APPLICATION FOR HDB FLATS

Column: 35

APPLICATION FOR HDB FLATS:

(Waiting list by couples): 11.

Dr Lim Wee Kiak asked the Minister for National Development (a) how many couples applying for HDB flats for the first time are on the waiting list currently; (b) what are their chances of success at the first and subsequent balloting for HDB flats; and (c) what measures, if any, are there to encourage them to consider buying resale flats instead.

The Senior Minister of State for National Development (Ms Grace Fu Hai Yien) (for the Minister for National Development): Mr Speaker, Sir, there are three ways for young couples to purchase

Column: 36

a HDB flat, namely, Build-To-Order (BTO) for new flats to be constructed, Balloting Exercise (BE) for new flats already built or under construction and resale flats. The bulk of new flats for sale is through the BTO system.

The average waiting time under the BTO system is about three years from the selection of flat to the collection of keys. This is the time taken to construct the flats. To shorten the waiting time for a new flat upon marriage, couples can apply under the Fiance-Fiancee Scheme.

HDB has implemented various measures to improve the chances of First-Timers. At least 90% of BTO flats for public applicants are set aside for First-Timers. First-Timers are also given double the chances under the ballot over Second-Timers. They have four chances if they are buying a flat to live near/with their parents under the Married Child Priority Scheme.

Therefore, First-Timer applicants enjoy a very high chance of success in most BTO exercises. In six out of the eight completed BTO exercises between August 2007 and March 2008, 80% to 100% of First-Timer applicants were invited to select a flat. In other words, all First-Timers, in some instances, were invited to select a flat. In the remaining two projects, both located in Yishun, 54% to 65% of the First-Timers were invited to select the flats. In other words, one in two was invited to select the flat.

In May 2008, HDB further refined its application process. To deter repeated non-selection of flats, First-Timer priority will be removed for those who turn down two chances to select a flat. At the same time, applicants who had been unsuccessful at least twice for BTO exercises in non-mature estates will be given additional chances from their third try onwards. Since the refinements, flat buyers have generally become more

Column: 37

considered in their applications and the acceptance rates have improved. This suggests that the measures are effective in helping the more serious applicants to book a flat.

Flat buyers looking for new flats already built or under construction can apply under the Balloting Exercise. However, BE launches are not frequent and consist of balance flats from the Selective En bloc Redevelopment Scheme (SERS). Due to the limited supply and high demand, the chances of selecting a flat under BE are not high.

First-Timers who need a flat urgently can buy a resale flat with the CPF Housing Grant of $30,000, or a higher grant of $40,000 if they stay with or near their parents. In addition, households earning a monthly income of less than $4,000 can also apply for the Additional CPF Housing Grant of up to $30,000.

In recent months, more First-Timers are turning to the resale market to meet their housing needs. In the second quarter of 2008, there were 1,470 cases of First-Timer flat buyers buying resale flats using the CPF Housing Grant. This is a 75% increase compared to the average of about 840 cases per quarter from the third quarter of 2007 to the first quarter of 2008.

Mdm Ho Geok Choo: The Senior Minister of State mentioned that home ownership in a way is the cornerstone of public housing. It was actually recently reported in the Straits Times dated 30th August that some Singaporeans would prefer to rent a flat as it is more liquid and does not subject a person's wealth to property cycle, so to speak. Is home ownership policy today still relevant, given that 90% of Singaporeans already own their homes? Can the Ministry comment on why it is more advantageous to own a HDB flat rather than rent one in the open market?

Column: 38

Ms Grace Fu Hai Yien: Mr Speaker, Sir, with your indulgence, I would like to refer this question to a subsequent Question which will be answered on rental flats.

Dr Lim Wee Kiak (Sembawang): Mr Speaker, Sir, I would like to thank the Senior Minister of State for her answer. I would like to ask her: what are the obstacles or impediments preventing first-time buyers from buying the resale flats instead of waiting for new flats; is the cash-over-valuation system one of the problems, and is HDB thinking of revamping the cash-over-valuation system?

Ms Grace Fu Hai Yien: Mr Speaker, Sir, I think a resale flat has a lot of advantages over a new flat. For example, there is a huge stock available out there and it is suited for applicants who have very locational specific requirements, and if they want to live near their parents for support, that is a very good reason to want to stay in a specific location. So resale flat actually has a lot of advantages. But, of course, cash-over-valuation (COV) is a consideration for many of the First-Timers, and that is really a reflection of the market condition. COV is an issue now, but it has not always been an issue. If you look at the COV in the past, particularly in the years from 2004 to 2006, COV was close to zero. So actually it is a reflection of the market condition, and I would urge First-Timers to basically watch the market carefully. It is a very serious investment to buy a house and therefore choose the right place and pay the right price for it.

Mr Zaqy Mohamad (Hong Kah): I am just following up on the Senior Minister of State's comment earlier. Would MND consider changing the mechanism for the housing grant given to First-Timers buying resale flats? The grant could actually be delivered in cash rather than putting it

Column: 39

straight into CPF, or an equivalent mechanism.

Ms Grace Fu Hai Yien: Mr Speaker, Sir, MND would review the housing grant scheme and it has done so regularly over the last few years. We will continue to do so. At the moment, we do not have a plan to allow the use of grant to pay for COV for the simple reason that we believe that valuation is really what the house is worth and therefore we should not encourage buyers to pay above valuation.