HDB pricing policy limits impact of rising costs

Source : Business Times - 11 Jun 2008

Board trying to contain cost by simplifying some projects

CONSTRUCTION costs for Housing & Development Board (HDB) flats have increased but the impact on buyers is likely to be limited, due to HDB’s pricing policy and cost-control measures.

Speaking to the media at HDB yesterday, National Development Minister Mah Bow Tan said that ‘construction costs have gone up significantly both for the building of private as well as public housing’. According to him, construction costs may have risen 20 to 30 per cent in general.

‘HDB is trying to contain the cost as much as it can,’ he added. One way is to simplify some of its projects. The government is also withholding some projects to ease pressures on the construction sector.

Asked how much of the increase in construction costs would go to buyers, he said that ‘for new flats, it should not feed directly through to the buyers, but it will probably feed through indirectly as the market price of flats goes up’.

In a forum reply last year, HDB mentioned that the prices of new flats are based on the market prices of resale HDB flats, not on construction costs. ‘In order to provide affordable housing to Singaporean families, new HDB flats are priced below their equivalent market values,’ said the reply.

Mr Mah assured that the prices of public housing will remain affordable.

The squeeze in the construction sector is not likely to delay the integrated resort projects. Progress is ‘on track’, he said.

Mr Mah also expects demand for HDB flats to strengthen if Singapore’s population grows as it has over the last few years. ‘We are monitoring the situation, and as the demand grows, we are also increasing the supply.’

He pointed out, however, that ‘we must also always be careful that we do not overbuild.’

HDB yesterday launched 382 flats for sale at Straits Vista @ Marsiling under the Build-To-Order (BTO) system. The first HDB project in Woodlands town in recent years, Straits Vista forms part of the total BTO supply of 8,400 units planned for this year. The project will comprise 50 three-room units with an indicative price range of $116,000 to $164,000, and 332 four-room units from $184,000 to $257,000.

HDB will receive the United Nations Public Service Award for its home ownership programme on June 23 and Mr Mah was at the agency to celebrate the win. There are more than 800,000 HDB flats in Singapore, housing more than 80 per cent of the resident population. About 95 per cent of HDB households own their homes.