Our Houses Aren't As Affordable As HDB Says
 

A forum letter to the Straits Times highlighted a different way to measure affordability.

Based on Numbeo's "house price to income ratio", Singapore ranks below major cities like Tokyo, Barcelona, Milan, Dublin, Toronto, New York City, Geneva, Oslo, Rotterdam, San Francisco, Sydney, Vienna, Stockholm, Amsterdam, Zurich, Copenhagen and Berlin.

This means: if we use all our annual income to pay for our mortgages, we need more years than these other cities.

Our houses are less affordable.

Contrast the above with HDB’s explanation that our houses are very affordable:

First, note that HDB specifically refers to “non-mature” estates. Is there a special reason? What about mature estates? Do they breach the international affordability benchmark?

Next, HDB doesn’t take into account the Cash Over Valuation (COV), which is over and above the 10% minimum downpayment needed to buy a HDB flat. And we all know that COV has been rising to unaffordable levels recently.

Remember HDB’s “market-based pricing approach"? This time, is HDB trying to humour us again?

Our Houses Aren’t As Affordable As HDB Says | Salary.sg - Your Salary in Singapore

To be fair, the COV (only for resale) is not decided by HDB and should it be raised, its driven by the market sentiments set by buyers.

Singapore market is typically unique with public housing as one of main driving force as compared with its peers in other countries.

I kinda reckon why HDB used non-mature estate would be using the rock bottom to compare/ also because they’re developing the new estates. Again, the central or mature estates have too much differences in terms of resale value.

the uniquely singapore system here feeds into itself.

with “stable” HDB prices, which i take to mean “prices can’t fall”, cost of new flats will trend upwards or at the least stay constant.

HDB will use reasons like market-based pricing to justify this. i think the real reason is they don’t want singaporeans to feel poorer. maybe the election is coming. but in my opinion this is unhealthy.

prices of new flats will serve to support prices of resale flats. otherwise, if resale is cheaper, HDB won’t be able to sell new flats.

and with jobs protected by the artificial jobs credit scheme, flat dwellers unaffected by the recession, some even feeling richer by the day, upgraders and condo-queuers will help push up private condo prices. hence the exorbitant prices we see at amk centro and soon many others.

it is a bubble. when stronger forces of supply and demand come into play, and when the government realize it can’t continue with artificially protecting the people’s interest (and its own interest), the bubble will burst.

just my 2 cents.

The prices for Singapore’s 2nd DBSS site at Boon Keng: 99 Years HDB

3rms - $349,000 to $394,000
4rms - $523,000 to $597,000
5rms - $536,000 to $727,000

0.8 KM away, FREEHOLD condos, 3+1(size of 5 room flats) cost around 750K-850K.

What gives? =)

As interest rate is lower and take home pay as a % of income is higher (lower taxes) compared to other industrial world, it can have a higher than normal HousePricetoIncome ratio and yet a servicing cost as a % of income that is lower.

So, to determine whether HDB value are overcalued, 3 questions needs to be answered:-
(a) Is this subzero interest rates sunstainable?
(b) Can income tax remains at this level?
(c) Can the wage growth trend before the financial crisis sustained..

Bears be careful. The market can, has and will remain irrational for as long as you and many others can remain solvent, and then longer.

irrational : shouldn’t it be Bulls be careful?
After all they are the people heavily vested in the markets and playing musical chairs now.
Bears are staying out with their cash safely in their bank accounts.

What is the ideal % of your total income or combined income (if married), that should go into servicing mortgage per month? thanks in advance.

house: i’m not sure if there ever was such a thing as ideal.
Every situation is unique and it really depends on your own definition of affordable.
For example I may have only 30% disposal income from my total income and yet still think that it’s affordable to spend 50% of that disposal income for housing.
But that has totally nothing to do with what your case or anyone else’s case may be.
Also you forgot that there are other factors like the number of years of loans taken, what your future family plans are and expenses, what your income will be, plans for retirement etc.
HDB has their own affordability index but there are others out there also.
End of the day the only advice is to live within your means and decide your own.
Personally I wouldn’t want to take a 30 years loan that will demand more than 20% of my disposable income.
Sorry if it’s not much help - maybe someone else has a better answer than this.

disposible income is income left after deducting monthly “fixed” bills like cars and house what. So this mean you should calculate how much you want to devote to your mortgage from your total income + employers’ CPF contribution + bonuses. This is because you’re trying to calculate how much from your total (combined if married) earning power should the mortgage take up.

