DIFFERENTIAL PRICING OF HDB FLATS (Extension of policy)

Mr Chng Hee Kok asked the Minister for National Development if he will extend the policy of differential pricing of Housing and Development Board flats to differential pricing between HDB estates so that prices in less popular estates may be lowered.

Mr Dhanabalan: Mr Deputy Speaker, Sir, can I have your permission to deal with Questions Nos. 23, 24 and 25 together as they cover the same subject?

Mr Deputy Speaker: All right.

Mr Dhanabalan: Mr Deputy Speaker, Sir, flats with a scenic view such as those facing town gardens, parks, reservoirs, etc, and those close to public amenities are in greater demand and should be priced at a premium. There are also a small number of flats with unfavourable features which should be sold at a discount from the prevailing posted price. However, the current pricing system does not reflect these factors for flats within the same estate or within the same new town. These different factors are presently reflected in the prices of HDB flats in the resale market.

The HDB will implement differential pricing of flats within the same estate or new town and add a premium to reflect the extra value for those flats with favourable factors. In the first instance, premia will be added for flats with easy accessibility to MRT stations and town centres, and for flats with scenic views.

Flats in less favourable locations will be sold at a discount on the prevailing selling prices. These will be mostly flats very near refuse bin compounds, or those which have been repeatedly rejected for various reasons.

For other flats, there will be no adjustment to their prevailing selling prices.

The proposed differential pricing is expected to be implemented before the end of this year. About 2,500 flats will be affected by this change. This represents about 6% of the flats sold in this financial year.

For the next few years only about 5-10% of HDB flats will be affected by such differential pricing.

There will be no change to the existing system of allocation. Public applicants will continue to select flats according to their registration numbers. The existing priority given to resettlement applicants will remain.

The existing categories of flats will continue to be available for selection to both public and resettlement applicants.

As a general pricing policy, HDB will continue to price flats within an affordable range to applicants. We want to encourage a full home-owning society, so prices must be affordable. However, this does not mean that all flats must cost the same. Flats which enjoy special features must naturally cost a little more than those without such features. Differential pricing of better located flats will not put home ownership of HDB flats out of reach of the people.

Mr Chiam See Tong: Mr Deputy Speaker, Sir, I believe the Minister has not really thoroughly answered the question because I think the Member who puts this question is interested in the proposed differential pricing. I am also interested to know under what guidelines these different prices will be judged by or guided by.

Maybe my question is not clear. There is certainly a range of percentage to the pegged price. So perhaps the Minister could tell us this.

Mr Dhanabalan: Mr Deputy Speaker, I would have thought that those who filed the question should know whether the question has been answered or not. But anyway, Sir, I will answer the Member for Potong Pasir. The differential pricing will be in the range of 2-6%, depending upon the various features either in terms of premium or in terms of discount.

Mr Chng Hee Kok: Sir, should not this discount be applied to those estates which are less popular?

Mr Dhanabalan: Sir, there is no such thing as a whole estate being less popular. HDB prices already reflect differences in locations of estates. For example, estates which are near the city are priced much higher than estates in new towns much further away. So there is already a gradation of prices which reflect the location. We are now talking about differences within estates and within new towns.

Mr Chng Hee Kok: Is the Minister not aware that there are some estates like Yishun and Woodlands which are less popular than other estates?

Mr Dhanabalan: Mr Deputy Speaker, Sir, Yishun already is priced much less than estates near town. Whether or not they will be taken up depends, I think, upon the amenities that will be put in.

Mr Chiam See Tong: I have another supplementary question. We are on the pricing of HDB flats and the Minister has given a guideline that there will be a premium of 2-6% in respect of certain flats which are in a good location. Will the Minister be willing to give a breakdown of how HDB prices are arrived at or are determined? Is he willing to give a breakdown as to the cost of the land, building cost, construction cost, professional cost, interest, etc?

Mr Dhanabalan: I suggest the Member file a question which can be considered.

Dr Vasoo: Supplementary question, Sir. Would there be a more specific objective for differential pricing other than the scenic spots, the good view and other related aspects.

Mr Dhanabalan: Mr Deputy Speaker, Sir, whether they are an objective or not will ultimately be shown by whether people are prepared to pay the premium.