Affordability key: HDB

Source : Today - 6 Mar 2009

WE REFER to the letters, “The social and financial impact of no-frills flats, estates” and “DBSS contractors will only sell at a profit” (Feb 11).

HDB is mindful to ensure the affordability of public housing even as they are equipped with the essential amenities and basic finishes. We agree that children‚s playgrounds and neighbourhood parks are necessary to serve the needs of HDB residents, especially young families. Similarly, most HDB flats are provided with basic finishes like bathroom tiles and sanitaryware so flat buyers benefit from the economies of scale HDB enjoys.

HDB offers a variety of flats to meet the diverse housing needs of flat buyers, from basic 2-room flats to larger flats with better finishes. On average, first-time flat buyers in 2008 needed only about 21 per cent of their monthly household income for their housing loan. This is well below the 30-per-cent benchmark for affordable housing. Most buyers can service their monthly instalments entirely from their CPF contributions, and need not fork out any cash. HDB has recently enhanced the Additional CPF Housing Grant (AHG) to provide even more help for first-time homebuyers.

New flat prices will not necessarily be lower if they are based on cost. Based on recent HDB projects, a new four-room flat costs about $330,000 to develop, taking into account land, building and other costs. This is significantly higher than the average subsidised selling price of a four-room flat of about $220,000.

Design, Build and Sell Scheme (DBSS) flats do not contribute to overall price increases as they only make up less than 10 per cent of public housing supply. They cater to the needs of a niche group with higher income and housing aspirations. If developers overprice DBSS flats for their target group, they face the risk of low demand.

It is not true that flatbuyers have been forced to buy bigger flats because HDB stopped building 2- and 3-room flats. On the contrary, HDB stopped building 2- and 3-room flats in the ‚80s due to poor demand. In response to public demand, HDB has resumed the building of 2- and 3-room flats in recent years.

We thank the two writers for their comments.

Ignatius Lourdesamy
Deputy Director (Marketing & Projects), HDB