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http://www.tremeritus.com/2014/03/15/dr-ng-housing-problem-has-been-decisively-tackled/ Dr Ng: Housing problem has been decisively tackled March 15th, 2014 | Author: Editorial Minister Ng Eng Hen Wrapping up the nine-day debate on the Budget and Committee of Supply (COS) this week, the Leader of the House Ng Eng Hen compared this year’s debate to the one held in 2011. He said the difference in the issues raised showed there has been significant improvement in some areas: MPs were also pleased that the housing problem has been decisively tackled. The results speak for themselves – shorter waiting times, lower costs and greater affordability of housing pushed MND off the hot seat, to the relief of Mr Khaw’s eyebags. All in all, this year’s Budget and COS reflect a House holding true to the course which the President set when Parliament began in 2011 – ‘to build on our strong foundation together, to give all Singaporeans a better life and brighter tomorrow’. Has the housing affordability issue been decisively tackled? Let us see. It is a good thing that Singaporeans have the internet these days. In Parliament last March [Link], Housing Minister Khaw Boon Wan said more will be done to reduce BTO flat prices relative to income, and to reduce the financial burden of housing on the young: We have stopped BTO prices from rising by delinking them from resale prices. We can now pause and see what else we can do to bring BTO prices in non-mature estates to, say, around 4 years of (annual) salary as it was before the current property cycle started. One thing is clear. We are committed to restoring and maintaining the affordability of new HDB flats to the vast majority of first-timer Singaporean households. Their Singapore Dream of owning their own flats, like their parents’, is safe. We will make sure of that. Notice that Mr Khaw used the term “restore the affordability of new HDB flats” and notice that he also avoids talking about resale flat prices and prefers to focus on new BTO HDB flats. In an interview with the Straits Times last April [Link], DPM Tharman said: Over the longer term, I do think that we will be better off with housing prices being a smaller multiple of incomes for the average person especially. For the low income group, we’ve got very substantial grants and subsidies. But for the average family, average young family, including those who are in the upper middle income group, and those who go for private condos included, we’ll be better off as a society and as an economy in having a more steady growth of property prices and the multiple of property prices to incomes being somewhat lower. It’s important for us to keep prices in check so that younger families feel that housing is affordable and don’t have to put so much of their disposable income into servicing their loans. I think that’s the right long-term objective. Let us look at a recent BTO launch in January 2014 to see if Mr Khaw has fulfilled his promise. Remember, he said he wants to bring BTO prices in non-mature estates to around 4 years of annual salary, as it was in the past before. Punggol BTO Jan 2014 [Link]: Typical 3-room: Nett selling price less grants = $165,000 Applicants’ median monthly household income = $2,800 Price to annual household income = 4.9 Typical 4-room: Nett selling price less grants = $300,000 Applicants’ median monthly household income = $4,400 Price to annual household income = 5.7 Typical 5-room: Nett selling price less grants = $430,000 Applicants’ median monthly household income = $6,000 Price to annual household income = 6.0 Obviously, Mr Khaw has yet to fulfill his promise to bring down BTO prices in non-mature estates to around 4 years of annual salary. In fact, if he wants to fulfill his promise, he should be selling the new BTO flats in Punggol now for about: Typical 3-room: 4 x $2,800 x 12 = $134,400 (19% discount from current $165,000) Typical 4-room: 4 x $4,400 x 12 = $211,200 (30% discount from current $300,000) Typical 5-room: 4 x $6,000 x 12 = $288,000 (33% discount from current $430,000)