Saturday, August 23, 2008

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HDB Income Ceiling to buy HDB Flats Not Pro-Family

During his National Day Rally speech, the Prime Minister spent a great deal of time talking about the government's latest pro-family policies but overlooked something very pertinent to setting up a family, that's having a place call home first. HDB household income ceiling of $8000 for purchase of the 1st HDB flat is simply too low especially at current high prices. Most couples will find it necessary to work for five years or more first in order to save enough to set up their home. This reduces the time available for young couples to have children. Why not remove (or at least increase) the HDB income ceiling for first time home buyers, so that all young couples regardless of income are able to buy a home at a subsidised rate and enjoy subsidised home loans ? This would serve as an incentive for young couples to start their family sooner.

May also want to read:
HDB Contributes to Singapore Record High Inflation
HDB Housing Subsidies: Is HDB Housing really subsidised?
HDB Resale Price Index from 1990 - 2008
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
Your Property Investment Determines Your Financial Success in Your Life
HDB Resales: West Sees Highest Price Increase


Anonymous said...

Good observation. Singaporeans and especially, our NS Servicemen (who sacrifice so much of their precious two years of their most youthful days and some, even lives) would welcome your valid points. At least this category of NS men are the most trustworthy citizens which you can count on. We have to bear in mind that the private condominiums (which surged significantly last year due to speculations and playing into the advantage of financially strong property developers, rich foreigners, speculators and en-block windfalls) have priced many of our fellow Citizens out and one cannot blame them from leaving the country if there is a choice for this unfortunate category of Singaporeans who did not qualify for HDB or DBSS or public housing. our pramatic government would be happy to see your good suggestion.

Anonymous said...

Indeed, we'd always see an increase in the number of Singaporeans who migrate every time the property price shoot through the roof.

A recent survey shows that two-thirds of Singaporeans have thought of migrating. This figure is alarming. I hope our government doesn't take this lightly, especially at a time our procreation rate is below replacement level.

I think the government should give more thoughts into retaining local talents. Sometimes you get the feeling of neglects, sometimes you even feel like a second class citizen in your own country, then you think maybe it's better to be a second class citizen in a foreign country where at least you can enjoy more space and perhaps, a slower pace of life.

Anonymous said...

this is a biased assertion

hdb is meant for the low income

those who can afford mass mkt condo should buy the condos and not hdb

i see many hdb owners with big luxury cars ... this doesnt makes sense ... hdb subsidies are meant for the low income

Anonymous said...

hdb is for low and middle income

if a couple earns more than 8k in total they should not qualify

as more people earns more, the proportion of people living in hdb should reduce over time

it doesnt makes sense for those who can afford large luxury cars to live in hdb

Anonymous said...

Since land and property is so limited in small city like Singapore, it is increasingly become a national issue where the stake are high for our fellow citizens. We should protect such human "treasures", i.e the true born Singaporeans.

Perhaps, "MEANS TESTING" for people or couple who want to apply for HDB and DBSS should apply.

NS Servicemen are defenders of our country not imported foreign talents or foreigners or PR. Our young men have stake or interests in this country compare to the very rich foreigners or some PRs, i can tell you this latter category of people are mobile and very likely to disappear at the slightest political problems in Singapore. Let those truly born Singaporean families who have NS Servicemen in their family nucleus (whether rich or poor) have a sense of belonging and dont neglect them at the expense of Foreign Talents. For Singapore couples earning $8k combined, is not a big deal and dont force this category of people to own private condominiums as last year mad increase in property prices, have made them unaffortable. These Singaporeans will be forced to consider to migrate if they are neglected and as one reader pointed out correctly,or they work, work, work to service high mortgages and then die in this increasingly expensive tiny city within a city.

Anonymous said...

