BUILT-TO-ORDER FLATS

BUILT-TO-ORDER FLATS

**

(Impact of BTO flat supply on resale prices): **

17.

Mdm Ho Geok Choo asked the Minister for National Development (a) whether the supply of nearly 16,000 Built-to-Order (BTO) flats will help lower the prevailing Cash-Over-Valuation (COV) amount in the resale market; and (b) besides increasing the number of new flats, what other measures is the Ministry exploring to correct the current imbalance in the HDB resale market.

Mr Mah Bow Tan: HDB recently announced that it will offer up to 16,000 BTO flats this year to cater to the strong demand. This is almost double the 9,000 BTO flats offered last year. At the rate of 16,000 flats per year, HDB will offer more flats than the total number of flats in Bukit Panjang or Pasir Ris town in just two years. The substantial increase in new flat supply will cater to the needs of first-time home buyers and siphon off some of the housing demand that is driving up resale flat prices.

To provide more housing choices for flat buyers, the supply of 16,000 BTO flats will be augmented by some 5,200 housing units under the Design, Build and Sell Scheme (DBSS) and Executive Condominium Housing Scheme (ECHS) that have already been tendered in 2010. HDB is prepared to launch more sites for DBSS and Executive Condominiums (ECs) if there is sustained demand.

Eligible flat buyers, especially the first-timers, have a choice of buying flats either directly from HDB or from the resale market. The HDB resale market operates on free market principles where prices are negotiated on a willing-buyer, willing-seller basis. Thus buyers should carefully consider what they can afford, including the COV.

I would like to reiterate that HDB flats are intended for long-term owner occupation. Some people may buy HDB flats in anticipation of future price increases, although they may not be in need of housing. This is one of the reasons contributing to the strong demand today. But flat prices may rise or fall in the short term. I advise buyers to be financially prudent and remember that HDB flats are meant for their long-term occupation. To reinforce this, HDB increased the Minimum Occupation Period (MOP) in March 2010 for sale of non-subsidised flats in the open market to three years.

HDB will continue to monitor the resale flat market closely to see if additional measures are needed to maintain a healthy and stable property market.

Column: 965