Watching HDB price behaviour, sensibly

Source : Straits Times – 23 Sep 2009

THERE is a rising pitch of anxiety evident in queries and feedback about HDB housing in recent months. These have centred on affordability mainly, no surprise considering that the sudden spurt in private property prices since July has boosted HDB values, which already were holding better during the recession. Hence, complaints about cash over valuation. Why don’t buyers exercise their democratic right to not pay a premium by looking in towns less ‘prime’? Home buyers have also touched on policy issues like household income ceiling and the operation of ethnic quotas. National Development Minister Mah Bow Tan addressed most outstanding grouses in a well-timed statement in Parliament last week, but such is the variety of need and the habits of personal preference that assurances would still leave some home-seekers unconvinced.

Affordability is a bugbear, which in turn influences notions of supply relative to demand. Median income and the ratio of household income used for loan service (up to 30 per cent, as a general rule) cited by the minister are indicative of most people’s ability to pay, but these are rough guides. In every flat type of up to five rooms and the corresponding price ranges, households which fall below the median income line could progressively be less able to own their homes. That’s a lot of families. Financing difficulty can also arise when a family chooses a bigger flat than it can pay for, or needs. There are far too many of these big-is-better purchasers. But this is also where the comprehensiveness of HDB’s income-differentiated schemes and the different types of supporting grants available reinforce affordability.

There is little doubt that state housing is affordable, whether new or resale, if one considers carefully precise matching need. The HDB has every conceivable flat type and location to suit every budget. Home seekers create problems for themselves when, as seen, they buy bigger places than they can comfortably finance. They could also be unyielding about wanting to live in ‘mature’ towns or to be near their parents, for the (selfish?) child-minding convenience. It is an odd mentality that regards only as ‘ulu’ the new towns which otherwise score heavily in more spacious estate layout and the much nicer, contemporary design of flats. And what of ‘distance’? Farthest points on this island are reachable inside an hour by public transport, faster by car. Mr Mah urged buyers to be sensible about making ‘trade-offs’ between location and price. This newspaper would go further: If they choose to be obstinate about quirks, they should not be hectoring the HDB for impossible concessions.