HUDC FLATS (New prices)

Mr J.B. Jeyaretnam asked the Minister for National Development if he will explain how the new prices for the Housing and Urban Development Company flats announced on the 18th of February, 1983 were arrived at.

Mr Lee Yock Suan (for the Minister for National Development): Mr Speaker, Sir, prices for HUDC housing are fixed no differently from those of other public housing. The Government adheres to the fundamental principle that the selling prices of public housing, including HUDC housing, should be kept within the reach of the applicants.

HUDC housing represents the apex of Government-developed housing for the people. Ideally, the prices of HUDC flats should be fixed to enable the HDB to fully recover all development costs incurred, including land costs at market value, as well as construction, financing and professional costs. However, if the HDB were to determine HUDC prices on this basis, selling prices would have been much more than those announced on 18th February 1983 owing to the high cost of land in Singapore.

To keep prices down, land costs have therefore been set at concessionary rates. For example, land for Jurong East Estate in the Outer Suburban Zone was imputed at only $100 per square metre, while land for Bedok and Hougang Estates in the Inner Suburban Zone was valued at $150 per square metre. These values are much below the market values of comparable land for private residential development. In the 10th URA Sale, successful tenders for residential land in the vicinity of Bedok New Town ranged from $500 per square metre to $870 per square metre.

In comparison with the selling prices of private flats in similar localities, the selling prices of HUDC flats in Bedok, Hougang and Jurong East are 40% to 50% cheaper in terms of per square metre of floor area. In the Bedok area, comparable private apartments are selling for about $2,230 per square metre, whereas HUDC flats are priced about 40% lower, at $1,238 per square metre for apartments and $1,424 per square metre for maisonettes. The average price of $210,000 per HUDC unit at Bedok, Hougang and Jurong East is well below market rates and within the reach of the HUDC applicants.

For the exclusive estates of Pine Grove and Gillman Heights, public selling prices are fixed at $1,723 per square metre for apartments and $1,981 per square metre for maisonettes. These prices are still about 30% below the prices of nearby private developments. But selling prices of Pine Grove and Gillman Heights units should not be allowed to cloud the issue. These two estates are the remnants of a legacy of exclusive housing enclaves created by the former Housing & Urban Development Co (Pte) Ltd. The HDB inherited them when it assumed the function of developing HUDC housing. In future, HUDC housing will be integrated within HDB estates in accordance with the Government's objective of achieving a better social mix of communities.

The determination of selling prices of future HUDC housing will follow the principles set for the first batch of integrated HUDC units at Bedok, Hougang and Jurong East. The Government will continue to ensure that these prices are kept within the reach of the people.

Mr Jeyaretnam: Mr Speaker, Sir, the Hon. Minister of State says that the prices will be kept within the reach of those wishing to buy the HUDC apartments. But I see a report in the papers, only two days ago, that a number of people are dropping out of this queue to buy HUDC flats, and that less and less people are applying. So obviously it is beyond their reach. Less and less people will be able to afford the HUDC apartments.

Secondly, the increases vary from 78% to 143% of the previous cost of HUDC apartments. Am I to understand from the Hon. Minister of State that the old company, HUDC, was running at a tremendous loss in selling those flats?

Mr Lee Yock Suan: Mr Speaker, Sir, the number of people who have dropped out from the HUDC waiting list is about 52 out of a total of over 4,000 applicants. That is roughly 1%. I do not think one swallow will make a summer. It is not necessarily the case anyway, that people who dropped out did so because they could not afford it. It could be for a great variety of reasons. The hon. Member should think carefully through his arguments before confusing the public. This question of the price increase of 78% to 123% -

Mr Jeyaretnam: 78% to 143%.

Mr Lee Yock Suan: 143%, 1 stand corrected. This is because of the increase in the construction costs over the last few years. As you know, the prices of private properties and of HDB flats have all gone up because of the shortage of labour, the increase in the prices of construction materials, and so on. The HUDC were not making any losses, but it does not mean that costs have not gone up as much.

As I have explained before, the HDB is in fact pricing the land at concessionary rates, and it is only on this basis that we are able to sell the flats some 40% to 50% lower than the market prices. This point about land values may not get through to the hon. Member. It seems to be a very difficult point for him to understand. But there is no doubt - if you ask any economist, he will tell you the meaning of this - that when we make land available to the public at subsidized rates, we should really be considering the market rate. I hope the Member now understands the issue.

Mr Jeyaretnam: Mr Speaker, Sir, as I understand from the Hon. Minister of State, the reason for the increase was the rising costs in the construction of these apartments, and yet he has said that the HUDC was not making a loss when it was previously selling them at its prices. May I know from the Minister whether his Ministry or the HDB is able to present a costing of these apartments. I do not know what the great difficulty is. If the Ministry or the HDB wants a form on how this costing is arrived at, I will be quite happy to give them to show how it can be done.

Mr Lee Yock Suan: Mr Speaker, Sir, there is no difficulty at all in providing the costing. If hon. Members want it, we will be happy to provide it. In fact, I am surprised to hear the Member now saying that there is no difficulty. If he recalls, sometime ago when we were debating this question of HDB prices, he was asking, "How does HDB price it?", because we have no accounting system and so on. We then asked him at that time whether he wanted us to price the flats for the Anson residents according to the true costs, and we did not get any answer from him. So now, I do not see how we should be asking him to give us a method to cost the houses.

Mr Jeyaretnam: You have the difficulty.