In public interest, time for the government to take action to regulate property prices especially the private property sectors and not to take any actions to stem the price corrections currently. Singapore is unique and property should not be exposed to excessive speculations in a tiny city here in the first place. Release more lands and introduce more punitive restrictions to moderate the still very high property prices in Singapore. Current regulations and actions are not enough as private developers are in very strong position to hoard land and dictate supply and trend. The government had made it too good and conducive for past speculators, rich foreigners, property developers to cash in on the back of IRs, Sport Hubs, more jobs creations, etc. They have reaped very good gains over the last two or three years. The extraordinary gains last particulalry in last two years were too steep and the property bubbles should be allowed or even encouraged to burst once and for all,so that Singapore can be competitive again and the majority of Singaporeans can find this place affortable. Get the financial system be ready for such an eventuality, preferably on a soft landing but allow property prices to drop. Sadly, TODAY Singapore has become one of the most expensive places in terms of doing business and place to live in. Much lower living cost of housing from current level is good for the country, people and make us competitive place to do business and live in.

Anonymous said...

I agree that it's time our government do something to curb private propertyd price. The report from ST on 24 Aug given below said there aren't enough HDB flats while sales of private homes remain gloomy. If private property prices come down so that more people can buy private homes, then the shortage of HDB flats can be partly solved. This is better utilization of resources.

ST 24 Aug:
HDB resale market going strong
While sentiment in the private homes market remains gloomy, the market for Housing Board resale flats offers another story. Deals of S$700,000 and above are still being done this year, after ‘record deals’ of more than S$700,000 first surfaced during last year’s boom, though these are few and far between.

The good news for sellers is that prices continue to rise, pushing up valuations.

Volume is seen remaining healthy as home seekers continue to check out resale flats, largely oblivious to the credit crisis consuming the world, market watchers said.

Demand for HDB resale flats comes mostly from newly formed families and new permanent residents (PRs), they said.

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, thinks that HDB prices are still rising because there is not enough supply to meet demand.

‘For example, last year, there were about 78,000 new citizens and PRs. So they may be buying HDB flats which they may not have been eligible to buy previously,’ he said.

HDB flat seekers also include those who are priced out of the private market given that mass market prices there remain relatively strong.

But there is a limit to the gains for an HDB seller. Already, HDB prices are considered high, said Mr Leong.

Also, agents say that buyers are showing more resistance to sizeable cash-over-valuation (COV) amounts. The COV is the cash sum that is paid over and above the valuation of a flat.

It cannot be paid from a home loan or with Central Provident Fund monies.

Generally, once you cross the barrier of S$600,000, there will be strong resistance, said the assistant vice-president of ERA Asia Pacific, Mr Eugene Lim.

High-priced transactions have been registered in a few estates such as Marine Parade, Queenstown and Bukit Merah. For instance, a S$750,000 deal for a 10-year-old, high-floor 124 sq m unit in Holland Close in Oueenstown was recorded in June.

Once a high-priced deal is done, sellers in the area will raise their asking prices. But these may not be realistic, said Mr Lim.

Increasingly, potential buyers are feeling the pinch of rising costs and negotiating harder for a smaller COV amount, particularly for non-prime flats, he said.

‘People are more cost-conscious now.’

For suburban locations, asking levels for COV amounts have come down, said HSR Property Group’s executive director, Mr Eric Cheng.

‘I would say that S$15,000 to S$25,000 is common for non-prime districts. Previously, people were asking for S$30,000 to S$40,000,’ he said.

‘The resale index rose because of higher valuations.’

Valuations are made based on historical data.

Going forward, HDB resale prices look set to rise, but likely by a smaller margin.

In its second-quarter data release in end-July, HDB said that it planned to offer about 3,900 new flats under the Build-to-Order (BTO) system over the next six months. These will be in towns such as Punggol, Sengkang and Bukit Panjang.

For the whole of this year, HDB has a planned supply of 8,400 new BTO flats, up from the 6,000 flats offered last year and just 2,400 BTO flats in 2006. These BTO flats are the main supply of new flats.

