Monday, November 5, 2012

Affordable Public Housing: The SDP Alternative

SDP launches "inclusive" housing manifesto


Nov 5, 2012 (source)


The Singapore Democratic Party launched its housing plan for Singapore on Nov 4, 2012, during a press conference at the Quality Hotel.

Led by party secretary-general Dr Chee Soon Juan, members of the party introduced a plan that focused on the creation of two separate housing markets as a means to keep property prices down while increasing the supply of cheaper flats.

Criticizing current housing policy as a “huge profit-making enterprise”, Dr Chee said that SDP’s housing paper came after “months of intense study and debate” with the motivation to “fix the mess” created by previous housing ministers.

On the housing panel were SDP members Jeremy Chen, Dr Leong Yan Hoi, and Dr Toh Beng Chye.

“Dual-market system” to keep housing prices affordable

Key to the scheme is the introduction of a “Non-Open Market” (NOM) – which will see new public housing being built and sold by the HDB at far lower prices than the status quo. Homes built under this scheme can only be sold back to the HDB, preventing profiteering and thus keeping prices affordable.

SDP predicts that at these lower prices, housing loans will only take between 9-15 years to be repaid, freeing up cash and CPF for Singaporeans to pursue other business interests and investments rather than have their liquidity locked into their homes.

The second market, the “Open Market”, will be where private housing and existing flats are bought and sold. “Open Market” home owners will be given the option to sell their homes back to the government, where they will be compensated.

Their homes are then assimilated into the NOM scheme, give OM home owners the option of having access to their CPF savings locked up in housing loans- something the SDP says will be necessary when Singapore’s baby boomer generation retires in 15 years and start facing liquidity problems as some realize their nest eggs are not substantial enough to keep up a decent standard of living.

Stabilising over inflated public housing prices

With both markets present – the NOM there to gradually stabilise and correct over inflated property prices, and the OM there to ensure that there are no sudden drops in value or loss of savings for existing home owners, the SDP housing panels put it forward that over time, prices will begin to return to normal, affordable rates.

SDP’s housing panel also suggested the building up of “buffer housing” at hand to ensure that supply consistently meets demand – something they say is not happening under current housing policies as young couples postpone marriage and parenthood in the face of expensive and difficult to obtain Built-To-Order flats.

Under the NOM and OM scheme, said panel member Jeremy Chen, the significantly more affordable prices SDP proposes are possible because they do not intend to include what is called the “land cost” – explaining that since the government had already acquired over 80 per cent of Singapore’s land at historically low prices, it should not be factoring the cost into the cost of building public housing.

“Costs should only include labour costs, material costs .. public housing is a basic need, and a profit seeking approach is unacceptable,” said Chen, showing statistics from GeBIZ revealing that the true cost of building works put forward by construction companies range between just $75,000 to $170,000 per unit.

“Inclusive” policy – singles, single-parent families not forgotten

SDP also touted it’s housing policy as being an “inclusive” one which does not discriminate against singles and elderly – two demographics they say fall through the cracks under current policy.

While priority will be given to families with children or expecting couples, singles will also be allowed under their plan to ballot for flats with everyone else – with restrictions placed only on the types of flats they are allowed to ballot for.

Single parent families with young children will also be given the same priority as families.

For lower-income Singaporeans who do not have the means to pay for NOM flats, SDP proposes that they continue to rent from the HDB – but with grants that are more gradual so as to prevent a disincentive for rental-home dwellers from taking jobs with higher productivity.

“I remember there was a case reported in the newspapers about an old lady who rejected a raise, because the raise would put her into a new income bracket where the rise in her monthly rent was more than her actual raise … that shouldn’t be the case,” said Mr Chen.

Under the SDP’s proposed grant quantum, the new rate of decrease of the housing grant is lower at lower levels of income – as each grant dollar is valued more by lower income households than higher income ones.

Housing policy benefiting the needy elderly

SDP also proposed a change to HDB’s current Lease Buy Back (LBB) scheme, where elderly Singaporeans in need of income re-mortgage their flats for a sum of money for a limited lease.

“Under SDP’s plan, senior citizens can convert their flats to the NOM scheme in return for an annuity to live on,” said Chen.

This annuity will be based on a basket of goods and inflation-adjusted, which Chen said should represent a “dignified” standard of living.

