I have corresponded with some readers over msn and it seems that they are interested in the HDB Flats issue that I brought up in my last entry and want me to help bring the issue to salience.
Coincidentally, I was reading the Sunday Times and noticed that even though there are still articles on Tammy, there is also a long article called "Reverse Mortgages for HDB Flats" in the centrefold of the main section of the paper. From the information in the article, the valuation or market price (selling price) of a 5 room HDB flat in Singapore is about S$300,000, a 4 room HDB flat's selling price is about S$220,000 and a 3 room HDB flat sells for about $S150,000.
When I looked at option 3, the reality of the high price of HDB flats sinks in. If you put aside S$1,100 for rental of a flat every month, you would be able to rent a flat for 21 years and still have S$480 to spend every month. However, if you do not rent a flat but instead rent 2 rooms, you would only need to pay S$500 a month which more than doubles the length of time that you can pay rental for.
We have yet to look at the amount of interest that HDB flat owners need to pay for their flats. Since I am not a certified financial analyst, I shall refrain from making any exact calculations. But it is intuitive that with the added interest, flat owners will end up paying a much higher price than the market value of the flat.
The following questions came into mind when I read the article.
1) Now that we have a gauge of selling prices for HDB flats, what is the cost price of HDB flats?
2) What is the actual profit margin on new HDB flats?
3) Where do the profits go? How are they spent?
4) Given that HDB flats are perhaps one of the most expensive investments that most Singaporeans make, is it possible for the authorities to reduce the selling price of new HDB flats to make it more affordable for all Singaporeans?
Maybe our resourceful reporters can help find out the answers to these pressing questions?