With HDB flats being so expensive in Singapore, have you ever wondered how much it would cost to build one? Or how would it fare against the prices of other high-rise flats around the world?
Well if you are curious about that, read on!
As evident in this research, Singapore is one of the costliest cities in Southeast Asia, almost on par with Seoul.
So… why are the prices of constructing houses Singapore and some countries so high?
To understand why, let’s start by analysing them first.
Kuala Lumpur, Vietnam and Beijing.
These are some of the emerging cities that have construction prices below USD$100 per square foot.
They keep their construction costs low via 3 factors to fuel their economic growth.
In cities like Beijing in China, a common sight is the forest of cloned high-rise residential buildings. These buildings resemble cookies that are made from the same cookie cutter. They cost little and lacks the vibrancy of creative architecture that can be found in developed mega cities like the USA. Even the Chinese filmmakers have made a social commentary in the form of a movie “Spicy Love Soup”. In this movie, the theme revolves around lost love as a woman gets lost amid the concrete forest while on the way to her lover’s home.
2. Quantity over quality
In reality, while love might not be lost, quality is lost.
High rise residential buildings are having increasingly poor safety measures and are utilising shoddy,substandard materials in construction, which causes issues such as water-logged basements and more tragic accidents of people falling to their deaths from their flats.
Not only that, since there is little to no variation in architectural design, these “cookie” buildings can be constructed in a ridiculously short period of time by construction workers, some of whom are migrant workers with little training.
3. Cheap labour cost
In emerging cities, this is not an uncommon phenomenon since the huge labour force allows these cities to keep their labour cost low. For example, since China launched its market reform in 1978, the factory and constructions sectors in cities have gained about 278m migrant workers from the rural villages.
On the other hand…
Seoul, Singapore, USA, Macau, Hong Kong and London.
These are the cities that have housing prices above USD$100 per square foot.
Not only are they developed mega-cities, but they are also among the top 11 countries that are
listed by the International Monetary Fund as having the highest gross domestic product (at purchasing power parity) per capita.
Their high purchasing power can be attributed to the growth in population from rural-urban migration, in addition to the inflow of foreign workers. But unfortunately, with this increase of population far exceeding that of the housing supply, they face an increasingly worrying problem of meeting the demand for housing. This high demand results in a rapid depletion of construction materials available, pushing up the prices of housing.
Besides the problem of shortage that Singapore shares with the other mega cities, another reason for the high prices in Singapore is the cost incurred in revamping housing.
Singapore’sHousing Development Board has been progressively planning and developing housing to become more sustainable and modernistic by being eco-friendly and design-driven.
This is done via the slightly costly addition of eco-friendly features such as centralised chutes for recyclables and eco-pedestals for all future public housing.
Where high rise buildings used to be structurally-driven, today’s high-rise flats are becoming increasingly design-driven. This advancement in design and construction techniques, although costly, is allowing HDB to create more complex yet aesthetically pleasing buildings such as the Pinnacle@Duxton, both the largest and tallest public housing development in the world, among others, under the ‘Remaking our Heartland’ scheme by HDB.
Affordability for everyone
However, despite the relatively high construction prices, one should not worry.
According to Bloomberg, Singapore’s housing prices have been declining for the past 13 quarters consecutively. Not only that, additional grants for first timers and low-income groups are readily available to ensure that housing is affordable for everyone.
1. First Timers
First timers enjoy substantial subsidies regardless of new or resale flats thanks to HDB.
For the new flats, they are priced below market value to allow a substantial subsidy.Whereas for resale flats, HDB provides a CPF Housing Grant of $30,000 – $40,000.Beyond that, new and resale flat buyers can additionally apply for a concessionary loan should they want to.
2. Additional Housing Grant and loans available
For low income households, families are eligible for the additional CPF housing Grant. On top of that, families can opt to get a HDB or bank loan to finance their homes at affordable rates given the current low-interest rate climate.
As such, even though it is by no means easy to keep the cost of constructing a house low while retaining quality and safety, governments around the world such as Singapore are trying their best to keep housing affordable and available within reach of today’s homebuyers.
Want to find the best mortgage rate in town? Check out our free comparison service to learn more!
Read more of our posts below!
The post How much is it to construct a home in various cities in the world? appeared first on Redbrick Mortgage Advisory.
This post was originally published on Redbrick Blog Section