“Three hawker meals a day, a beer or two with khakis every three days, and every few months, maybe a trip up to Genting Highlands with friends, something like that. A reasonable, dignified standard,” said Chen.

SDP’s annuity scheme, combined with the NOM scheme, which aims to increase retirement savings, will work to support existing needy elderly as well as reduce the number of Singaporeans who find themselves with not enough savings to retire.

Former chief GIC economist Yeoh Lam Keong, who was present at the launch, called SDP's housing policy a "high quality" one that would be "good enough to kick off the (housing debate)" and " needs to be part of the National Conversation".

However, he raised concerns about whether the NOM and OM dual system would create two classes of Singaporeans - one group who owned very cheap homes which can no longer be a source of asset appreciation, and another which owned private housing purchased at historical prices.

He also brought up the importance of only allowing citizens "one bite at the cherry", saying that allowing them to come back for more could lead to profiteering from the system.


SDP's full Housing Policy scheme can be found here

Time we had real public housing, Yawning Bread (Alex Au): here


An analysis of the SDP Housing Plan

Leong Sze Hiang (source)

Leong Sze Hiang

I refer to the Singapore Democratic Party’s (SDP) launch of their paper “Housing A Nation: Holistic Policies For Affordable Homes”, on 4 November.

Non Open-Market HDB flats

The proposed “Non Open-Market” (NOM) category of HDB flats for Singaporeans only, is a novel one, and a significant departure from our current public housing policy.

Briefly, NOM flats are priced at construction and administrative costs plus without land costs, and cannot be sold in the open resale market, but only back to the HDB at cost less depreciation.

NOM implications, outcomes?

Whilst no one can say for sure what the impact, implications and outcomes may be, if the SDP Housing Plan is adopted, in part or in totality, a great deal may depend on the speed and graduality of implementation.

Notwithstanding the above, I think the NOM may be a welcome relief for the following groups of Singaporeans:-

… those who cannot afford a new BTO (Build-to-order) flat

… those who cannot afford a resale flat

… those who cannot pay their existing HDB mortgage and want to downgrade, but are currently unable to do so in the resale market due to financial constraints like outstanding loan balance, high resale prices, Cash-over-valuation (COV), loan availability, etc

… those who want to downgrade to retire or monetise their existing flat

… those who are homeless, but have sufficent CPF and/or cash-flow to afford the much lower priced NOM flats

… those in the Interim Housing Scheme or renting in the open market, as the SDP plan does away with the 30-month waiting period before anyone who has sold a HDB flat can apply for a BTO flat or HDB rental flat

Conversion to NOM

With regard to the option for any open market (OM) flat to be converted to a NOM flat to receive the pricing differential back in CPF/cash, I think it may also be a welcome relief to the following:-

… those who cannot pay their existing HDB mortgage and want to continue staying in their existing flat

… those who want to to retire or monetise their existing flat, and still continue to stay in the same flat

… those who have not passed their 5-year Minimum Occupation Period (MOP), and need to get funds (CPF/cash) out of their current HDB flat

… divorcees (Note: I believe under the SDP plan, divorcees will not be penalised in regard to MOP or the need under the current policy to re-arrange a new housing loan)

Impact on Resale market prices?

If the NOM is implemented gradually, such as the initial about 10 per cent of BTO flats suggested by the SDP Housing Panel, I believe the impact on the HDB resale market may not be substantial, and perhaps gradually cool current escalating prices and COV.

Of course, it may also be more prudent to implement the plan in stages, such as the NOM first, whilst holding back the Conversion to NOM to gather feedback and reaction of the market.

I think those who can afford may still prefer OM flats due to the possibility of capital appreciation in the future.

Conversion to NOM vs HDB Lease Buy-back?

As to the NOM conversion in retirement scheme, which allows those who retire to covert to NOM in order to get the price differential to obtain a life annuity, it may be more suitable for retirees than the current HDB Lease Buy-back scheme because

… the sum available from the NOM conversion may be higher

… the monthly life annuity increases in the future with an adjustment for inflation

… there may be more certainty as the flat owners can stay for as long as they live, instead of for 30 years

A much needed truly National Conversation?

In summary, my opinion is that generally, the SDP Housing Plan may help to reduce much of the financial stress that so many Singaporeans are faced with today. I therefore suggest that the Government, stakeholders and Singaporeans, engage with more ideas, feedback and suggestions, to explore the possibility of refining and using some if not all of the features in the SDP Housing Plan.