My suggestion is calculate your monthly income, multiply by 12, add bonuses, divide by 12, do the same format for your spouse’s income if married, add the two figures up, that is your monthly “spending power”, your monthly mortage should be no more than 30% of that.

I forgot, you should add in the 14.5% employers’ contribution monthly before you multiply by 12, then add the bonus, don’t forget your bonus also have 14.5% employers’ CPF contribution

handsome: yes you are right. i guess i was saying that i would look at my household disposable income before deciding on how much of that i would commit to a housing loan. i also forgot to mention that it’s cash commitment after the CPF for housing.
Another more important factor for me is how long the commitment will be.

As a person who is having a huge problem getting a flat, you can be sure I am not going to vote for the ruling party come election time.

Their logic is so flawed. They don't build enough flats causing demand to build up and resale prices shoot up as a result. Then they tell you oh, they gotta price the new flats based on market prices of resale flats. Complete BS if you ask me! :mad:

It is definitely a bubble. But will the bubble burst? If so when? I am getting more and more fustrated as the days go by. Maybe one day you will see me protesting outside Parliment. :(

Have you considered getting a smaller flat and/or staying further away from city? If not, why not?

I'm asking, cos this is the first question the government or your MP will ask when you complain to them (or protest outside Parliament).

That's beside the point. Asking people to buy smaller flats or flats further away from the City doesn't solve the problem of escalating property prices. It's sweeping the dirt under the carpet. What's one to do when even small property become unaffordable? Ask people to pitch tents at East Coast park? This is what I will tell them if they ask me this question.

But to answer your question, I can't apply for 3 room or smaller flats cos the of the household income ceiling of $4,000.

As for proximity to the city, my financee's parents stay at Outram. I am hoping to get a flat near to them.

Then they'll just say you're being choosy, the same way they do to people who can't find jobs ("why don't you be toilet cleaner or road sweeper?").

I'm just playing devil's advocate.

Then I will tell them, I am going to take 30 years to finance that damn thing, and I don't have a right to be a little choosy? You think buy vegetables in market ah, not nice throw away.

I would love to see some of our ministers move into some of those so called areas you can get if you are not choosy.

I figured so. No worries, it's good practice for me. Just in case I get invited to debate them on national television. :D

Are flats too pricey or buyers too choosy
 

Are flats too pricey or buyers too choosy

Experts advise buyers to keep an open mind in terms of location, size

Mr Jason Zheng is getting married next month, but he and his fiancee have yet to find a place of their own.

The 27-year-old IT consultant does not want to wait three years for a new flat but has been priced out of the resale market due to the current property rally.

Sellers have been asking for cash of up to $60,000 above valuation, which he cannot afford.

He also struck out twice at the Housing Board’s half-yearly sale where most of the units on offer are completed.

His dilemma is not unique. In the past month, at least 15 people have written to The Straits Times Forum, venting their frustrations over escalating prices, premiums over official valuations and a perceived undersupply of HDB flats.

But have buyers really encountered a wall when it comes to housing options?

Or is it also a matter of some people being too choosy and unrealistic in their expectations?

National Development Minister Mah Bow Tan urged buyers to take a bigger view in Parliament last Monday. For a household that earns $4,000 a month, he said the options might be:

~ A new five-room flat in Punggol or Woodlands;
~ A resale five-room flat in Woodlands;
~ A four-room flat in a popular estate like Tampines; or
~ A three-room flat in a mature estate like Toa Payoh.

Those in the industry agree that buyers can be narrowly focused.

PropNex chief executive Mohamed Ismail observes that couples are often reluctant to live in the outskirts and want flats in certain good locations where they can move in immediately.

But these places – like Bukit Merah, Tiong Bahru and Clementi – command a high price.

A four-room flat in Toa Payoh can cost up to $535,000 while one in Woodlands is priced less than $250,000.

Agent D. Lim said newlyweds often insist on getting flats near their parents’ homes even though the latter may live in mature, pricey estates.

MPs interviewed said they have seen cases where couples turn down new HDB flats because the location was not ‘prime’ or the unit was on a low floor.

East Coast GRC MP Jessica Tan explained: ‘They have preferences, and since a flat is not a small investment, these people tend to be more choosy.’

