Tuesday, June 4, 2013

Khaw Kawbeh on Citizens' Kawbehing

The rush to build flats, flats and more flats, more than 50,000 since 2011, cannot be sustained says our minister Khaw Boon Wan. No shit Sherlock! Facepalm.

Nobody said that HDB should build until glut, just build slightly more than enough to cope. Layperson ball park figure, 5000-10000 flats excess, mix of 3-4 bedrooms in ulu areas scattered across the island. Obviously his predecessor Mah didn't understand that and fucked it up for everyone and his PAP when election time came in 2011. Mah fucked public housing policy more than Khaw did for sure and the former MND minister lost his job.

Besides supply of flats and that has happily pushed up prices for existing flat sellers because of shortage of flats, the other pain to the buyers' wallet is COV. This is cash, not something from CPF and buyers can't take a mortgage loan for it. Loanshark, overdraft, credit card and other unsecured loans can, but not a proper currently low interest rate mortgage loan.

HDB should actually listen, not just hear, people. Sellers can sell their flats at whatever market price they think but buyers should get loans based on the valuation of the flat without any COV, just like buyers of private properties. Both buyers and sellers will be relatively satisfied.

WTF in fact, why should HDB resale flat buyers be penalised for buying flats in this way compared to private property buyers? If the resale flat or a private condo apartment is $1 million, a buyer of a HDB flat is going to pay more cash than if he were to buy a condo, all things equal. That doesn't make a HDB flat sound affordable. No?



Ramped up supply of HDB flats not sustainable in long run: Khaw Boon Wan

SINGAPORE: The Housing and Development Board (HDB) has been ramping up the number of flats it has launched in the last few years but National Development Minister Khaw Boon Wan said this number could slow down after 2015 to prevent a glut in the market.

Mr Khaw was speaking to the media on Monday after witnessing the handover of a completed Build-To-Order block in Woodlands from the contractor to HDB.

25,000 BTO flats were launched in 2011 and another 27,000 were launched last year.

While this has helped satisfy the backlog of demand from first and second time home buyers, Mr Khaw stressed this cannot continue.

This year alone, HDB plans to launch at least 25,000 new flats but Mr Khaw said this continued ramped up supply is not sustainable in the long run.

Mr Khaw said he is not worried about a "small glut" forming in the public sector as he wants to help more groups, like singles. He said he hopes to build up an inventory such that flats are ready if there is demand.

While he doesn't foresee a glut happening in the next two years, Mr Khaw cautioned the market need to go back to a steady state.

He said: "Don't expect this 25,000 units per year or the construction ramped up programme to continue forever. It can't be. It is not sustainable, bearing in mind that new family formation is only at 15,000 a year. As we clear the back log, we should be able to move back to the steady state.

"The steady state does not necessarily mean 15,000 units construction per year. Some may prefer to buy resale flats so that they can move in immediately. More importantly, they can select which flats to buy and which areas to buy because their parents might not be in the non-mature estates or their parents might not want to move into non-mature estates so we should always keep those options open."

Mr Khaw also said he is confident that HDB will be able to deliver on the flats it has promised.

This is despite the tightening of foreign manpower into Singapore. Mr Khaw pointed out the use of pre-fabricated components in HDB projects has helped to address this constraint.

Mr Khaw said HDB is on track to deliver the 13,600 units planned for completion this year and he added the effect of the ramped up supply is beginning to be felt this year while the full effect will be felt over the next two years.

About 6,000 HDB residential units have already been completed as of end May.

Mr Khaw said: "The steady state is a sustainable property market. I think property prices will probably always float upwards unless the economy crashes. We hope not to have prolonged recession. So long as economy is growing steadily, wages will go up steadily, and therefore property prices will also go up steadily.

“But there will be times when the asset appreciates much faster than wage increases, like in the last five years, so that is not sustainable. That was a period for happy sellers and very unhappy buyers but we are slowly tilting and hopefully we will reach a happier state, a fairer state between buyer and seller sometime soon."

However, Mr Khaw said what he is concerned about is a glut occurring in the private market.

He noted that a large proportion of private property is taken up by investors who are hoping to rent out their units.

He cautioned that if there is a glut in the market, rental yields could drop very quickly.

This will also cause serious financial trouble for those who have taken up a private loan, especially when global liquidity begins to ease.

Mr Khaw added this is why the Urban Redevelopment Authority's land sales have only been on a six-monthly basis.

"We have to be very nimble, and fairly skilful and also a little bit lucky. So far we have been lucky, but don't count on that for too long," stressed Mr Khaw.

On the ongoing 'Our Singapore Conversation' on housing, Mr Khaw said there have been plenty of suggestions but he addressed some participants' calls to scrap the Cash-Over-Valuation (COV) component for HDB resale flats.

He pointed out the transaction is an agreement between buyer and seller and said if home buyers are keen to pay above valuation, there is little he can to do to prevent it.

"Sometimes, you may love the place so much that (you are) prepared to pay higher – that is how COV crops up. How do I prevent it from happening? If you insist on doing so, (either by) under the counter or giving an 'angpow' (red packet) three days later in a wet market somewhere, how am I going to catch you? So it doesn't work to say let’s ban COV."

Mr Khaw added one thing participants agreed on and are proud of is Singapore's home ownership numbers.

He said in particular, he has been paying attention to the discussion on seniors, as more begin to retire and start to look at how they can get extra pocket money from their homes whether from renting out a room or right sizing their home to a studio apartment.

Mr Khaw stressed that preserving the value of property has practical implications for retirees but capital appreciation has to be reasonable, and not like the last few years.

Mr Khaw added he is working on making BTO flats more affordable.

He hopes to bring down the cost from five years of a couple's annual income to four years but he said home buyers will need to have the right expectations.

"If you engineer the softening of prices, and everybody shifted their expectation where previously they'd buy a three-room and now they'd buy a five-room, then you're chasing tails and the problem will never be solved," said Mr Khaw.

- CNA/fa

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