GIC economist: SDP housing plan "excellent"

Singapore Democrats

Nov 5, 2012 (source)

Yeoh Lam Keong

Former GIC chief economist Mr Yeoh Lam Keong (About Yeoh and his views on Singapore: here) praised the SDP's alternative housing plan for Singapore as of "remarkably high quality and in-depth piece of research."

Mr Yeoh made the remarks at the launch of Housing A Nation: Holistic Policies For Affordable Homes at the Quality Hotel yesterday. (Download the entire paper here.)

Mr Yeoh, who is also a senior research fellow at the Institute of Policy Studies and an adviser at the National University of Singapore and Singapore Management University, described the paper as "excellent".

"Not only is the theory and methodology sound and rigorous, the empirical work seems well researched and remarkably detailed as well," he said.

On the policy itself, Mr Yeoh said that the Non-Open Market (NOM) proposal is "coherently laid out and makes much sense in terms of the objective of potentially giving low-income and middle-class Singaporeans access to affordable, high-quality public housing."

He added the SDP's principle to de-link HDB prices from the private cost of land is a "fundamentally sound one."

He also highlighted the paper's discussion of the causes of asset price inflation and the dangers of an asset bubble in property, commenting that that these issues "are currently insufficiently tackled and highlighted by policy-makers."

Mr Yeoh, who was Director of Economics and Strategy and Chief Economist at the GIC from 2000 to 2011, said that the paper "goes a long way" towards achieving its goal of outlining a holistic policy for affordable public housing in Singapore.

"Considering the authors are approaching a complex, technically arcane area with not much available data, it discusses the main arguments and alternatives cogently, rigorously and very competently," the prominent economist pointed out.

But Mr Yeoh also had a few suggestions to improve on the policy. First, he said, the NOM scheme was unnecessarily restrictive. He suggested allowing resale of NOM flats on the open market after a period of 10 years.

The 10-year period should minimize any adverse impact on existing free-market prices of resale HDB flats.

Furthermore, he added, HDB should allow singles to buy flats irrespective of age (currently at 35).

He also wanted to see more emphasis on the need for a more extensive subsidised public rental market. Singapore needs to make such rental housing available to a large section of the population.

Another well-regarded analyst, Mr Leong Sze Hian (pictured, right), also viewed the SDP plan positively, saying that the policy "may help to reduce much of the financial that so many Singaporeans face today."

"I therefore suggest that the Government, stakeholders and Singaporeans engage with more ideas, feedback and suggestions, and to explore the possibility of refining and using some, if not all of the features in the SDP Housing Plan," Mr Leong urged.

Mr Yeoh concurred, remarking that the policy "is a much needed kick start to a crucial national debate on affordable housing."

Read also:
SDP proposes non-open market flats in housing policy


Chee: PAP has failed Singapore in public housing

Singapore Democrats (source)

The PAP Government is unwilling and unable to solve current problems of high HDB prices, Dr Chee Soon Juan said in his opening remarks at the launching of the SDP's housing policy, Housing A Nation: Holistic Policies for Affordable Homes, on 4 November 2012. Below is the transcript of his speech:

In March this year, we gathered at the Excelsior Hotel for a very special and historic occasion – the launching of The SDP National Healthcare Plan: Caring for All Singasporeans. It was a comprehensive and in-depth alternative healthcare policy for Singapore, one which we are extremely proud of.

Today, eight months later, I am equally excited to announce the unveiling of our housing policy titledHousing A Nation: Holistic Policies For Affordable Homes. This paper is another first in Singapore's history where the SDP has conducted a detailed study of the housing system in this country and, more important, proposed solutions that address the problems that plague public housing here.

The document, which will be uploaded on the Internet and made available on the SDP website following this launch, is the result of months of intense study and debate by the SDP's housing panel.

Like our healthcare plan, you will see that this is more than the usual rhetoric offered up by the opposition. It is a plan comprehensive and detailed enough that enables a government and its public servants to carry out.

The SDP was motivated to embark on this project, in part, because we had seen the mess that former Minister for National Development Mah Bow Tan had made with the public housing system prior to 2011. But after the GE last year, Mr Khaw Boon Wan took over the portfolio and after more than a year, has, unfortunately, very little to show by way of changes to the system.

