20140330 The HDB has failed Singaporeans

Formed in 1960, the HDB has transformed Singapore’s squatter colonies into (unaffordable) First World public housing. The HDB has even won numerous international accolades for various public housing projects.

Is success in public housing all about regularly winning accolades for buildings and designs? As far as citizens are concerned, affordability is definitely more important than creating an impression for foreigners. As HDB has also acknowledged on its website, its role is to “provide affordable, quality homes”.

I will post on this blog questions and (my) answers which confirm HDB’s failure to discharge its responsibility to citizens.

Hasn’t the government realised its error since it did ramp up HDB construction?

No. Because there was no accountability at the HDB. In fact, what we will witness is the HDB and the government will be patting themselves on the back for a job well done. They will be rewarded for failure ie screwing up citizens who are saddled with higher housing loans. Increase in construction activities = increase in GDP = higher performance bonuses!

Image @ clipartof.com

Isn’t public housing affordable now?

Khaw Boon Wan, MND minister, has yet to fulfill his promise to make BTOs affordable. 4/5-room HDB flats still cost way above the four years of salary he had promised. Citizens are therefore disappointed and one has even mocked Khaw with this unflattering photo on Facebook.

Public housing must include resale flats which are still unaffordable to young couples.

How unaffordable are resale flats? HDB resale transactions

(COMBINED SALARY $5000) $1,150

(typical 3/4/5-rm prices of $350,000,$450,000 and $550,000 respectively)

3 RM 4 RM 5 RM
$350,000 AFFORDABLE? $450,000 AFFORDABLE? $550,000 AFFORDABLE?
5% CASH $17,500 YES $22,500 MAYBE $27,500 NO
15% CPF $52,500 YES $67,500 YES $82,500 NO
MAXIMUM GRANT $40,000 NA $40,000 NA $40,000 NA
LOAN AMOUNT 80% $235,000 NA $320,000 NA $400,000 NA
MONTHLY INSTALLMENT $1,067 YES $1,452 NO $1,815 NO
MINOR RENOVATION $20,000 NO $30,000 NO $40,000 NO
BASIC FURNISHING $15,000 NO $20,000 NO $25,000 NO

HDB loan calculator

From the above table, any ordinary young citizen couple will find it an impossibility to purchase a 3-rm resale flat. It is a basic unit to start a family. The above has not taken into consideration the stamp duty, agent’s commission and other miscellaneous items.

Is it really that unaffordable?

Any public housing unit that requires a dual income to service the mortgage over 25 years has to be defined as unaffordable. Should unforeseen circumstances such as accidents, deaths or retrenchments, there will be huge costs in downgrading. Why should citizens take any risk in public housing which requires a dual income?

If cannot afford, then buy from HDB la?

We are talking about a basic unit, a need. Singaporeans seem to have forgotten we do have right to demand that the government makes ALL public housing affordable. Resale HDB flats should not be conveniently excluded. The PAP cannot be allowed to dictate to us where we should live and insists that all must apply for new flats to fit its definition of ‘affordable’.

Won’t the new PR policy help?

Tweaking legislation to allow new PRs to buy resale units only after three years means the postponement of an existing problem to a future date. This is myopic. After 3 years, PRs will flood the HDB market again and another round of price increase will result from the pent-up demand. HDB’s short term planning requiring perpetual tweaks will cause other easily-anticipated problems such as a volatile housing market.

Will the the temporary increased supply cause housing prices to fall?

In anticipation of the election, the ramp-up construction may cause prices to temporarily fall. However, the problem lies in our government being the biggest landlord and it favours high property prices. Sooner or later, when there is no more threat of power loss, property prices will resume its climb. High property prices trickles down to high commissions for agents, high GST collection, high revenue for the HDB, high rental, etc. The government collects more taxes as a result, all at the expense of citizens.

What are the flaws of BTO system?

As the name ‘Build To Order’ suggests, construction can start only after the confirmation of more than 65% to 70% of demand in the project. This means there is essentially ZERO planning by civil servants. Choose a plot of vacant land and just let the people make the decision. Don’t blame the government even if it is the most undesirable location.
Civil servants are paid to plan ahead but came up with the BTO system which means they will always be behind the curve. Even smaller developers take some risks but the HDB, as the biggest developer, is allowed to take ZERO risk with a ‘kiasu’ system. The HDB wants to have money in the pocket first before constructing the product. At the end of the year, it somehow manages to lose billions for taking ZERO risk.

Why is HDB fundamentally flawed?

HDB exists as a political tool used by the PAP to control and micro manage the population. At its whim, it can construct thousands of new housing units in GRCs with low PAP popularity to shore up its support.
After new ‘home owners’ have received their keys, the estate is handed over to town councils which is managed by PAP MPs and grassroots supporters. PAP also decides which parties are awarded contracts.

HDB has yet to close the loophole which allows ‘home owners’ to cash out by purchasing a second unit directly from HDB. There have been suggestions by opposition political parties such as the SDP. Former GIC chief economist Yeoh Lam Keong has praised the SDP’s alternative housing plan, calling it a “remarkably high quality and in-depth piece of research”.

Did HDB ramp-up construction cause any issue?

The biggest issue is of course the quality of workmanship. The elites treat housing as a game of SIM City where production can suka suka be ramped up as if there are no repercussions. The reality is the supply of QUALIFIED, SKILLED and EXPERIENCED manpower is inelastic. On the scale of current HDB construction, the required manpower does not exist. This has resulted in quality being severely compromised and more issues of shoddy workmanship will surface in future. But HDB doesn’t have to bear with the inconvenience, residents do.

Why does the HDB want to control housing?

Singapore is run by the elites with only profit making in mind. The welfare of citizens is an after thought. With the elites controlling the HDB which in turn controls housing more than 80% of the population, public housing can easily be abused to house an increased foreign workforce. PRs were allowed to purchase public housing, never mind if it resulted in higher prices. This saves the government construction costs of new infrastructures.

In 2010, the HDB set aside 2 blocks of flats in Toa Payoh for immediate rental to foreign workers at the IR. For Singaporeans, they simply had to wait an average of 17.5 months to 25 months. TOC FB

There are many other issues which will be highlighted on another post.


Citizens must know they have the right to affordable public housing which must include resale HDB flats. The HDB has been abused by the PAP to control and micromanage citizens. A politicised HDB exists only to serve the PAP at the expense of citizens.
The unchecked escalation of public housing prices contributes significantly to our low TFR and a high cost of living. Despite all efforts, the HDB has still not been able to provide affordable public housing. It has continued to fail Singaporeans.

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