NEW HDB FLATS

NEW HDB FLATS:

(Adequacy of supply for newlyweds): 11.

Mr Chiam See Tong asked the Minister for National Development (a) whether the Ministry can provide figures of new HDB flats in the market for the last three years; (b) whether there is enough supply of HDB flats for newlyweds to purchase from HDB instead of having to go to the resale market; (c) will the Ministry consider giving priority to newlyweds under the Fiance/Fiancee Scheme during the bi-monthly sales exercise; and (d) will the Ministry consider holding a dialogue with couples who have registered for marriage to hear their plight in such purchases.

The Minister of State for National Development (Ms Grace Fu Hai Yien) (for the Minister for National Development): Sir, from January 2004 to June 2007, HDB offered for sale more than 31,000 new HDB flats under various sales exercises. HDB plans to offer another 5,000-6,000 new flats in the second half of 2007. In total, that will bring the number of new flats offered in 2007 to 10,000 units. It will also continue to monitor the market closely, and make appropriate adjustments to the new flat supply, if necessary.

Mr Chiam asked whether there is enough supply of new HDB flats for newlyweds so that they do not have to buy a resale flat. I would like to clarify that the demand for housing from first-timers is met through new flats as well as resale flats. There are three reasons for that.

First, new and resale flats have different attributes and their own

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attractions to flat buyers. While new flats come with more modern designs, they tend to be in newer towns which are less centrally located and may not be ready for immediate occupation. On the other hand, resale flats, whilst older, tend to be situated in more established towns with a wider range of facilities and are ready for immediate occupation. Resale flats are a good option for newlyweds who wish to live near their parents or are planning to get married soon. With the large stock of more than 800,000 flats in Singapore, resale flats come in a wide variety of sizes, locations and prices to meet different housing needs and budgets.

Second, a large number of first-timers are really asking for new flats in mature estates. Some of them wish to stay near their parents, while others like the location and seemingly better resale value. Much as we empathise with young couples, especially those who want to be located near their parents, there is simply not enough land in the mature towns to meet every need. From time to time, HDB identifies a site in a mature estate for redevelopment, and is able to offer a small number of new HDB flats for sale to the public after re-housing SERS residents. Dawson Estate, which was mentioned by PM in his National Day Rally speech, is one such example of HDB's effort to rejuvenate the mature estates.

However, this supply is small. It takes time for HDB to collect sufficient land parcels, and it is not enough to meet all the demand for new flats in mature towns. Where possible, HDB will do what it can to rejuvenate old estates, intensify the use of land, and introduce new HDB flats for sale to the public. However, given the land constraints, the majority of new flat supply will be located in the newer towns. It is not possible for HDB to provide a new flat to every young couple who wishes to stay near their parents.

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Therefore, first-timers who wish to buy a flat in a mature estate should consider the option of buying a resale flat. First-timers who buy resale flats can enjoy a HDB Housing Grant of $30,000, while those who live near their parents enjoy a higher tier grant of $40,000. To help the lower income group in buying their first flat, the Additional Housing Grant has been enhanced recently. For those whose monthly household income is below $4,000, they will also enjoy an Additional Housing Grant of up to $30,000. Therefore, first-timers can enjoy up to $70,000 in housing grant or about 40% of the price of a three-room resale flat.

Third, the building of new flats must be in line with the net household formation rate, which takes into account the number of new households formed as well as the disbanding of households due to deaths, changes in marital status and other factors. If HDB were to provide every young couple with a new flat, while we will make the young couples happy today, we are creating a big problem for the same young couples in their later years. The same couples, in their perhaps not-so-young days, will have difficulties selling their flats later when they need to. We must not forget that a flat buyer today may be a flat seller later. In other words, if we over-provide for the young couples, we will inevitably affect the older couples who are thinking of monetising their HDB flats, or the couples who aspire to upgrade to a private property. HDB, therefore, needs to calibrate the supply of new flats to ensure a healthy resale market where both buyers and sellers can meet their needs.

The Member has also asked MND/HDB to consider granting newlyweds priority under HDB's bi-monthly sales exercises for unsold flats. I wish to clarify that HDB has already been giving priority to first-timers (which includes newlyweds and

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those applying under the Fiance-Fiancee scheme) when they apply for new HDB flats under the Build-to-Order and Balloting Exercises.

This is in recognition of the more urgent needs of this group of flat buyers who are seeking a home to settle down and start a family. In the HDB Heartware Forum project which I have recently completed, we have taken note of the desire of the young couples to stay near their parents and have made recommendation to HDB to improve the priority scheme accordingly. HDB has announced on 14th August 2007 that the priority framework will safeguard for first-timers at least 90% of the flat supply under the Build-to-Order and balloting exercises. Under the revised system, first-timers will also enjoy double the chances over second-timers; and first-timers applying to live near their parents will be given four times the chances compared to regular applicants. First-timers who have applied unsuccessfully for four or more times will also be given additional chances, starting from their fifth attempt.

We have not extended the priority system to the bi-monthly sales exercises for unsold flats, as the flats offered are leftover units from

Build-to-Order and balloting exercises, where priority has already been given to first-timers. These leftover flats are usually not so popular and often, they remain unsold and available for subsequent selection after applicants have been invited to select their flats.

For example, in the April 2007 bi-monthly sale exercise, for flats in the North/West sector, 190 flats remain (or 14% of the units offered) available for walk-in selection today.

As to the Member's question on whether MND will consider holding a dialogue with newly-wed couples, I would

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like to inform the Member that HDB regularly carries out surveys and gathers feedback from potential flat buyers. Most recently, the Forum on HDB Heartware has also conducted extensive focus group discussion, public consultation, and email feedback on enhancing HDB community. Young participants in the age band of 25-34 years from all races and both genders formed one such focus group. Arising from the Forum's recommendations, HDB has increased the priority for first-timers and those buying flats to live near their parents. HDB has no plans to conduct another dialogue session with the newly-weds in the near future.