AFFORDABILITY OF HDB FLATS

AFFORDABILITY OF HDB FLATS

28.

Mr Zaqy Mohamad asked the Minister for National Development in light of smaller HDB resale flats selling at prices above valuation and the limited supply of HDB rental flats, whether the Ministry has any plans to ensure that smaller HDB flats remain affordable for low-income families.

Mr Mah Bow Tan: The Government is committed to ensuring that public housing remains affordable to the majority of Singaporeans, including lower-income families.

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There is an adequate supply of affordable HDB flats for lower-income flat buyers. HDB resumed building new 3-room flats in 2004 and new 2-room flats in 2006. New HDB flats are priced with a significant market discount to ensure their affordability to flat buyers, with first-time buyers eligible to take up a mortgage loan from HDB at a concessionary interest rate. Lower-income families with household incomes not exceeding $3,000 per month can also make use of the Additional Housing Grant (AHG) of up to $20,000 to pay part of the purchase price of the flats.

Eligible first-time flat buyers who choose resale flats are eligible for the CPF Housing Grant of $30,000 or $40,000, as well as the AHG.

Public housing has remained affordable to lower-income households. Last year, those who bought new 2-room and 3-room flats used an average of 20% of their monthly household income to service their housing loans. In other words, most of these families can service their housing loan entirely from their CPF Ordinary Account contributions, without any cash outlay.

While the prices of HDB flats in the resale market have increased, this growth is in line with the general recovery of the property market. Lower-income flat-owners also benefit in terms of asset appreciation. I would also like to clarify that not all flats are transacted above market valuation; about half of resale flat transactions were at or below market value earlier this year.

As buying a HDB flat is a long-term commitment, flat buyers should exercise financial prudence and decide on a flat that is within their means.

HDB will continue to monitor the public housing market closely to ensure that public housing remains affordable to the majority of Singaporeans.