I don’t really know when the HDB changed its rules to allow permanent residents (PRs) to purchase resale HDB flats. And I didn’t know how many PRs were buying up these flats – until I saw the following report:
Private property owners and PRs make up 30% of HDB resale transactions. This concurs with my and my friend’s experience hunting for a flat recently.
I had never really paid much attention to the numbers, although many have been speculating that PRs are pushing up the prices of HDB flats.
So, in January this year, MND minister Khaw Boon Wan clarified the matter:
Maybe Mr Khaw is right. I don’t think he is lying, of course. But still, the perception persists.
This past month or so, I’d been accompanying my friend to hunt for a flat. Our experience seems to tell us a slightly different story. Out of every 2 or 3 buyers/sellers we came across, at least one of them was a PR. And our experience also says that PR-sellers ask for sky-high COVs, while PR-buyers are willing to fork out much more COV too. For example, S$35,000 to S$40,000 COVs are quite common. Sellers’ typically ask for COVs of between S$40,000 and S$50,000, the latter being the most common we’ve come across, even for flats which are on the lower floors and/or which do not have much furnishing.
And mind you, we’re talking about 5-room flats here – which tells me that these PRs are people with money who can afford bigger flats.
Why do PRs find it more sensible to buy resale flats? Here’s a thought (from Yahoo: “Are PRs to blame for high HDB resale flat prices?“):
“To get a clearer picture, I spoke to some PRs who have bought HDB resale flats. Their prime reason for purchasing was to make use of their CPF contributions and shelter themselves from the higher rental prices. For example, taking an EMI (equated monthly instalment) of around S$1,200 from their CPF is far better than forking out S$2,500 as monthly rent, leading to savings of around 50 percent.
While the benefits of the CPF housing scheme could be the main driver for PRs looking to buy HDB resale flats, the high rentals tend to create a sense of urgency in them to buy flats sooner than later. It is this mad scramble for resale flats that gives sellers the confidence to ask for higher prices, resulting in rising COVs. So while the asking prices for resale flats can always be influenced by supply and demand dynamics, some factors like COVs can be “contained” if there is no rush to buy.
As such, it is time that the policymakers increase the supply of subletting flats and implement measures to cool the red-hot rental market, thereby minimising the rush to buy HDB resale flats.”
It can be frustrating (very much so) when you come across such ridiculously high COVs. For those who need a flat urgently but who may not have money to spare, it makes no sense to us that PRs are allowed to purchase public flats. I think citizens must be given the right to own public flats funded by the public – and foreigners or PRs should not be allowed to gain from this.
After their MOP (minimum occupation period), these PRs can sell their flats, make a bundle and go back home, made for life. We Singaporeans are then left with what we’re facing now – the ridiculously high prices of public housing.
I do feel, as does my friend, that the Government should introduce measures to curb PRs gaming the system, especially now that curbs have been put in place for those owning private properties who want to buy HDB flats. As for PRs, a levy can perhaps be imposed on them when they sell their flats – a levy which is substantial enough to prevent them from profiteering from the system.
Another suggestion is for PRs who purchase HDB flats to be given an ultimatum on taking up citizenship. Say, for example, within 3 years of a purchase of a HDB flat, PRs must take up Singapore citizenship. If not, they will be required to pay the levy as suggested above when they sell their flats.
After all, Senior Minister Goh Chok Tong (I still cringe to call him “Emeritus”, so I won’t address him as that) did once suggested the same. He had said that some PRs will be approached to take up citizenship and if they didn’t, their PR status will be revoked. (See here.) Unfortunately, SM Goh later “clarified” his comments and that he didn’t mean that all PRs will have their status revoked in this way.
But the point is that there should be more done to discourage PRs from profiteering from public housing, which they clearly can at present. Whether they are actually the ones propping up the ever-increasing prices of HDB flats, the point remains that they should not profit or be able to profit from what is suppose to be basic public housing for citizens.
My friend’s hunt for a home continues. Hopefully, she won’t have to end up having to engage in a bidding war. She is adamant that she won’t be coerced into one. And I stand by her conviction.
Post-script: The issue of PRs pushing up HDB resale prices was debated in Parliament in January 2012. MND Minister Khaw Boon Wan later posted the following on his blog, providing information on the COVs forked out by segments: