HDB RESIDENTIAL FLATS (Shortening of waiting period)

Mr Hwang Soo Jin asked the Minister for National Development (a) what are the current waiting periods for the purchase of the different types of Housing and Development Board residential accommodation and what steps have been taken to shorten them; and (b) whether he will consider working out a scheme whereby applicants on the waiting list may opt to commence paying prior to allocation so that they will not be affected by any price increase.

Mr Teh Cheang Wan: Mr Speaker, Sir:

(a) the current average waiting period for the purchase of HDB flats is three years, against the normal waiting period of 21/2 years. The longer waiting period has been caused by the recent slowdown in the HDB construction programme. The slowdown has been primarily due to the smaller number of HDB contractors tendering for jobs because of losses incurred in past projects as a result of high inflation. They are also refraining from tendering because of the uncertainties of rising costs.

The HDB on its part is taking steps to ensure the availability of basic building materials, such as sand, granite and bricks. The HDB is also studying possible modifications of its contracting system, such as cost-plus tendering, to encourage more contractors to tender for projects.

(b) There are no advantages in having a scheme to allow applicants to pay for their flats prior to allocation. The selling prices of HDB flats have to be revised periodically to meet rising construction costs. Otherwise, the subsidy for public housing will reach unacceptably high proportions. Costs invariably rise during construction because of escalation clauses in building contracts. If applicants pay for their flats before allocation, the HDB will have to provide for builtin allowances for price escalation during the construction period. Applicants will, therefore, not necessarily pay less by paying earlier.