cost, especially in the New Towns.

“In my opinion, the pricing of HDB flats should only account for construction costs and price differences between locations. This was arguably the case in the late 1980s, when the total land cost accounted for a substantially lower share of the total price of an HDB flat.” wrote Mr Leong.

He suggested that land costs be taken out of the picture because much of the land used for building HDB flats was surrendered by the Pioneer Generation to the government for a relatively modest sum under the Land Acquisition Act between the 1970s and the 1980s.

“The Pioneer Generation endured difficulties when they were evicted from their homes and resettled with a low level of compensation. They accepted this because they were told their land was going to be used for a higher purpose, to provide affordable homes for every Singaporean.”

TOC has previously reported on how the PAP government acquired large swathes of land from farmers and residential occupants in Singapore by only paying S$2.50 to S$7.50 psf for their “squatter house with concrete floor” in the 70s and S$7.50 to S$14.63 psf during the period up till the mid-80s.

Take, for example, the land at Bishan was acquired from Kwong Wai Siew Peck San Theng temple through a compulsory acquisition for 30 cents psf in 1979. The temple’s 131ha of cemetery land was forcefully acquired by the government for a paltry S$4.9 million.

At the same time, it is worth noting that the HDB BTO estate that was launched in 2020, Bishan Ridges, had 1,502 units and sold 4-room flats at about $555 psf.

Mr Leong lamented that Singaporeans today must pay market prices for the land that was taken away from their forebears and only get a small discount from the government that barely covers one-fifth of the land charges.

“The time has come for us to question whether even our public housing policy has lost its way.”

 

https://www.theonlinecitizen.com/2022/12/08/leong-mun-wai-says-that-land-cost-should-be-taken-out-of-pricing-of-hdb-flats/

[Londonchocolateroll]

Whats funny is sinkie is willing to pay that kind of prices to rent it for 99 years. Anyway good luck to the next generation

 

Insert KJ.jpg

[Huat Zai]

1 hour ago, Londonchocolateroll said:

Whats funny is sinkie is willing to pay that kind of prices to rent it for 99 years. Anyway good luck to the next generation

 

Insert KJ.jpg

And now we're stuck in this ponzi, they can't remove the cost of land or existing HDB values will crash, new HDBs will cost too much for young couples to buy, and our citizens will become increasingly in debt.

 

Song bo @socrates469bc

[socrates469bc]

1 hour ago, Huat Zai said:

And now we're stuck in this ponzi, they can't remove the cost of land or existing HDB values will crash, new HDBs will cost too much for young couples to buy, and our citizens will become increasingly in debt.

 

Song bo @socrates469bc

 

limpeh thinks the best part of the article is that the ncmp obviously dont know what is the crux of the matter.

 

the crux of the matter here is whether property inflation in pappyland has reached an unsustainable level, not whether land cost shld be included in property pricing or not.

 

thats why limpeh support partially privatizing hdb, both as a mean to allow market forces to determine the true value of a property and also to curb this artificial speculation created by ah goh.

 

wahahahahahahahahahaha

 

Edited December 9, 2022 by socrates469bc

[Huat Zai]

2 minutes ago, socrates469bc said:

 

limpeh thinks the besst part of the article is that the ncmp obviously dont know what is the crux of the matter.

 

the crux of the matter here is whether property inflation in pappyland has reached an unsustainable level, not whether land cost shld be included in property pricing or not.

 

thats why limpeh support partially privatizing hdb, both as a mean to allow market forces to determine the true value of a property and also to curb this artificial speculation created by ah goh.

 

wahahahahahahahahahaha

 

 

There is only one way