High HDB prices: Squeezed even harder

Source : Straits Times – 22 Aug 2009

THE HDB resale price index has surged relentlessly since 2007. Since the first quarter of 2007, the index has increased 35.3 per cent and is now at a record high, even though the economy is still recovering from downturn.

This is an anomaly the Government should examine.

The recent Punggol Residences launch by HDB, which drew seven applications for every unit on sale, is another case to show the Government needs to increase supply to prevent housing prices escalating further.

While there is the additional housing grant to help the lower-income group, I urge the Government not to overlook the sandwich class group – those who are not eligible for subsidised public housing, yet cannot afford private housing. The escalation of mass market property prices has made the dream of owning a private property even more distant.

I urge the Government to reconsider the income ceiling of $8,000 as a criterion to be eligible for the Central Provident Fund (CPF) housing grant, which has been in place since 1994. Since 1994, the CPF Ordinary Account contribution rate has decreased from 30 per cent to 23 per cent and the HDB resale housing index has almost doubled from 75.5 to 140.2.

The supply of executive condominiums has also come to a halt. For those who aspire to condo living, Design, Build and Sell Scheme units launched by private developers range in prices from $550,000 to $720,000. Given the income ceiling of $8,000, couples who buy such flats must take huge loans which may not be proportionate to their income.

I urge the Government to look into the following to help the sandwich class:

~ Raise the income ceiling of $8,000 to take into account the almost doubling of housing prices, as well as general inflation;~ Increase the supply of executive condominiums;~ Increase the supply of new public housing so unsuccessful applicants for new HDB flats will not put additional upward pressure on the resale housing market; and~ Implement anti-speculation measures to cool down private property prices.

Given that the HDB resale index may be a lagging indicator since resale transactions entered by buyer and seller may take up to three months before HDB approves the resale application, the housing price index is even higher than it appears. It is already common in the resale market for sellers to ask cash over valuation ranging from $15,000 to $30,000.

The Government is encouraging families to procreate, but imagine what future generations will have to fork out to own a place that they call home.
Chew Kim Cheer