With more new flats coming on the market, some demand will be taken away from the resale market, said Mr Lim.

He expects an overall price rise of 10 to 15 per cent, including an 8.2 per cent rise in resale prices in the first half of this year.

Mr Cheng believes the rise in the next 12 months will not be more than 5 per cent.

Last year, HDB resale prices rose by 17.5 per cent.

HDB prices will support the private mass market sector, but selectively. A lot still depends on the general economic outlook, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

When the economic outlook is less buoyant, HDB upgraders are likely to stay put rather than move to another estate to upgrade, he said.

Typically, demand for a private suburban launch comes primarily from the same housing estate. Unless the market is generally buoyant, sales will start to slow once this pool of buyers runs out, he added.

Anonymous said...

I begin to wonder what qualifies as "low or middle" income at this present time in Singapore.

From what I recall from the documentaries and social studies lessons, the original objective of the HDB was affordable housing for all Singaporeans. I vaugely remember feeling very proud when I was told that Singapore has 1 of the highest rates of home ownership in the world. Yes it was more than 20 years ago, but things should not have changed that much right ...

I've been based overseas for the 14 months, having been sent on an overseas attachement by my company. I'm due to move back soon and given some unexpected (but very plesant) changes in my social life, am looking to purchase a home and start a family. My new contract is very attractive and my monthly personal income is just above the 5 figure mark. Along with my girlfriend, whom I am planning to marry (she makes about half of what i make), we should be very comfortable. Guess I was overly optimistic.

I looked at the HDB guidelines, and realised I was not eligible for a new flat. I then looked at the property prices for private residences and got a pretty huge shock. I had never really paid attention to the housing market as I was busy climbing the corporate ladder to make sure I had enough income to purchase a house. Some digging has led me to the conclusion (correct or not) that the recent surge in prices has been due largely to speculation, both from local and foreign funds. Looking at the economic fundamentals, my personal opinion is that private properties are somewhat overpriced now, and I am definitely not eager to commit to a large mortgage right now.

End result, I am in a somewhat unpleasant position of earning too much to qualify for government housing, but not willing to pay an arm and a leg for private property. Yes, it is still better than having a lower income and being able to qualify for housing, but it does make me wonder.

Having been a loyal citizen, having served (and will continue to serve) my national service, showing a willingness to start a family and continue contributing to my nation of which I am infinitely proud, why am I not given the same opportunity to purchase subsidized goverment housing which should be the right of any citizen? I can understand the government wanting to discourage speculation in HDB property, but shouldn't the policies allow for first time owners (who do not own private property) to have the opportunity to purchase at least once?

In any case, I am lucky to have a mom who is welcoming me (and my partner) back with open arms. So its back to the family apartment and saving money hoping for a reduction in the price of private property.

Just some comments to those who commented that those who can afford mass market condos should but them, and that it does not make sense for hdb owners to drive large luxury cars.

Isn't that a personal choice? A person should not be forced to commit to a higher mortage (and thus more interest payments to the bank) just because he/she has a higher income. We should all be allowed to choose how we wish to spend our hard earned money. The standard of government housing in Singapore is high enough that there is no need to impose a "caste" mentality that HDB owners are of a lower class.

Anonymous said...

Dear Anonymous,
I agree with you that buying a HDB flat should be left as a personal choice regardless of income.

Anonymous said...

Staying in condo doesn't mean one earn more than those staying in HDB.

I'm earning 5 figure salary, but I would not commit to a private property, which hv the same floor area as my HDB, but triple the price.

Anonymous said...

I think highly hdb resale prices will go down sooner in sengkang area and outside city area, as you see latest BTO project in sengkang area was under demand, they offered 484 units for 4 room type but they had received applications only for 380 units by july 14 dead line, this shows demand so much lesser...

Anonymous said...