MPs said newlyweds often go to them for help in getting a home, urging them to intercede with the HDB.

Certainly, housing is a hot issue, especially when prices are climbing.

Last Monday, in Parliament, Mr Mah assured the public that HDB flats remain affordable, noting that eight in 10 Singaporean households qualify for various grants. Still, prices of HDB resale flats are at a historic high, reversing from a first quarter dip of 0.8 per cent to a 1.4 per cent rise in the second quarter.

There is also the rising COV, or cash over valuation. This is the premium which sellers demand over the official valuation.

COV amounts reportedly doubled in July this year to about $10,000 to $15,000 for five-room and executive flats, from a median level of $5,000 in the second quarter.

MPs and industry experts said those most affected are first-time buyers – usually couples unsuccessful in getting build-to-order (BTO) flats and who cannot afford resale flats.

Currently, the HDB uses the BTO system, introduced in 2001. Eligible buyers can apply for flats in their preferred locations from specific projects launched.

It takes about three to four years for the units to be built. Construction will start after a majority of flats are booked.

Previously a queue system, where flats had already been tendered for construction when offered to applicants, was used. Though the system assured buyers of a flat when their turn was due, it did not provide a real gauge of demand as applicants could drop out at will.

This resulted in an oversupply of about 20,000 flats when the Asian financial crisis hit in the late 1990s. The stock was cleared only in 2007.

Now, flats not booked under BTO, surpluses from the Selective En bloc Redevelopment Scheme, surrendered flats or cancelled bookings are made available in balloting exercises as well as half-yearly sales.

To meet increasing demand, HDB said it will offer 8,000 or more BTO flats this year. This compares to 2,400, 6,000 and 8,000 in 2006, 2007 and last year respectively.

A spokesman added: ‘The majority of first-time applicants have a chance to select a BTO flat within two tries.’

Given the realities today, industry experts advise buyers to keep an open mind on where to live and the size of the flat.

KF Property Network’s general manager Tony Koe recommends that young couples without extra cash should look for units on the fringe of places like Woodlands and Choa Chu Kang, where prices are more in tandem with valuation.

MP Lim Biow Chuan (Marine Parade GRC) also warns couples against overstretching their finances.

‘A lot of people are now living on credit; when you buy a large flat and put yourself on a long-term financial commitment, what is going to happen if you are retrenched or fall sick?

Source : Straits Times, 20 Sep 2009

http://business.asiaone.com/Business...21-169054.html

I personally feel that public housing in "prime" areas are ridiculously priced now but I think it is a problem that is limited to those area (I stay in one of those area so I not complaining =P). But then how to solve your problem?

The solution you want is
1) The flat must be in prime area (Outram as your future in laws are there)
2) It must be affordable for you
3) It must be larger then 3 room (due to your income)

The only way for govt to meet your expectation is to artificially lower the value of property in prime area by perhaps:
1) Flooding the market with supply and mind you it must be only in those prime area, maybe by tearing all the existing Outram flats and building 80-100 stories housing to replace them thereby tripling available housing.
2) Make the location undesirable by either building a rubbish dump right smack in the middle or moving the red light district there
3) Remove all existing amenities and make them similar in term of estate maturity to new estates.

This is not meant to be inflammatory, I'm trying to draw your attention to the dilemma. You can be choosy but being unrealistic and complaining about facts will not change it.
Now if those CCR condo can only come down to 1200PSF then I can afford it, time to complain to my MP about that.

Nah. I don't find your post inflammatory or offensive in any way just very pragmatic. :)

To be honest, I know there are very little options left and what are they. Just feeling very fustrated with the government for trying to gloss over the issue.

Even if I were to get a new flat at some ulu area, it's not cheap and supply is also rather limited. They claim new flats are priced taking into account the market conditions of resale flats. But why the hell did resale flat prices suddenly surge up suddenly over the last two years in the first place?

Cos they didn't build enough flats! The BTO thing didn't work out as they hoped. Then they try to distort the numbers and paint a rosy picture of themselves.

According to ERA, there are more PR buyers of resale HDB flats now, double the proportion for 3 years ago. Hence the amazing recession-defying price increases could be partly due to these additional PR buyers, who are the direct beneficiaries of our foreign talent policy - and as for the merits of the FT policy, we can discuss ...

