Housing A Nation: Holistic Policies For Affordable Homes

The Problem

While the HDB has indeed provided physical housing for the majority of Singaporeans, its system has generated three very grave and urgent problems:

  1. HDB-flat prices have risen so fast that they have become unaffordable.

  2. Singaporeans are spending their CPF savings on their flats leaving them with little to retire on.

  3. The current escalation of property prices has created a dangerous economic bubble.

 

SDP’s Solution

The SDP proposes a new Non-Open Market (NOM) scheme to help reduce the prices of HDB flats. Under this scheme a segment of new HDB flats will be priced at cost (including labour, material and administrative costs) minus the land “cost” that is currently factored into HDB prices. 
Flat prices will hence be substantially lower, ranging from $70,000 for 2-room flats to $240,000 for 5-room flats.

As the name implies, however, flats bought under the NOM scheme cannot be re-sold in the open market. Owners wishing to dispose of their NOM flats will have to sell them back to the HDB.

Singaporeans who purchase NOM flats will take an estimated 9 to 15 years to pay off their housing loans compared to about 30 years under the present PAP system. This drop in housing expenditure will free up capital for homeowners to invest or save for retirement.

Current owners of HDB flats can continue selling their flats in the open market (OM). Policies regulating OM flats will remain relatively unchanged.

Current flat owners can also choose to convert their OM flats into NOM flats. The Government will return them the difference between the original price of their flats (as purchased from the HDB) and the price of an equivalent NOM flat, subject to a cap.

This money will be credited back to the owner’s CPF account or used to pay any outstanding housing loan taken. The converted flat will then be subjected to the rules governing NOM flats.

First-time HDB buyers can choose to buy an OM or NOM flat.

The rationale behind this scheme is that the Government should not profit from Singaporeans when it comes to public housing. Public housing is a social good and should be used to meet the housing needs of the population instead of being a vehicle for profit – whether the Government’s or citizens’.

 

Read the full paper Housing A Nation:  Holistic Policies For Affordable Homes here.

Housing Thursday, 06 August 2015 SingaporeDemocrats Print

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