Mr Khaw said that he had sleepless nights when he first assumed the job because public housing in Singapore was experiencing enormous problems with sharply increased prices and an under supply of flats.

Back then, he warned buyers that "With so much uncertainty, I must advise investors and upgraders to bear these considerations in mind when they go to (property launch) showrooms.”

That was in June 2011.

A year later, the minister, addressing the problem of HDB prices, said that he had been successful in bringing down prices and, in addition, engineered, in his words, a "soft landing” as opposed to triggering a sharp correction. "That's what we've been trying to do,” he said, "and so far, so good.”

That "soft landing” resulted in HDB prices hitting record levels. In September this year, a resale flat was sold in Queenstown for more than $1 million. In October, the HDB was marketing new 3-room flats for as much as $795,000.

In a matter of months, Mr Khaw changes his tune. Now he says that "strong demand” for housing will persist. In other words, housing prices will continue to climb.

Why the U-turn? The truth is, ladies and gentleman, the PAP Government does not have the political will to take the necessary measures to significantly reduce prices. The HDB is an enormous cash cow for this Government. The billions of dollars that it rakes in by including "land costs” in our flat prices means that the public housing is a huge profit-making enterprise. It keeps the already staggering amounts in the coffers of the GIC and Temasek well-fed.

But even if it does want to lower housing prices, it doesn't quite know what to do. What can it do apart from admitting that its policy of making public housing an investment tool to be bought and sold on the open market like any other commodity has led our housing system to such a precarious state today? Admitting failure is not in the PAP's vocabulary.

This is why the opposition has to step in. Where the Government has failed in its stewardship of the country, the people look to the opposition for remedies. To this end, the SDP is stepping up and we are taking the proverbial bull by its horns. We have come up with a set of policies that will tackle the housing problems that we face today.

I will leave the details of the paper to Jeremy Chen who will take you through the nuts and bolts of our policy. What I want to do is to address the bigger issue of why the SDP is putting so much effort into drawing up alternative policy plans.

I hope that you have been able to see that the SDP has been the party of constructive ideas in the last couple of decades. But since the last General Election especially, we have seen more and more people from the various professions coming closer to us and working with us to formulate substantive policy positions.

We do this because we recognise that the governing party has become directionless, clinging on to its archaic practices and policies in a changed and changing world. Because of its autocratic nature and top-down approach to problem-solving, the Government has been unable to address the aspirations of the people.

We see an entire generation of Singaporeans become disillusioned with the PAP as their lives and livelihoods get increasingly desperate and their futures increasingly bleak. Is it any wonder then that a majority of Singaporeans indicated in a survey that they want to leave this country? Such is signal failure of this Government.

But if not the PAP in government, then who? Who can the people turn to as an alternative? This is the dilemma that Singapore finds itself in. To be sure, this is the situation that undemocratic countries find themselves in. Authoritarian regimes crushe their opponents and render the opposition incapable of performing their duties. Its either a bad government or bust.

This is the situation that we must desperately get out of and this is why the SDP works to become the party of choice, the party that Singaporeans can look to as an alternative.

But rather than puff ourselves up and engage in braggadocio, we want to let our work, our actions and our ideas to do the talking. In the past several years, despite our lack of resources, despite all the negative publicity and despite the crippling legal sanctions against us, we have worked to become a party that is competent, constructive and compassionate. In other words, a party that can take over as government.

The drawing up of our alternative policy plans is but one aspect of this effort. Apart from our Policy Unit, our Communications team have endeavoured to become even more effective in our online reach, our Ground Operations continue to expand our ground campaign, and our Training and Development Unit work to raise the quality and quantity of our membership.

These are not boasts. I hope you don't take it the wrong way. I tell you all his because I want you to know that we are doing everything we can to extricate our country from this perilous position of being stuck in a one-party state. It is our way of encouraging you to come off the sidelines and help the party is working to take Singapore in the right direction.

And as more and more Singaporeans –competent, principled and dedicated Singaporeans – step forward to join our ranks as we hope you will do, you will see a bigger and better SDP develop.

I am confident that the publication of this paper will take us another step closer to our goal, that it will another demonstration to Singaporeans that there is emerging an alternative ruling party.

Thank you.

The SDP's alternative housing policy paper, Housing A Nation: Holistic Policies for Affordable Homes, can be downloaded at:


Well done SDP for your housing policy plan! by sgthinker:  here


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