"The government's target population of 6.5 million is steadily increasing the
pool of PRs; and they have to buy their HDB homes from the resale market as they
do not qualify to buy new flats directly from HDB. ERA's resale transactions
show that PR buyers make up some 40 per cent compared to 20 per cent three years ago." - Eugene Lim, assosiate director, ERA Asia-Pacific.

Our Government defines affordability as not using more than 35% of your gross monthly household income to pay for the monthly installment.

Let’s look at the scenario for typical young couple that have recently graduated from University and been working for 2-3 years.

Combined monthly income: $7,000, take home pay = $5,600 (80%)
Amount that goes to Ordinary Account: $1,610 (23%)

Suppose they buy a flat at $600k. After emptying their Ordinary Account, they have to take a loan for $520k @ 2.6% over 30 years.

Monthly Payment = $2080 (about 30% of their gross household income)
From CPF, we have $,1610 (23% of gross income)
Cash Top Up: $470

Take home pay of the couple after topping up the cash component
= $5600 – 470
= $5,130

Sounds quite okay…

But… what if say, the wife kenna retrenched one day or wants to be a homemaker. Leaving the husband to finance the flat alone. Assuming the husband earns $4k monthly.

Monthly Payment = $2080
From CPF, we have $920
Cash Top Up: $1,160

Take home pay of the couple after topping up the cash component
= $3,200– $1,160
= $2,040

Is it a “comfortable” figure? We will come back to that again in a short while.

What HDB might say in response to my post…

1)They can always buy a cheaper flat.

The truth is there ARE flats costing more than half a million that are supposedly meant for applicants with household income below $8k. And if a couple earning $7k can barely afford it, who can?

2)Why do you assume they will get retrenched along the way? Why plan for an event that may not happen? If you think like that, you will never be able to afford a flat.

I am sure if you drive, you do keep a spare tyre in your car boot. No?

Further more, it used to be that households with a single income earner were able to finance a flat alone. The figures show clearly flats are no longer “as affordable”. I just hope our government will acknowledge it instead of dismissing our concerns with a wave of the hand.

The government is always telling us the importance of having children, staying near your parents and supporting them etc. We must also try to save and plan for retirement. Seems like mission impossible in Singapore nowadays. How to do that with $2,040? One of my friend told me he’s planning to get a car, cos his mother is getting old and he’s also expecting a 2nd child. I told him to forget about it. If the young couple in our example has a family car too, they have like $1,000 left per month!

3)Look, there are flats that cater to different budgets. We are going to repeat ourselves again, just get a cheaper flat! Maybe at a less central location. Don’t be picky!

Yah… we are going to buy something that will take us 30 years to finance. And we are not supposed to be picky… hmm… For Pete's sake, we are not buying vegetables at the market, if the vegetables don't taste good, just throw!

The reason why I am looking at flats in central location is because, my family lives at Toa Payoh, while my fiancee's family stays near Outram. I just want a place near to them.

I am not looking at buying a luxurious condo. I just want a simple 4 room flat that is near to either on of our families! Is it too much to ask for?

Hi Husky,

You have some excellent arguments. Can I repost what you wrote above to the main site as a blog article?

Hi,

my pleasure. :) Feel free to quote me also. PM or email me if you need further info.

I got a city-area flat because locals are fussy...
 

I consider myself very lucky, being perhaps among the 'last batch' to purchase a first-hand flat from the HDB for under $200,000 before their prices skyrocketed.

I own a 4-rm apartment on the 20-something floor at Farrer Park Rd that cost me just $186,000. Farrer Park has an MRT at its doorstep, Mustafa Centre, The Verge, City Square Shopping Mall, United Square, Novena Square/Velovity within walking distance. Schools like SJI Junior and ACS are within 1km, and for girls, there's St Margaret's Primary also within 1km. If you want a neighbourhood school, there is Farrer Park Primary. And on National Day, I can see fireworks from my bedroom window.

Recently, I thought of upgrading to a 5-room flat, and so I did a valuation on my unit which is valued at $445K now. I definitely cannot afford moving to a 5-room flat in my current area; I have been priced out of the market. And I cannot imagine living elsewhere. So I decided not to move in the end, even though the COV range for my neighbourhood is between $20K-$50K.

