The two videos below are just for laughs but they do convey some messages to bear in mind.

PM Lee Hsien Loong announced during the National Day Rally that the income ceiling for new HDB apartments will be raised from $8,000 to $10,000.

The income ceiling for executive condominiums (EC) will also be raised from $10,000 to $12,000.

I think this change is long overdue as the previous ceiling was in place for the last seventeen years. During this time, both incomes as well as the price of HDB units have gone up considerably.

Will this change cause all the borderline cases to switch from buying a private property to buying a HDB unit instead? Private property developers will be watching the developments nervously.

But with this change in income ceiling, HDB will also need to increase the supply to meet the greater demand. Otherwise, prices will continue to go up. This is the fundamental rule of economics that cannot be ignored.

It looks like Minister Khaw is doing all he can to stem the rising HDB resale prices.

HDB has offered 3356 new HDB units at prices starting from $137,000 for a three-room, $217,000 for a four-room and $274,000 for a five-room flat.

In May’s launch of 4,000 new flats, the starting prices were $166,000, $264,000 and $335,000 for the same flat types.

While the lower prices could be partly due to the location, the discount to the resale flats in their area does appear to be higher.

Will this cause people to change from buying in the resale market to balloting for new units? Or will people start to wait for new units that could be priced even lower?

Perhaps permanent residents will continue to bid up resale prices, while citizens will try their luck balloting for new ones as they can wait it out in their parents home.

Surely, this divergence in prices cannot go on forever.

A flurry of negative feedback has emerged on the social media after it was announced that the priciest-ever new HDB flats went up for sale in Tampines under a Design, Build and Sell Scheme (DBSS).

Five-room flats at Centrale 8, built by developer Sim Lian, will cost $880,000. This works out to be almost $750psf.

The developer had previously paid $261psf for the land.

MND Minister has clarified that DBSS flats are actually not HDB, but a type of housing between HDB and executive condominiums (EC).

DBSS flats are public housing units designed and built by private-sector developers and they typically come with more luxurious fittings. Prices for the units are not stipulated by HDB nor is there any pricing formula set out in the original contract.

But I do find it hard to reconcile the fact that this developer is able to price freely for something that is supposed to be public housing.

After all, buyers of new DBSS flats are able to get a $30,000 grant if they meet the eligibility criteria. This makes the units available at a discount compared to similar private housing. Furthermore, they are available to people in the monthly income range of $8,001 to $10,000.

Nevertheless, Minister Khaw had said that while they are not able to tell the developer to change it’s price, there are things that both HDB and would-be buyers can do. To me, that is a very clear “yellow card” to the developer.

1) HDB will be ramping up larger BTO launches and pricing them appropriately.

2) Buyers should walk away if they find the prices too high.

Combined with the fact that the income ceiling of $8,000 for new HDB flats will probably be raised very soon, this developer might very well be forced to give a discount on its original price when the buyers in the $8,000 to $10,000 income range all decide to apply for normal HDB units instead.

Property prices is hugely influenced by demand, supply and sentiment issues. Supply is now playing catch-up with 26,000 HDB BTO to be released this year. In the preceding five years, there were only:

• 16,000 BTO in 2010
• 9000 BTO in 2009
• 8400 BTO in 2008
• 6000 BTO in 2007
• 2400 BTO in 2006

That supply was clearly insufficient to match with our growing population over the past five years.

This shall be my only post on the General Election.

Initially, I had not intended to make any posts on it as this is meant to be mainly an investment site.

However, one of the issues bought up is related to housing, which is something that has been discussed here before.

Just two days before polling day, the person in charge of public housing continues to insist strongly that HDB flats are affordable.

Despite the fact that most of the general public feels otherwise, he is still relying on statistics provided by his officers to support his case. If this is his view, I am not so optimistic that things will get much better. The next generation will be in for a hard time if prices continue on their current trajectory.

And hours before all parties have to stop campaigning due to the newly introduced cooling day, political flyers have been distributed to households in a last minute desperate act to swing votes.

There’s no time for the affected party to reach out to everyone with their clarification. I thought it would be fair for people to read their clarification before they go to vote, so I’m posting the link to their official reply below:

Response to Last Minute Political Flyer