No review for $8k ceiling for public housing benefits
October 2nd, 2009 | 
Author: From our Correspondent
Despite increasing calls for HDB to review the $8,000 income ceiling cap for public housing benefits which was introduced way back in 1994, National Development Minister Mr Mah Bow Tan is adamant that they should stay.
Currently, households earning below $8,000 monthly can apply to HDB directly for a new flat at subsidised prices, or apply for a housing grant if they purchase an HDB flat.
Young couples with a combined income of more than $8,000 are complaining that they are being squeezed out of the resale market by its record high prices.
In response, Mr Mah said that the government will be offering more executive condominiums (ECs) to address the needs of middle-income buyers in the $8,000 to $10,000 monthly income bracket.
ECs are built with condo facilities but have sale restrictions similar to those for public housing.
They were introduced in 1995 to bridge the gap between public housing and private apartments. First-time buyers whose incomes are under $10,000 can apply for a $30,000 grant.
A quick check on HDB infoweb shows that most ECs are priced more than $550,000 with those in central districts fetching more than $600,000.
It is unsure how a higher number of ECs will help the middle-income buyers when they already balk at the prices of resale flats which currently still cost slightly less than ECs.
Given the high prices of ECs now, it is unclear if homeowners are able to monetize their assets by selling them at a profit as they are subjected to the same sale restrictions as HDB flats.
It appears that choices are limited for this sandwiched group who do not qualify for a housing subsidy and yet are able to afford private housing.
The $8,000 income ceiling was introduced in 1994. With the increase in median wages over the years, perhaps it is time to review it.
Mr Mah did not provide any clear reasons for keeping the cap. Increasing it will surely help more middle-income Singaporeans to buy their own homes.
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14 Responses to “No review for $8k ceiling for public housing benefits”
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i stress the root of the problem is not whether cOV should be removed or whether 8k ceiling should be lifted.
The real cause of all this problems is that HDB is a monopoly. It must be broken up, say into 3 pieces and distribute its shares equally to all singaporean citizens(at age 21).these shares are non-transferable and will be cancelled at retirement age. singaporeans will only be entitled to profits from the shares.
Private developers should also be invited to participate in building flats to boost competition further.
govt’s only function is to act as a referee (and not a player cum referee like now)to prevent collusion. govt should only order 1 or 2 rm flats from the broken up HDB and subsidise them for those in need.
Interest rates will not be set by govt but subject to competition by banks/financial institutions like hong leong and the broken up HDB finance units.
those who earn 8k and above,
if you cannot get direct hdb flats,
then one of you just resign from your job and apply for your flat
What’s there to complain about?
> Old Guy , i wonder how is world will be like if everyone is as “smart” as you are . You are totally brilliant like our ministers .
The main thing is this: no matter how much you earn, the govt and HDB wants at least 30% of it, plusy you have to empty your piggy bank to pay the COV or the deposit or the downpayment.
Remember this also, they say they did not force you. You can alternatively rent, or pitch a tent at ECP.
cy is right. The root of the problem is HDB having a monopoly. I would even go so far to say the real root is PAP having a monopoly.
With this problem still existing, lifting the 8K limit will only let the richer Singaporeans buy up HDB flat, thus increasing the demand even MORE.
Also, privatising housing is also not a complete solution. By all means, allow private contractors to build studio, 1-room, 2-rooms, 3-rooms and so forth.
However, the real solution is for HDB to be a non-profit organisation and build affordable flats for all. Either that or their profit should be capped at 10%.
Of course this will never happen because PAP is a money-face government and will never lose out any opportunity to make money.
Hence, we need to vote in oppositions to check on them and question them to reveal the cost of constructing a unit.
Privatising the “public housing” market is definitely not feasible.
If HDB is privatised, our govt will start auctioning land to the highest bidder. Companies will bid the MAXIMUM price that consumers are willing to pay, at which the company is still able to make a modest profit.
Thus the end result of this “competitive free market” is that companies lose, consumers lose, only PAP wins.
This is what is happening for our wet markets, private condos and BPL rights.
In the past, when Ministers are not paid highly, the houses remain affordable. With the pegging of their pay to the top echelons of each professions, in other words to the market rate, the floodgate is opened and the houses subsequently become more and more expensive since they also start to be pegged to the market rate.
I think that a review of the income ceiling is much needed. Raising it to 10k is reasonable. The subsidy for each income bracket can be scaled as follows:
Salary : grant
below 1k: 80k
below 2k: 70k
below 3k: 60k
below 4k: 50k
below 5k: 40k
below 6k: 30k
below 7k: 20k
below 8k: 15k
below 9k: 10k
below 10k: 5k
The income ceiling for 3 room flat should also be raised to 5k.
to reader,
i have already thought abt the problem of land supply controlled by the govt. that’s why i propose that singapore citizens to be issued shares in the split HDB units equally (starting at age 21).these shares are non-transferable and will be cancelled at retirement age. singaporeans will only be entitled to all profits from the shares(non-taxable). this is something like a REIT.
Thus,even if land bidding drives up price, singaporeans won’t lose out because they benefit from obtaining dividends from the split HDB cos. likewise,if HDB cos don’t make a profit,meaning price of HDB flats sold are at cost. singaporeans also benefit from low price of HDB flats although they won’t get any dividend. fair enough.
to reader,
the problem of BPL rights stem from the fact that there is no worthy successor to BPL. to overcome this, ppl’s habits have to be changed (easier said than than done). if not, asian football standards must be raised to european levels to attract audience and thus compete with bPL for market share.
meanwhile,those who are paying through the nose for BPL can’t complain since noone is forcing them to subscribe.
Personally, i am also a bPL fan but since starhub raised prices ,i have stopped subscription, thus not “contributing” to the obscene pay of the some football players who are hooligans in disguise.
@Dane
Currently, the income ceiling for 3-room is S$3000 for non-mature estate. For mature estate, the income ceiling is S$8000.
Why there is such a rule, I don’t know.
To Dane,
your suggestion on allocation of housing grant based on income is neither practical nor equitable.
Remember, all male citizens served NS, for which they are never compensated during that 2.5 years. It is therefore only fair that a same lump sum subsidy be given to all Singaporean males when they buy a flat for their family.
The family income/salary at the time when the flat is purchased is irrelevant.
For family income below $2k, the sad fact is the family is unlikely to be able to afford flat. No amount of grants can help. They should be offered subsidized leased flats.
Dear cy:
Your idea of splitting HDB shares and sharing in the profits is indeed very interesting. However, you have missed something out. Land auctions are done by SLA, and SLA is the agency making the obscene profits. It is thus possible for HDB to make a loss and flats to still be overpriced. In fact, this may already be happening right now. A case of left pocket into right pocket to serve as a smokescreen.
Hence for your idea to work, we will need to issue out shares for SLA and HDB. And I’m pretty sure the govt will never ever give away their 2 cash cows just like that.
Honestly speaking, those homeless or very low income should be given a studio apartment to stay in. The owner can be government but those homeless or very poor can live in there until they die.
Unfortunately, our money-face government will probably not do this to take care of our own people.
The solution is not to raise the income ceiling. Doing so would only lead to those earning more than $8,000 a month bidding up prices with their higher maximum loan size, resulting in even higher prices.
The housing prices are driven by the ease of financing and the amount of financing. When the minimum cash financing went from 10% to 5%, people could finance their homes more easily, and increase their bids based on their highest loan size.
Same thing when interest rates dropped -> loan size increased again.
Same thing when more families earned two incomes over the last 30 years.