But so what if I can pocket a high COV for my flat? I'm very very shocked that in the space of 6 years, the housing situation has become this bad. It makes no sense for me to overall fork out more money for my next apartment in a less convenient heartland that is far away from the city. I can foresee my monthly loan being more than $1,000, even for somewhere as 'ulu' as Bkt Panjang or CCK. Right now my loan is less than $600 a month; split 50/50 between me and my husband, both of us pay not more than $300 from our OA every month for this flat. I will never, ever have it this good again.

How did I manage to move here in the first place? In 2003, a balloting exercise for Kallang/Whampoa was conducted, for the locations of Jellicoe Rd, Jln Tentaram and Farrer Park Road. Most of the successful applicants were eyeing the new blocks at Jellicoe Rd (along Victoria Rd, off Lavender St) and they gave up their queue number after those were sold out. Very few of them wanted a unit in Jln Tentaram (in Whampoa, off Balestier Rd) because the area does not have MRT and is not served well by busses. Even fewer considered buying the new apartments at Farrer Park Rd because of its proximity to Little India.

To me, that's not a good enough reason for me to give up the chance of living so close to the city! In fact, foreign workers are not a problem at all -- and I'm raising 2 young kids in the neighbourhood. From Mon-Sat, Little India is really very quiet with no foreign worker crowds. They only come on their rest day, on Sunday. To me, that's acceptable -- I choose to stay home too, on that day. After so long, I've become used to it too. I think S'poreans are overreacting as foreign workers do not necessarily make your neighbourhood a dangerous place. In fact, it is safer as there are more police patrols.

It's the nature of Singaporeans to be fussy and maybe, a little snobbish and paranoid regarding foreign labourers. Ironically, I have to thank them. If not for my fellow citizens being picky and having misconceptions, I don't think there would have been so many good units at Farrer Park.

Honestly, S'poreans should learn to compromise, lest they let other opportunities slip by. Not every expectation can be met, nor can everything be perfect... what is important is to learn to adapt, like how I have learned to live with foreign workers in my neighbourhood.

I guess my other piece of advice is -- try to pay off your monthly loans with money from your OA, with no cash top-up. Or else your OA is going to remain at $0 for decades! Newlyweds should try to avoid resale apartments at all cost, unless they can really afford it with money only from their OA. I waited 5 years before I finally bought my Farrer Park apartment, and it was a huge risk. I already had a queue number for a BTO project in Sengkang, but I had to give it up even BEFORE I found out the results of the balloting. Imagine, if I had failed in the ballot, I would be back to square one. But don't be disheartened. Even if it takes you 5 years like me (and I had a young baby then too), don't give up on applying directly to the HDB as a first-time buyer. Your finances will really be ALOT more stable.

You are quite lucky indeed. :) I am really glad there are people like you who have already bought your flats but still can empathise with flat hunters like us.

Dilemma
 

I'm not sure whether to ballot for the Oct's Sale of Balance Flats OR to wait for the next supply of balance flats OR to wait for the bubble to be burst (accumulate & save more $ till the next property market crash)..

Are we unrealistic
 

$600k flat at mature estate yes. If household income is $4000, why the couple never think of getting a 4 room flat from news estate such as Seng Kang? And if you know your situation will be back, found a job quickly.

Bottom-line... are we realistic and flexible?

HDB figures put perceptions in perspective
 

HDB figures put perceptions in perspective

High number of BTO applications does not equate to urgent housing need

Slightly more than half of first-timer applicants invited to book a flat under HDB’s Built-To-Order system between May 2008 and June 2009 did not book a flat, although this rejection rate is lower than before HDB refined its BTO application process in May last year.

That fine tuning saw HDB removing first-timer priority for those who had turned down two chances to select a flat.

Ninety per cent of flats in each BTO project are set aside for those who have first-timer priority.

HDB issued figures yesterday to debunk the perception that a high number of applications for BTO projects equates to urgent housing need, given the relatively still high rates of rejections by first-time applicants.

The average rejection rates furnished by HDB yesterday refer to BTO flats in non-mature estates, where the vast majority of such flats are located, and exclude studio apartments. HDB’s figures yesterday showed that between March 2007 and March 2008, before the application process was refined, 9,088 or 67 per cent of the 13,605 first-timer applicants invited to make their selection did not book a flat. Between May 2008 and June 2009, the rejection rate had fallen to 52 per cent or 6,747 of the 13,080 first-timer applicants invited.

The rejection rate for first-half 2009 has declined to 45 per cent.

