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“You Can’t Compare HDB Prices to Private London Flats and Say We’re Better Off!”

National Development Minister Khaw Boon Wan quoted UK newspaper The Independent article that “Londoners queue overnight in sub-zero temperatures to buy one bedroom flat for 400,000 pounds (S$840,000)”. He compared that to HDB prices and then grandiosely proclaimed,

“Young Singaporeans are many times better off than their counterparts in London or Hong Kong. This is the reality,”

Did Mr Khaw really read the Independent article or did he read only the headline and jumped assumptions?

If Mr. Khaw likes to hoodwink the nodding heads in the Parliament, well he can play on the ignorance of his own party members if he so wishes. But it is insulting the intelligence of the public because he is, in reality, comparing London private property prices to HDB prices.

Chobham Manor is private housing

The property in question, Chobham Manor (, is an extremely sought after private development located in the 2012 Olympic site, dripping with the most modern facilities and the crucial Cross-Rail transport link. At the equivalent of S$1,450 psf for a one bedroom flat (550 sq ft), it is equal in price to a brand new District 15 freehold condo and 30% cheaper than prime District 10 – the proper comparison.

Perhaps what Mr Khaw did not know is that many British who worked in London, do not live in central London. They commute 30 mins to 1 hour from the suburbs or the surrounding counties of Essex, Kent, Surrey and Hertfordshire for bigger space and lower prices. As the article infer, many of those queuing are foreigners and well-off British buying for investment or a second home in the capital city.

UK Leases

Chobham Manor has a mix of houses and flats. Houses are most likely freehold while flats are most likely 999 years leasehold. Unlike HDB, UK leaseholds do not revert back to the freeholder at zero. Towards the end of lease, the leaseholder negotiates with the freeholder for a new lease, typically at 5-6% of assessed property value for a long lease of up to 999 years and less for shorter leases. (

UK Public Housing

In the past UK public housing, called council estates, provided affordable housing through low rents for those earning low income or in need of welfare. From the 1980s onwards, the UK government’s Right to Buy legislation allowed tenants to purchase the freehold on their property at 33% to 50% discount to assessed values. Hugely popular, this was in effect a transfer of wealth from state to the low income.

Presently, low cost housing are provided by non-profit housing trusts or associations through rent or shared ownership with the occupier. Any surplus is used to maintain existing housing and help finance new ones.

The CPF-Housing conundrum

Because of the massive role CPF plays in financing property purchases, comparison between London and Singapore cannot be on house price as a multiple of annual salary alone. The effect on retirement and healthcare provisions must be properly considered.

The UK operates a mixed public-private approach to pension and a heavily public approach to healthcare

–          A British worker receives a comparatively low state basic pension of GBP 125 per week from 65 onwards, rising to GBP 140 per week from 67 from 2017 onwards.

–          He has a workplace pension in which he and his employer contributes. In other words, he has a fall-back if his state pension is not enough. He cannot use his pension for housing. Neither is his pension used for healthcare expenses.

–          At age 55, he can withdraw his pension subject tax free allowance limits and the rest to purchase an annuity. He can defer both. Again a fall-back in case he stopped work before reaching state pensionable age.

–          His healthcare is nearly free.

Of course, the usual rebuttal is the British pay high taxes but here is the thing that Mr Khaw did not say for it betrays the willful hollowness of his statement. Singapore HDB prices may be cheaper than London private housing prices and the British do complain much about high prices. But they finance their private property purchases despite paying high taxes and without touching their pension and healthcare arrangements. In addition, the British affords much higher personal consumption than Singaporeans despite pension contributions lower than CPF’s.

By comparison, in supposedly low tax Singapore, citizens afford their cheaper 99 year lease HDB property at the cost of running down their retirement provisions which suffer from the double whammy of healthcare expenses in addition. And their HDB property depreciates rapidly in the latter half of the lease because the property reverts back to the government at zero. In order to make up for retirement inadequacy, Singaporeans may be forced to downgrade or reverse mortgage their pride and joy. Or they may have to rely on their children for financial support, passing the problem from one generation to the next.

So, contrary what Mr Khaw grandiosely said, who is better off – Singaporeans or British?

This commentary was written by Chris K,  a retired executive director in the financial industry who had mostly worked in London and Tokyo.
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