Tuesday, 7 June 2011

Points to Ponder for HDB

The aim as it has always been is to buy a first-time HDB flat at low prices (at low interest rate) and then sell after 5 years to make a profit regardless whether people need a flat or not (it's your entitlement!! as many will advise). These buyers form a significant part of the population fuelling the demand for new flats and the general unhappiness with housing matters.

Minister Khaw approximated about 15,000 first marriages a year with 70% of new couples getting their homes via HDB’s BTO flats. He has since tasked HDB to ramp up BTO development to 25,000 flats this year to quell the demand and clear backlog, however, should we keep building so many flats yearly and will Singapore eventually run out of space to build public flats? As more private condominiums are completed within the next three years, will there be more supply than demand and who do we expect to live in them?

Let's assume from the yearly 15,000 first marriages, we have 30,000 sets of parents from the married couples leaving the nest, let's also assume all come from two child families so eventually when all the children get married we will end up with thousands of new HDB flats and lots of elderly parents living alone in the old HDB flats. Thus, while building more flats solves the housing shortage now, it will eventually lead to another problem of old flats and neglected parents.

The following suggestions might be useful to MND.

a)  HDB may want to explore the possibility of combining the selective en-bloc with BTO in mature estates. This will surely be a boon to both old and new residents. For example there are many 10-12 storey flat estates which can be accommodated in 5 blocks out of 10 (30-40 storey flat) in an en-bloc exercise, that way the Government can maximize and re-plan urban space while offering older estates a mid-life upgrading and no doubt pleasing the lucky new flat owners (many will want to stay close to family). The old plot can similarly be reused for housing or to introduce new amenities to enhance the estate overall.

b)  Re-look urban planning in Singapore and through selective en-bloc exercises, remake old estates with integrated facilities such as schools, Polyclinics, transport, sports facilities, shopping malls, markets and office clusters to support a mini population. It will cost money but will be money well spent and appreciated by the people notwithstanding the continual boost to the construction sector.

c)  Offer a new variation of the Married Child Priority Scheme, instead of allotting double chances to new flats applications, the HDB should facilitate the sale and re-sale of an existing flat between parents and their married children. The parents will sell their flat at market valuation to the HDB and HDB in turn re-sells the flat to the married couple at the same price but with first time interest loan rate. This allows the aged parents to cash-out on their flat and allow them to still stay in the same flat (estate) while the newly weds get their instant home and carry out their filial duties.  Conditions such as a minimum 5-Year Occupation period will apply. To sweeten the deal, the married couple may be given a $40k cash-back (i.e. Family Grant –but not to CPF) which they can immediately use to renovate their (old to new) flat.

d)  The previous suggestion is also another variation to the Lease Buyback Scheme (LBS). The current LBS eligibility criteria does not apply to most middle income Singaporeans and I believe the scheme only appeals to people who have no family, charity or beloved pet to leave their fortune to.

e)  To boost the national fertility rate, the Government may consider introducing a “nanny bonus” given to every household with a newborn child living with a grandparent. The amount could be $400 a month given out till the child reaches age 7 (Primary One).

Finally MND should put an end to the debate on pricing of new HDB flats by providing a detailed breakdown of costs, including land, construction and miscellaneous fees. Without undermining the private developers, such disclosure will surely eliminate another hot election potato.

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