Reasons cited by applicants who did not book a flat include that their preferred units had already been taken up, they are reconsidering other housing options and the completion dates for the BTO projects are too long.

HDB also sought to debunk the perception that BTO applicants often made numerous unsuccessful attempts, pointing out that there is an 80 per cent chance of success for first-timer applicants to be invited to select a BTO flat. And the success rate of first-timer applicants being invited for flat selection within two tries is 96 per cent.

The BTO system remains the major source of supply of new HDB flats. HDB starts building flats in a BTO project only after it achieves a certain level of demand. Feedback from some potential buyers is that the three to four years it takes for the new flats to be built under BTO is too long. HDB officials urged young couples setting up home to plan ahead for their new flat purchases and apply for BTO flats under the existing fiance-fiancee scheme before they even get married.

Meanwhile, there has been strong demand for the 2,132 flats, which are either completed or nearing completion, that were launched on Oct 1 under the new Sales of Balance Flats scheme. As at 5 pm yesterday, 13,741 applications had been received. Applications close on Oct 14.

HDB is also ramping up the supply of BTO flats to be launched for the whole of this year, from 8,000 units planned previously to 9,000 units. With close to 4,000 BTO units launched in the first nine months of 2009, another 5,000 units in eight projects will be launched for application in Q4 this year. This month, HDB will release a project each in Sengkang and Jurong West, followed by two projects in Punggol next month, and four in December – including two in Dawson and one each in Bukit Panjang and Sembawang.

National Development Minister Mah Bow Tan, who spoke to reporters yesterday after visiting HDB sales counters, reiterated that the supply of new flats under the BTO programme is more than adequate.

He urged potential buyers including newly married couples to look for workable solutions and to weigh the trade-offs if they can’t find a flat in a mature estate where their parents live.

He also said HDB takes into account additional demand for resale HDB flats from the influx of permanent residents when it builds new flats as these units will eventually filter into the resale market.

Source : Business Times – 8 Oct 2009

Hard to get that first flat? Not so
 

Hard to get that first flat? Not so

NATIONAL Development Minister Mah Bow Tan has refuted claims by some first-time buyers that they could not get an HDB flat despite repeated applications.

Mr Mah said yesterday that some of the assertions that have appeared in media reports recently were ‘not entirely truthful’.

Home seekers had claimed that they were unsuccessful despite making several applications, while one hopeful said he lodged 18 attempts but still did not secure a home.

But Mr Mah said: ‘What is actually happening, is not a matter of buyers getting a flat, it’s a matter of them getting it and not selecting it for one reason or another.’

HDB figures yesterday showed that eight in 10 first-timers could get a flat on their first try if they were not choosy; the success rate was 96 per cent for the second try.

This is under the build-to-order (BTO) scheme, the HDB’s main supply of new flats. Projects get built when a certain demand is reached and flats typically take three to four years to be built.

‘If you look at this, you’ll know that the supply of new flats under the BTO programme is more than adequate, that is an assurance that I want to give to younger couples setting up homes for the first time,’ said Mr Mah.

‘Don’t worry, there are flats available for you, in different parts of Singapore at prices that are affordable. But we need to impress upon flat buyers that you may not get the dream flat of your choice the first time, but you have to make the decisions, and consider the trade-offs.’

This could mean living in a more affordable home but further away from the city, he said.

One of the media reports that prompted Mr Mah to speak out featured Mr Soh Say Kiat, who said he and his wife had applied 18 times since 2001 but did not get a flat.

The HDB said yesterday that its records, which started from 2002, showed that the couple made 12 applications and were offered flats three times but did not take any.

In another instance, Mr Jayce Ng and his wife told The Sunday Times that they applied at least eight times but were offered only one unit, which they turned down.

The HDB said records showed the couple were offered a flat seven times but did not select any.

Mr Ng, 30, however, pointed out that buyers who reject flats could have been offered leftovers with undesirable attributes.

‘You can’t blame me for having high expectations and not wanting to live on the second floor when I’ll be living there for the next 10 years – and this is a lifelong investment,’ he told The Straits Times.

The prospect of living on the second floor also proved a deal breaker for Mr Soh, who gave up the chance to book flats when he found out what level they were on.

‘I don’t want to be forced to get a flat I don’t want,’ he said.

The HDB data yesterday showed that even when applicants have the entire block of flats to choose from, three in 10 buyers still reject units.

