Singapore’s ex-HDB CEO: During my time, HDB flats were 3X median annual salary

ex-HDB CEO: During my time, HDB flats were 3X median annual salary

March 24th, 2013 |  Author: Editorial

ex-HDB CEO, Dr Liu Thai Ker

At a lecture on the Singapore Public Housing Story, organised by the Centre for Liveable Cities on 20 Mar, Dr Liu Thai Ker, who was the ex-CEO of HDB and URA, made the call for Public Housing to return to the basics. Dr Liu said the end goal should be affordability. Dr Liu’s call was also backed by former Senior Minister of State and HDB Chairman Aline Wong, who reiterated that the purpose of public housing is to “provide a shelter over everybody’s heads”. Dr Aline Wong said, “The asset part comes along because … property appreciates over a long time. But that is not our primary objective. People make money, accumulate savings … but we cannot promise that they will not lose (value in their property), depending on the property cycle.” Dr Liu said, “Maybe we should go back to the basics in the sense that we should not, say, emulate condominiums — that require more expensive materials, extra this, extra that … go back to basics, keep housing prices affordable, let residents embellish the houses, embellish the interiors.” He reiterated that the “core mission” of the HDB is to “provide affordable housing”. “And in the process of providing that, we try to use whatever budget available to create the biggest possible floor area for the people and with minimum frills, minimum decorations and so on. By minimum decorations, it doesn’t mean that the buildings are not beautiful … if the buildings are well-proportioned, they are beautiful.”

Dr Liu added, “When I was CEO, we looked at the per capita GDP (gross domestic product) growth, the sector of people eligible for public housing, their income … and then matching that to our selling price and to our flat sizes. It was really a very detailed study.” Dr Liu noted that in those days, flats typically cost about three years of an owner’s annual salary.

When Mah Bow Tan was the Minister for National Development, HDB BTO prices were linked to HDB resale prices.

Since Mr Khaw took over from Mr Mah, Mr Khaw has de-linked resale and BTO prices by varying the discounts for new flats.

And recently during the Budget 2013 debate, Mr Khaw said the Government aimed to bring down Build-To-Order (BTO) flat prices in non-mature estates to around four years of annual salary “as it was before the current property cycle started”.

Indeed, the World Bank considers a ratio of 5 or under as affordable for local residents, while the United Nations has set the bar even lower, at 3 (see Link). In any case, anything above 5 is surely considered unaffordable by both the World Bank and the United Nations.

In a slap in the face of the Goh Chok Tong’s Govt in the 90s, Dr Ailine Wong said, “In 1989, when they liberalise the rule to allow private property owners to buy HDB flats and vice versa, I thought we were deviating from our principle of providing public housing to those who could only afford public housing. So now, we are back to a more basic principle, I am very happy about that.”

She added, “Going back to the basics of providing shelter … we are moving on the right path now by going back to more rental (flats), providing housing for the divorcees and for the singles… We are not deviating from emphasising that family is the basic block of society. (But) these people (divorcees and singles) are already there with a need.”