Tuesday, March 23, 2010

HDB: Myths and Truth I

It has been more than 2 weeks since I sent in my email to MOF to obtain the data/methodology for Mr Tharman’s statement in Parliament which said that poor income families in Singapore would be helped to the sum of $460,000 for. In spite of sending reminder, I have yet to receive a response.

If the numbers are accurate and correct, it is unknown why MOF would refuse to release the data/methodology. Without transparency, there can only be rumor and speculation about the accuracy on what Mr Thraman claimed.

Well, throwing numbers and figures in a serious place like Parliament could be pretty easy. However if such so call "statistics" or "figures" are not and could not subject to public scrutiny to the fullest details, then I guess such talk is just Highfalutin expression without any solid foundation.

I have also written to HDB to seek clarifications on what Minister Mah has brought up in parliament about the affordability issue. Similarly, I have been ignored. This is a government that self-proclaim to be the First World government, but without any "Transparency" in action. A government that dare not provide any proof that could withstand public scrutiny. It is really up to Singaporeans to decide whether to believe such talks or not.

I shall now move on to Minister Mah's HDB MYTHS and TRUTH.

MYTH I: There are not enough HDB flats to meet demand.
# The HDB released 13,500 new flats last year and will release another 12,000 or more this year. This is more than the total number of flats in Clementi or Jurong East (about 23,000 flats each).

Based on the HDB website, it takes 3 years on average for a new HBD flat to be built. The 13,500 new flats released in 2009 will therefore only be available for occupancy in 2012. Similarly the 12,000 HDB flats released in 2010 will not be available for occupancy until 2013.

There is a housing shortage in Singapore NOW. From 2003 to 2008. the total population increased by 17.6% while resident population increased by 8.2%. The number of HDB flats however only increased by 1.2.%.

The inadequate new HDB flats to meet demand caused a destructive boom-bust cycle to be formed. Prices of HDB prices have skyrocketed as people need HDB flats NOW. The subsequent flooding of the market with HDB flats in 2012/2013 will mean that there is likely to be collapse of HDB prices by 2012.

A conservative estimate of the need to provide 4% more flats compare to 2003 would mean a need to increase new HDB flats by at least 24,000 flats. This should be on top of the natural annual demand of new flats derived from new couples.

YPAP has published Mr Mah Bow Tan’s speech in Parliament


To avoid misquoting Mr Mah, I had waited for a copy of the speech to be released on an official PAP platform before commenting on it. There are some parts of the speech which I do not understand. I have written in to the Ministry of National Development to clarify what Mr Mah meant, but as I have said earlier, I have been ignored totally.

In view of the inability of HDB to meet demand for 2003 and 2008, I would like to discuss Mr Mah’s Build-To-Order (BTO) system and how it caused the current HDB housing bubble.

Under the BTO scheme, HDB flats are built based on application demand. In Mr Mah’s own words, the intent of the BTO scheme is so that HDB is not stuck with a large inventory of unsold flats.

To prove his point, Mr Mah then sprouts out an impressive looking set of statistics to show that the BTO system is working and that there are sufficient HDB flats to meet demand.

The fatal flaw in Mr Mah’s reasoning is that it takes 3 years or more for BTO flats to be built. What happens then if there is a sudden spike in housing demand? What can Mr Mah do?


Sudden spikes in housing demand coincide with booms in the Singapore economy. During such booms, the labor market tightens. To keep wages down and prevent Singaporeans from job hopping, large numbers of FT are allowed into Singapore. These FT need a place to stay and therefore push up rental and property prices. PRs could only buy from the HDB resale market but the truth is, how many Singaporeans could afford to sell their HDB flats without buying another HDB flat for them to live in? Without a stockpile and a 3 years time lag for new HDB flats to be built, what can Mr Mah do about skyrocketing HDB prices?


If we stick with the current BTO system, we will have a continuous series of destructive boom-bust housing cycles. During such cycles, there will be a small group of individuals who earn supernormal profit. There will however be a much larger group who will suffer large paper losses and be saddled with a huge debt for possibly the rest of their lives.

The total mismatch of IMMEDIATE demand and supply in the HDB resale market is basically caused by the lag effect of HDB supply of new flats. Singaporeans could not possibly sell their flats to PRs due to PAP's own liberal FT policy basically because they could not get any new flats from HDB at all.

This in turn created a round robin feedback effect on the whole system. HDB resale prices went up, causing the prices of new HDB flats to go up as well. This in turn cause deferment of purchase of new HDB flats by the lower income couples.

There is nothing much which can be done to help the victims of the current boom-bust housing cycle caused by Mr Mah’s BTO system. The best that can be done is to change the system to protect future generations. As part of comprehensive HDB housing reform, I would like to propose

1) Revert to the previous Build-To-Sell system

2) Maintain a strategic stockpile of HDB flats which can be released into the market to stop housing bubbles from forming

3) Reduce the time to build HDB flats

4) Have a long term policy of matching available HDB flats to the Total Population of Singapore.

Goh Meng Seng


Anonymous said...

One of your "fan" dedicated a song to you: 新加坡的追风少年/英雄!

Anonymous said...

if you vote for me,

5) ALL HDB buyers will get 50% discount from current prices.

and i may just throw in a free rug.

Anonymous said...

If you vote for Mr Mah

6) Owe $ Pay $ for 30 years

and NO FREE RUG !!!

Jeff in Tampines said...

My father built houses and condo blocks in our home country. His co, founded 1867, gives 100-year warranties on everything with their name on it since 1881. Still going strong.

It takes about 9 months to build a house, 2 years to build a condo block. They limit themselves to a 3-year backlog for just the reasons you mention. This is with far higher quality of materials & workmanship than any I've seen here.

Their condos cost about 1/3 of what HDB crap goes for here. And make no mistake: it IS *ALL* crap.

I came here for life; my wife literally can't function without her mother and sisters. Now? I keep saying "this is the year they'll boot the Asian Josip Broz Tito out on his ear." And another "election" sees the sheeple once again doing what they're told to. No wonder most of my friends are non-rich people like me who spent their formative years elsewhere.


One problem can't get solved until the other is.