Can the Government unilaterally lower the cost of land for public housing, and thereby reduce the selling price for HDB flats?
That is a tempting option, but also one which presents problems, if you think deeper about the wider consequences of such a move.
The prices of new HDB flats are already heavily discounted from comparable resale flat prices. At the same time, eligible Singapore citizen households have access to CPF housing grants and concessionary HDB loans. The vast majority of families in Singapore find public housing to be within their reach.
HDB buys land from the Government to develop public housing. Some claim that this is merely a transfer of funds from one pocket to another. But that doesn’t mean that the land therefore loses its value, simply because it is sold from one state agency to another.
All land in land-scarce Singapore come with a certain value. Land may have been acquired, or it may have been reclaimed. But it commands a definite value, and all State land forms part of this country’s national reserves.
Already, land that is valued for public housing is lower than what it could have been priced, were it set aside for private housing, and released competitively through land sales programmes.
The Government manages land as the trustee of taxpayers, and relevant costs have to be properly accounted for. Even if acquired earlier, a plot of land increases in value because of the public investments put into it, such as the introduction of road, rail or sewerage links, and these efforts cost money.
To reduce the price of land arbitrarily, or not even to factor in land costs at all for the development of public housing, is tantamount to a raid on Singapore’s national reserves, if the full value of the land is not recognised and paid for. Neither the Government nor HDB can move the value of State land up and down as it pleases.
What HDB does is to recognise the value of the land it buys, as determined professionally by the Chief Valuer, and then helps Singaporean families with their first housing purchase by pricing the eventual sold flat at a price that is well below comparable market prices.
We believe this is an approach that will help both individuals and families, and which also takes into consideration the national interest.