In February’s launch of Champions Court in Woodlands, the rejection rate on the first day of selection was 24 per cent. The rate was 36 per cent for Fernvale Crest in Sengkang launched in June.

The rejection rate for BTO projects by first-timers was as high as 67 per cent in 2007 – meaning almost seven in 10 applicants rejected any flats offered to them.

This figure has since come down to about 52 per cent after the HDB introduced new rules in May last year to penalise non-serious buyers by removing their first-timer priorities.

Mr Mah acknowledged yesterday that three to four years might be a long wait for some young couples but noted the best way to cut short the waiting time was to plan ahead.

Couples can book a flat under HDB’s Fiance/Fiancee Scheme, which lets them join the flat queue early – before they get married, he said.

Mr Mah was speaking to the media after chatting to buyers at the sales counters at the HDB Hub in Toa Payoh.

One home buyer the minister spoke to, Ms Lim Yu Fang, 22, signed up yesterday for a five-room flat at a Punggol BTO project which cost $331,000.

‘Although the wait is long, we still went ahead because it’s more affordable compared to resale flats,’ said Ms Lim.

ENOUGH, AND AFFORDABLE

‘Don’t worry, there are flats available for you in different parts of Singapore at prices that are affordable…But we need to impress upon flat buyers that you may not get the dream flat of your choice the first time. - National Development Minister Mah Bow Tan, on the supply of HDB flats and buyers’ expectations

Source : Straits Times – 8 Oct 2009

The two relatively long post before this can be summarised in three words, Don't Be Picky. Incidentally that is the nick of the poster for both articles.

I have but three questions which I hope don't be picky can address. Don't be a drive by poster...

1) When buying something that takes up to thirty years to finance, is it wrong to be a little picky?

2) What exactly is the objective of removing first timer piority for applicants who has rejected a flat twice? It seems more like a measure to "force" people to take up a less than desirable flat than to ensure people with urgent need will be able to secure a flat.

3) Exactly what are we to the decision makers? Animals that they try to stuff into pigeon holes? Just make sure every pigeon has it own hole. Whether they like the hole they are assigned to or not is not important. What is important is, we can achieve a high success rate of filling them up into holes.

My last point is not exactly a question but more of a wish. I think it will be interesting to see some of these top brass stay in public housing for a while. Perhaps they can understand the situation on the ground a little better if they could really come down to our level. Being high up there in a control tower, it's not hard to imagine how we look to them. Cattle that they try to force into their respective pens...

I am not a mouth piece of the Government but would like to share my own experiences

I bought my Jurong West 5-rm in 2005 at a price of $170k. My spouse and I were also hoping to stay near our parents (Tampines and Ang Mo Kio) but we just couldn't afford flats in these matured estate. We talked it through and eventually decided that we will go ahead with the Jurong West flat because it means less financial demand on both of us, and we can clear the loan much quicker. Since then, we have been paying the installment with our CPF with no cash outlay. In fact at this moment we have enough cash savings on hand to clear the loan but since the interest rate HDB loan is lower than that of inflation, it is silly to redeem a "positive loan". We are using the cash for investment. The flat is valued at $410k today.

My spouse and I often reflect on how different will life be if we insisted on buying a resale in the matured estate. Yes, we will be close to our parents, but the quality of life will much lower. If we had bought a flat in those estate, we will been able to afford a car today to bring our parents around. If we had bought a flat in those estate, we will not have the cash savings we have today to generate more income. If we had bought a flat in those estate, we would continue to be slaves to our 30 year loan for the rest of our lives.

My advise to my peers looking to buy a flat is to just go for the cheapest you can find. While staying close the parents is a good thing, the cost of it is not worth it if it means paying so much more for a flat. As the saying goes "A flat is a flat is a flat". What is most important is the "Home" that you build using the flat as a resource.

Husky, i understand that since there will be a 30 years commitment, you would want to choose something ideal (even though it may be expensive). But why not consider something cheaper which you can clear in 15 years even if it means staying further away from parents. The money you save can be plowed to give your parents more allowance and give yourself a lighter financial load.

Hi, thanks for sharing your story. I have actually considered all the above you mentioned. Currently, I am trying to ballot for a flat in the Oct exercise. Worked out my sums and decided that I should be able to (barely) afford a 4 room flat in say Bedok or Ang Mo Kio.

