Up to 12,000 flats yearly to meet growing demand

Source : Straits Times – 24 Nov 2009

THE Housing Board expects to offer between 10,000 and 12,000 flats every year over the next five years to meet growing demand, National Development Minister Mah Bow Tan said yesterday.

That will serve as a guide for HDB’s build-to-order (BTO) scheme, with the actual number made available depending on market conditions.

‘What actually happens a few years down the road is unknown. Also, demand is not constant – it varies from year to year, depending on economic and other factors,’ he told Parliament.

Taking questions from members on housing issues, he noted that HDB had responded swiftly to this year’s spike in demand, by raising its planned supply of 6,000 flats for the year to 13,500.

‘If the take-up of BTO flats remains strong, we will continue to push out more flats under BTO next year – at least one (project) every month if necessary,’ said Mr Mah.

While HDB does not have a policy of keeping vacant flats as a buffer, it nonetheless has a supply of flats that are ready for occupation, he disclosed. Such flats make up about 10per cent of all new flats.

He was responding to a query from MP Cynthia Phua (Aljunied GRC), who asked whether HDB could consider keeping a stock of ready flats for families who were in urgent need of a home.

‘Although I have said that we do not plan for a buffer, in actual fact there is a buffer of flats over and above the BTO (flats) which are available and have shorter waiting times,’ said Mr Mah.

These available flats are leftovers from other HDB schemes – such as the Selective En-bloc Redevelopment Scheme and surplus BTO flats – which are sold under HDB’s sales of balance flats exercise.

Ready flats are hugely popular because buyers do not have to wait to move in. This is in contrast to the BTO scheme, under which buyers typically have to wait three to four years.

Touching on the issue of cost, Mr Mah said that the total cost of flats varied according to ‘when we build, where we build and what we build’.

It included the cost of land, construction and ancillary services, and varied from $230,000 for a three-room flat in Punggol to $530,000 for a five-room one in Tiong Bahru.

He reiterated that HDB does not price its flats based on cost plus profit, but on a market price with a generous discount.

The selling price was sometimes more than total development cost and at other times, it was less than the cost – especially when construction costs are high, which has been the case over the past few years.

‘Overall, HDB incurs a large deficit in building and selling flats every year, as reflected in its audited annual accounts. In its financial year from 2008 to 2009, HDB incurred a deficit of $1.5 billion for the home ownership programme alone,’ he added.

First-time buyers were assured that there would be sufficient affordable housing.

HDB recently increased the proportion of flats set aside for first-timers from 90 to 95 per cent. And first-timers are 96 per cent likely to be given a chance to select a flat within two tries, he said.

Mr Mah said he was prepared to look into the cases of those who were unsuccessful after three tries, to see how HDB could help.

Analysts said yesterday the planned flat supply over the next five years would help ease demand.

‘This is a marked increase in planned supply, so it’s good for the market. The question going forward, is how will HDB more accurately gauge demand,’ said Chesterton Suntec International’s research and consultancy director, Mr Colin Tan.