The flexible pricing formula for HDB flats

The clearest picture of what formula was used in HDB pricing was revealed by LKY last Sunday. It was at cost or cost minus. Though it was a general statement, let’s presume that it was construction cost plus a little land cost as the land originally acquired was at minimal cost under the Land Acquisition Act.

So the original formula is likely to be Price = Construction Cost.

Though it was not discussed, it was likely that after a while the Price was slightly adjusted to provide some profits for HDB. Thus the formula would be Price = Construction + profit.

I use a small p for profit as the profit then was really not much to talk about.

Then someone got an awakening. The CPF holders have a lot of money in their savings. They can afford to pay a more for their flats. Then I think the formula was changed to Price = Construction Cost + Profit.

I am now using a bigger P to equate a bigger profit being built into the price.

This went on for a while till someone got another enlightenment, like being struck by a bolt of wisdom, and the formula was changed to Price = Subsidised Market Price. There was no need for the big P any more. It was hidden in the Market Price.

Then more angry noises were heard and the formula was modified and explained in different ways. It was changed to Price = Resale Market Price with Subsidy.

Then more noises and anger. So the factor of Affordability crept in as many claimed that it was getting unaffordable. So the formula was modified to become Price = Resale Market Price with Subsidy subject to 30% of two incomes for 20 years and instantly it became affordable.

As price kept going up, the formula was revised to Price = Resale Market Price with Subsidy subject to 30% of household income for 20 years. More members can now contribute to make the price more affordable.

Again the price went higher and the formula was again revised to become Price = Resale Market Price with Subsidy subject to 30% of household income for 30 years. See, still very affordable. It was all over the media with the Housing Minister having his special pages to drum this affordability idea into daft Sinkies.

But this was not the end. The formula was again revised to become Price = Resale Market Price with Subsidy subject to 30% of household income for 40/45 years. 30 years simply were not sustainable.

This may not be the last change as the price is still going up. It is likely that the formula will be revised again and likely to be Price = Resale Market Price with Subsidy subject to 30% of household income for 60 years or 100 years.

Does anyone realize that the Cost factor has been missing since Price was changed to Subsidised Market Price? Yes, Cost is no longer a factor in the issue of pricing HDB flat prices. The price of future HDB flats will not be determined by Cost but by the 30% of household income and how long they allow the buyer to repay. It also means that the price of HDB flats, regardless of Cost, can keep going up as long as the salary goes up and the repayment period is extended.

This is called flexible pricing, or rubber band pricing, like luxury goods. It can go as high as the seller so wishes as long as it keeps to the 30% benchmark plus plus. The first plus is the household income. The second plus is the number of years for repayment which is inversely proportional to the Price. The longer the number of years taken, the higher can the price go up. The formula can thus be written as Price = Resale Market Price(with market subsidy) Plus Plus.

Where is the problem?

The basic in problem solving is to identify the problem, acknowledge the problem, then works towards removing or overcoming the problem. If all else fails, just avoid the problem or pretend that there is no problem.

The SDP has worked very hard, putting a team of professionals together to try to solve the high property price problem. They have come out with a very detailed proposal called Non Open Market Scheme to solve the problem that is on everyone’s mind. Actually I am wrong to say this. It is only in the minds of those who see high prices as a problem. Some are jubilant and celebrating the high prices. Where got problem?

LKY had said that his party has delivered the goodies to the people, built and sold housing at cost or below cost, and the people are now happily enjoying the high value of their properties, inflated 5x, 10x or even 20x. Such a great achievement, to make the people so rich cannot be a problem. It is something admirable to brag about. And the people are so grateful. This is even better than the savings in the CPF that put a smile on Swee Say’s face.