My main gripe is that the Government till date simply just refuses to address our real concern. Over the last 4 years, your flat "appreciated" 140%. Whether it's still affordable or not really depends on the yard stick we use to measure. If the Government persists on using their methods of calculation to argue that it's still affordable, there's really nothing much I can do.

But no matter which angle you look at, a 140% appreciation in the price of a flat over 4 years is worrying. I don't recall them ever admitting to that, nor offer any official explaination as to how that happened.

They can't do much now. Admitting fault will not help either (may very well be worse off). Problem now is that if drastic measures are taken to push down prices, many people will feel poor => not a good situation when election is so near. So they can only try their best to appease frustrated newcomers and just risk losing a few votes.

Inflation will be a major problem very soon if USD keeps losing ground. We can strengthen SGD or maintain it. Either way we are doomed: strengthen SGD => exports go down, maintain SGD => high asset inflation.

You may be right. Then the poor dog becomes a sacrificial lamb with all his newly wed friends... :( They continue like this... they can be very sure 66% will become 33% soon.

I've been tracking this thread recently since I'm in a similar dilemma. You sort of summarized my root concern; a situation whereby there can exist a 140% appreciation of a flat over 4 years is nothing short of worrying. I'm no economics guru but it just feels like something's really wrong... I seriously do not see my income catching up with these kind of appreciation levels :(

I can imagine if this continues... asset values soar but nobody is able to upgrade even if they wanted to (cause its too expensive) and first-time buyers will definitely be priced out(!)

Yup. You don't have to be an economist to know something IS very wrong. Housing is one of the most important and basic need, but they have allowed the prices to soar... so much for trying to keep inflation and costs of living down.

Thanks to our very open economy and the overpaid people - bankers in US and politicians in SG. We don't see such severe problems in MY and ID. Something IS very wrong.

Interesting read over the weekend:

THE HDB has addressed some recent media reports and readers' letters concerning first-time home buyers complaining that they could not get a flat despite repeated attempts.

CASE 1: Married, but no place of their own

The Sunday Times reported on Sept 20 that Mr Jayce Ng and Madam Jacelyn Yong had applied at least eight times, five for build-to-order (BTO) projects and half-yearly sales.

They claimed they were successful in only one application - for a five-room flat in Clementi two years ago and regretted not buying then.

HDB's response:

The couple submitted 15 applications, out of which only four were for BTO projects, where couples have to wait typically three to four years.

Their other applications were for limited flats in mature estates. Records show they were offered a chance to select a flat seven times but did not do so.

The couple's response:

Mr Ng said he does not remember being offered as many as seven times.

In some cases, he said he chose not to select a flat because the ones left over were on the second floor.

CASE 2: 18 failed attempts to get an HDB flat

Home buyer Soh Say Kiat wrote to The Sunday Times Forum Page on Sept27 saying that he and his wife married in 2001, but had yet to hold their customary wedding.

They said 'we have been unsuccessful in our numerous attempts - around 18 times since 2001 - to get an HDB flat' which they put down to 'rotten luck'.

HDB's response:

Records from 2002 showed the couple made 12 applications.

Out of these, only two were for BTO projects, the rest were for popular flats in mature estates.

The HDB says the couple was offered a chance to select flats three times but they did not take it up.

It pointed out that Mr Soh was offered a BTO flat in Sengkang in 2003. If he had accepted, he would have got his flat in 2006.

The couple's response:

Mr Soh said he could not remember all three offers, but recalled that he gave up one offer because the flats were on the second floor.

He admitted they were picky about location when they started applying for homes, but say they will try for BTO flats on offer now.

CASE 3

A home buyer sent an e-mail to the Prime Minister's Office on Sept 21 saying: 'I have been married since 2007, and to date, unable to secure a HDB flat after numerous balloting exercise at least 10 times over the years.

'This has greatly affected first-timer applicants especially like myself where I could not live a normal life.'

HDB's response:

The couple applied eight times, not 10, and only one application was for a BTO flat, where there is a much higher chance of success.

They had four chances to select a flat but did not do so, including an option to take up a BTO flat in 2005, which would have been completed last year.

Husky,

It will be useful if you can share with us your budget, requirements (no. of rooms, high-floor, etc) and the shortlist of location that you have. With this info, maybe we can give you a more comprehensive advice on what and what-not to look out for.