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$880k HDB?!

>> Monday, June 20, 2011

Are my eyes playing tricks on me? The latest launch at Tampines for the DBSS has hit a new high of $880k for a new HDB. Are such prices affordable to be considered for public housing?

However, from this, I also recalled that some years ago, many were also shocked at the prices of The Duxton, DBSS at Boon Keng and various other developments that were setting new high prices.

Looking back these sky high prices for HDB are becoming the norm and these applicants are mostly in profit even though they purchased it at the then considered high prices. So who are we to judge that the $880k price tag is too high? Who knows what kind of prices they will fetch 8 years (3 years to build plus Minimum Occupation Period of 5 years) from now.

Anyway, I would like to take a different perspective on this issue compared to the general lashing of the social media. If I was an investor of Sim Lian, I would totally agree with what they have done. Disregard the 99% who are complaining, so long as that 1% is willing to purchase the expensive units, you have done justice to the shareholders. It is a supply and demand thing. As a purchaser, you feel prices are too high, you have the choice to walk away.

I try to draw a similarity in Starbucks. Why are they selling coffee at $8 a cup? 3 in 1 sachets are $0.50. Coffee shops are also increasing prices to $1 for a cup nowadays. If you do not want to pay for it, boycott Starbucks or the coffee shop or don't even drink kopi! What do you have to complain? Ask government to step in and subsidize coffee? Close down Starbucks for setting ridiculous prices?

No one is putting knife to your throat. The social media has been a great avenue for people to vent frustrations at everything the government does. Most I believe, are not even looking for a home and just joining the crowd to voice out their discontent. If the government were to step in, they are not supporting the private sector and the way they do business.

They must have their own formula or based on survey that that is the price people are willing to pay. Alternatively, if the price was too "cheap", it will form a long overnight queue and people may not get their choice units and the complaining continues. To reiterate, it is a supply and demand thing, there may be genuine buyers who can accept the price and appreciate not having to queue overnight to get their choice unit.

Everyone is entitled to their opinion about the price of HDB, but the constant falling back to whine at the government irks me. I suppose the government is supposed to give everyone their choice unit in a mature estate at a cheap price immediately. And anything less like a low floor unit in Jurong West/Sengkang at an affordable price 3 years later is unacceptable..

8 comments:

so1trg June 20, 2011 at 10:28 AM  

We tend to forget that the objective of having HDB flats is supposed to be subsidised housing for Singaporeans only.

financialray June 20, 2011 at 10:57 AM  

My advice is buy a cheaper HDB or DBSS, then upgrade later to a condo. If you can afford $880k, u can probably upgrade to a condo in a few years time.

I will buy for 880k only if many other attractive reasons such as parents live nearby AND work nearby AND maybe kids study nearby. Otherwise, will lose a lot of opportunity costs. Also must be prepared to live in it for 10 years but who can be so sure?

Lau June 20, 2011 at 10:58 AM  

Indeed, that should apply to BTOs and even resale flats.

Lau June 20, 2011 at 11:01 AM  

F Ray, precisely, they r targeting that exclusive group who fits the criteria. It may not b u n me, but if there is just that group, it makes perfect sense to price it as such. So nothing wrong with the price tag.

financialray June 20, 2011 at 2:47 PM  

Hi,

For 880k , I would consider an EC that offers condo facilities such as a swimming pool and a gym.
At least for an EC, I can foresee it will sell for 1 million easily when the 10 years is up and it becomes a private condo.
For a HDB to sell later for more than 1 million, it will happen maybe 10-20 years later but not in the near future.

futures-explained June 20, 2011 at 9:28 PM  

I think they have under-priced it, it should be $888,888 :)

Obviously the buyers believed that the flat will bring them good luck and prosperity with the nice price tag.

financialray June 22, 2011 at 11:42 AM  

In the end, looks like logical minds prevail. Developer testing market reaction with so-called indicative pricing.
Developer has lowered price to 778k today 22 June 2011.
Perhaps developer worried they get blacklisted for profiteering and barred from future DBSS projects.
More than 100k discount.
Human greed knows no bounds.

Anonymous June 24, 2011 at 3:33 PM  

FR, ECs have a restriction on location as few are being developed at not so ideal places.

Further, they reduced prices not because of demand, which shows a 2x take up rate, but most likely from fear of the government black listing them from future projects. They secured the project under MBT's reign but it is KBW's reign now, he sings a different tune, time to kaw tao to the incoming. =)

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