Come on where is the problem? If it is a problem, LKY would not be bragging about it. If it is a problem, Boon Wan, would have solved it. His remedies so far were not meant to bring down the high property prices, but to allow continue appreciation of property prices. The reality of price shooting through the roof may be a bit unexpected. But does anyone see any panic, any panic measures being taken to prevent the prices to go further up? They may be quietly celebrating the huge success of a housing programme where all buyers can look forward to more asset enhancements and appreciation of values.

Now, when the govt does not see this as a problem, don’t expect the govt to do anything. Only some people, mostly the younger people and those who have no properties, are crying out loud that high property price is bad. So, one say got problem, one say good thing to have. What will happen to the SDP’s NOM Scheme then? Redundant, unnecessary, uncalled for, unwanted!

Only when the SDP is in power, or when a think alike opposition party comes to power would the SDP’s proposal be considered. To the incumbent power, where got problem? Don’t come and ‘ka cho’ with unnecessary solutions that are not needed. Don’t be too clever when there is no problem to start with.

Alvin Tan’s punishment by NUS confidential

NUS Disciplinary Board has dished out their punishment to Alvin Tan, an Asean scholar, for posting his private sexual pursuits in the youtube. This has caused a furore among sinkies and taxpayers are up in arms wanting to know why public money was wasted on such a person that obviously have values and lifestyle that are unconventional and incongruent to the social norms of the day. Many were asking for the withdrawal of the scholarship and a return of all money dispensed to Alvin Tan.

NUS conducted its disciplinary inquiry and had since announced that punishment had been meted out but this was kept confidential. Is this acceptable, just by hanging a confidential placard over this case? This is no ordinary case and is of great concern to the public whose money is being spent on this scholar? Do the people, the public, have a right to demand to know what is going on, what kind of punishment was handed to Alvin Tan? Does NUS owe the public an explanation?

Or this is a confidential matter, a student disciplinary matter, an NUS internal matter? Is the gag order justifiable? Personally I don’t think this is a confidential anymore. Not disclosing the disciplinary action will only create more anger. The veil of secrecy or confidentially cannot be suka suka used to hide the ugly truth from a more vocal public that demands for more transparency.

Obama just said these in his victory speech

What is politics and what is political campaign? It is about America for Americans. It is about no Americans having to fight for a job with foreigners. It is about equality. It is about American children being given the best opportunities to be in schools and colleges.

Politics is all about the well being of American citizens. He is still speaking. He is still on the air as I type these few words.

Obama added that all Americans must have hope for a better future, that as long as they are willing to reach out, to work for it, there is hope for every Americans, better jobs for every Americans. That is what politics and running for the Presidency were for Obama, to better the lives of Americans, not foreigners.

Benghazi killing a just retribution

Now that the dust has settled and the war cry has died down, let’s revisit the killing of the American Ambassador Chris Steven in Benghazi, Libya. The Americans were angry, horrified by the bombing of the American Embassy. Actually it was chicken feat compares to the bombing of the country by the European and American military war machine. It is just dessert to pay back a little for the bombing of someone’s country because they wanted a regime change, and leading to the killing the Libyan President Gaddafi. Does anyone bother about Gaddafi’s death and the death and destruction of a country?

The attack on Libya was not provoked; a unilateral military campaign in violation of the UN Resolution Which only authorized the prevention of the Libyan air force from attacking the rebel positions. There was no UN permission to conduct air strikes into the country. The Americans and the Allies chose to attack another country for their secret agenda.

What about sending a cruise missile to attack the Chinese Embassy in Belgrade and killing several Embassy staff? A totally unprovoked evil and hostile act. Only the Americans could commit such aggression and get away claiming it was a mistake, a wrong map or outdated map provided by their deadly CIA. The Americans were not remorseful in the missile attack against the Chinese Embassy. Neither were they remorseful about the invasion of Libyan and Iraq.

The bombing of the American Embassy in Benghazi was just retribution for the Evil Empire. Just a token of retribution for the enormous harm and damage to other countries and the toll of human lives. Evil deeds will return to the wrong doer, one day, most unexpected.