I truly agree that Singapore citizens should not force into buying condo based on household income ceiling. Prudency is one's choice, especially when it comes to purchasing of big ticket items like car or property. One may choose prudency by upbringing or circumstances on various grounds to buy a HDB instead of private condo. They may have a big extended family to support like joint care for aged parent, grandparents, in-laws, ill stricken siblings, children & etc even though they may have a high income ceiling. They may prefer to save up for retirement, future children education or future marriage and the list of reasons can go on. Hitting the income ceiling may not come as a good news for those whose income just barely inching over the ceiling because for them this may mean hardship as they would have to spend higher percentage of their disposable income on housing repayments & monthly maintenance for private condo while their peers earning maybe $500 lesser can even enjoy a bigger living space and afford to have more savings by buying a 4 room HDB at a fraction of the cost.

In fact it should be made a citizen’s privilege to have a choice of owning a HDB without a ceiling income restriction. Especially so for male citizen who have served their National service because they have proven their patriotism to Singapore.

HDB ruling should allow all Singapore citizen rich or poor, regardless of their income ceiling within the 1st 5 years into their work life to have a choice to purchase an HDB flat. Such computation can be derived from monthly CPF contribution and age from discharge from NS or graduation & etc (This is a suggestion & thorough detail study required as to how to gauage). In this way the system is fair and would allow even a high flyer to accumulate sufficient CPF & cash downpayment for them to purchase a HDB flat without burdening their parents’ CPF. After which the ceiling income rule will kick in and their privilege will be forfeited should they choose not to. Joint application with parent should be allow with the main application being the children and transferable (FOC) to a legally married spouse

This should the kind of privileges differentiating foreigners here under PR or WP.

Anonymous said...

HDB flats are a good place for family with low-income (combine salary not more than 8000 to start with). Many people like me benefit and manage to buy houses because me and my wife combine income is only 5000+++ and make us able to buy house affordable.
I understand that many people combine salary can be as much 8000+++ and why should they be queueing for HDB. Left the income like us to suffer. That is why the impost of this 8000 is a very good guage marking to set a standard or else the low-income and middle income like us, earning combine range salary between 4000 - 6000 cannot buy HDB. What is the fairness, it suppose to be for the Low and Middle Income. If you earn more than 8000 and stay in HDB, dun you think you are the one who is spoilting the market causing the market to flow. Spare a though for us the low and middle income, we also need to stay in flats and setup family. With your both combine income more than 8000, you can get a more comfortable house.

Anonymous said...

To the anonymous in 11 September. People who are earning 8000 dollars and above also can be ill afford to pay for the high price private property. With job security at a premium, Household income can drop suddenly and the so call "middle class" can one night become "lower class" after losing his/her job. So in essence being in Middleclass in Singapore, you are stuck in between rock and hard place.

chocolatey said...

My bf and I intend to apply a HDB flat. Our combined income is $7,950 currently. If we don't get a flat by this year, we will not have a chance liao, cos our pay revisions will be next year. We dun mind getting an EC, but there's not many ECs around. We tried looking at private condos too, but the prices are too high and we can't afford it with our income. We're really 'stuck in the middle' - too rich to get a HDB flat, but too poor to buy a condo. Sigh. It's so difficult to even get a new flat in Singapore. Sob...

Anyway, we are trying our luck for this Sep08 ballot exercise. However, looking at the no. of applications vs units avail., i think our chance of even getting a ballot no. is as slim as striking toto...wish me luck ppl...

Anonymous said...

Luck to you chocalatery !!! Go and bising the government lah..

Anonymous said...

Wish you luck too gal! I have been balloting for 3 times already...No luck yet. Go for ROM first...It increases your chances of getting a flat!

chocolatey said...

thks to anonymous (oct 4 & 6) for your well-wishes...will keep u ppl posted of my ballot results in nov!

chocolatey said...

What are the pros and cons of buying a condo? Was thinking...if I'm unable to get the a flat in the recent balloting exercise...should I consider getting a condo instead? Any advice is much appreciated! :)

Anonymous said...

There is no doubt that cost of living has increased over the past few years. While those with a household income of $8000 may be considered rich 10 years ago, this may not be the case now. The HDB $8000 income ceiling was set donkey year's ago and hence should be adjusted based on the increased in cost of living. Besides, the number of people living in poverty have decreased tremendously. Therefore, HDB's goal shouldn't be to provide affordable housing only for the poor but also the middle income as well. Nonetheless, there must be a ceiling or else the price of a flat may be inflated by those who can well afford private housing.

danny said...


HDB is meant to provide for the basic need of housing. It’s mandate is to meet housing needs for the majority, not entire population of Singapore (otherwise, Singapore will be a complete socialist state). The Gahmen prioritizes its assistance (in terms of access to public housing) first to families who are in the sub $8k income group. These sub $8k families (8 in 10 as per article) are the majority of Singaporeans, therefore, by providing them a priority to decent public housing would be pro family.

Within the sub 8k groups, there are further sub groupings providing more protection to sub 3k families (to direct purchase of 3room flats from HDB). This group does in fact need more assistance and protection.

Housing is a basic human necessity. The gahmen is right in protecting the lower earning 80% of families from competition from the top 20% earning families in terms of this basic human need.

Allowing for a less regulated private property market allows for families in the top 20% earning group to satisfy their housing needs which the gahmen cannot meet. The fluctuations in prices are the result of free market forces. While I agree that the gahmen can be more timely and responsive to curtail speculative forces, it is unfair to discredit the gahmen as not being profamily.

Families in the over $8k group, top 20% earnings, should consider the difficulties of those in the sub $8k group before complaining to the gahmen. Is it fair for families making perhaps $50k per year to compete for housing resource with families making about $100k per year (for those in the cut off zone).

Imagine 2 couples, A and B, both wanting to get married, get their own love nest and start a family. (To the glee of the gahmen).

Now, suppose, Couple A makes $50k/yr, Couple B makes $100k per year. If there’s only 1 flat being balloted and Couple B gets the flat, then Couple A have postpone their plans or they could rent. To rent a 4br costs up to $2k in some places ($24k/yr). While Couple B can afford this amount, to Couple A, this cost is possible, but prohibitive.
One could argue that Couple A could rent a shitter place for $1k per month to start, while couple B, even though they make twice as much can start right on with their lives and plans. Now I hope most people will think such a situation is unfair, and someone ought to do something about this.

Well in fact, something has been done by the gahmen. In the allocation of limited resources, in order to be Pro-family, to enable both couples get on and start their own families, the gahmen does give Couple A more chances to get housing because if they lack the resources/options available at the disposal of Couple B. So I conclude that the $8k limit is in fact Pro-Family and the complaint here are of a vocal minority.

Also noted in some comments is that some Singaporeans consider migrating, and up to 2/3 have considered doing so. Also noted, with great interests, are the tendencies of some other Singaporeans to scorn foreigners coming to Singapore only for educational opportunities or economic gain, of particular contention, these foreigners lack of allegiance and commitment to Singapore. Interesting.

I’m sure Singaporeans remember, responsibility of speech and freedom of speech ought to go hand in hand. Due considerations should be made before publishing populist comments that may seem like a good idea at first glance, but are grossly unfair if actually implemented.

Thank you

Anonymous said...

Just want to share the data from Govment. In 2007 the 20% Income cap is arround $11.000/month. If you use $8.000/month it mean already arround 30% Income cap. You can check your self the data at

danny said...

I'd like to thank anonymous for pointing out the salary info discrepancy between the said 8 in 10 families and the salary data that indicates only about 70% eligibility.

This difference does not constitute 'anti family' policy, I would urge the Gahmen to keep closer tabs to real time statistics and adapt policies more quickly in order to meet the needs of the people.

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