Transparency crucial in the housing situation

June 28, 2013
Singapore Democrats

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Singapore Democrats

As prices of HDB flats continue to risebeyond the means of Singaporeans especially the younger ones, thequestion of whether the cost of land should be included in the priceof flats is intensifying.$CUT$

At the heart of the issue is theGovernment selling state land to Singaporeans and thereby turningpublic housing into a profit-making enterprise.

In response to the public’s concern overthe matter, the HDB posed this question on its website: “Can the Governmentunilaterally lower the cost of land for public housing, and therebyreduce the selling price for HDB flats?” (See here).

The question is, of course,rhetorical and the HDB’s answer is no. The reason, the HDB explains,is that “All land in land-scarce Singapore…commands a definitevalue, and all State land forms part of this country‚Äôs nationalreserves.”

Having set a monetary value on these reservesof land and then selling them to the public through the HDB, theGovernment has, in fact, derived a significant revenue stream.

TheHDB does not deny this. Its statement acknowledges that “housingis lower than what it could have been priced, were it set aside forprivate housing, and released competitively through land salesprogrammes.”

It is an admission that HDB makes money,albeit less than if the land were to be sold “competitively” — that is, to private developers.

And yet, in a recent dialogue sessionwith Singaporeans, National Development Minister Mr Khaw Boon Wansaid that the HDB lost hundreds of millions dollars every yearproviding flats for the people.

This seems hard to believe.Singaporeans are spending most of their CPF savings on their HDBmortgages and the Government is making a profit selling land forpublic housing. Yet, Mr Khaw claims that the HDB is losing hundreds of millions ofdollars each year. If this is true, then one can only conclude that the housing system is run in ahighly inefficient and, worse, unsustainable manner.

Read also HDBloses money: What Khaw doesn’t say

Our economy has arrived at a stagewhere growth has become harder and harder to achieve withoutinnovative input and regeneration. There is no sign that things willchange in any meaningful manner in the foreseeable future. Ourpolitical economy seems set to proceed in its present path, meaningthat growth will continue to be indifferent.

This will have an adverse impact on theability of Singaporeans to support the high housing prices whichwill, in turn, lead to serious consequences not just for homeowners and the housingmarket but also the entire economy.

It is, therefore, imperative thatSingapore examines the current public housing system. To know whetherit is sustainable or not requires the examination of the facts andfigures such as the real cost of constructing the flats and the costof the land.

In other words, the Government mustopen the books of the relevant bodies for public study. Transparencyis crucial.

Read SDP’s alternative housing policy Housing A Nation: Holistic Policies For Affordable Homes