HOUSING AND DEVELOPMENT BOARD PURCHASED FLATS (Demand and waiting period)

Dr S. Vasoo asked the Minister for National Development whether the demand for bigger Housing and Development Board purchased flats increased significantly in 1990 and 1991 and what further steps are being taken to reduce the waiting period for such flats under the new booking system.

Mr Dhanabalan: Mr Speaker, Sir, demand for all categories of HDB flats has increased in recent years. In 1989, HDB received a total of 32,800 new applications for 4-room and larger flats. The number of applications increased to 35,100 in 1990 and 48,200 in 1991, an increase of 47% over the three-year period. This increase is due to the increasing number of applicants who are upgrading to bigger flats.

Demand for 5-room flats was especially buoyant, with the number of applications for 5-room flats nearly doubling over the last three years, from 10,100 in 1989, to 11,300 in 1990, and 19,200 in 1991. Over the same period, demand for Executive flats also rose but at a lower rate of about 26%. There were 7,400 applications in 1989 for Executive flats, 8,200 in 1990, and 9,300 in 1991.

HDB has therefore stepped up its Construction Programme for new flats over the past three years. But such increase in construction is constrained by the capacity of the construction industry as a whole. It has to be done gradually so as to maintain quality and not overheat the construction industry and push up building costs.

To reduce the waiting period for certain groups of flat applicants, the balloting system for allocation of flats was modified at the beginning of this year to give priority in the allocation of flats to:

(i) new households, in preference to upgraders; and

(ii) repeatedly unsuccessful applicants, in preference to first-time applicants.

Following this change, new households who apply for 5-room and Executive flats in new towns under development such as Woodlands, Chua Chu Kang and Jurong West, are generally able to book a flat after two to three ballots, ie, about six to nine months from first application. As demand for flats in Tampines New Town is relatively high, those who apply for 5-room and Executive flats in Tampines may have to wait a little longer. Generally, they should be able to book a flat after three to four ballots.

As the Revised Balloting Scheme was implemented only recently and is working satisfactorily, it would be premature to modify it further. HDB will continue to monitor demand for HDB flats and will step up its Construction Programme for new flats as much as possible, to further reduce the waiting period for applicants.

Dr S. Vasoo (Tanjong Pagar GRC): Sir, may I ask the Minister two supplementary questions? Is the current new booking system working better than the old system? Are there plans to address the concern about increasing prices of HDB flats?

Mr Dhanabalan: Mr Speaker, Sir, I do not want to go into all the advantages of the new booking system over the old waiting list system. The system is working well and people know at the time of application whether they are going to get a flat within a very specific period. Under the old system, they just put their names there and they did not know when they were going to be offered, where they were going to be offered, and what price they were going to be offered. All these uncertainties are removed in the new booking system. My view is that it is a better system, both from the point of view of the buyer as well as from the point of view of HDB which has to build these flats. It has got a better idea as to what to build and where to build these flats.

Increasing prices of HDB flats, yes, some concern has been expressed. But I think it is very important for Members to inform their constituents and the general public that when we talk of changes in the prices of HDB flats over a period of time, and when people talk of a 4-room flat going up by 20-30% in price, we are not talking about the same product or the same type of flat. HDB is not like McDonald's. You can go to any McDonald in Singapore, it is the same Big Mac that you are going to get, the price is the same and I assume that what you buy today will be the same as what you buy a month or a year from now.

Each HDB development is different It is in a different location, it has got a different orientation and it has got a different design. So you cannot compare, say, a 4-room flat built one year ago in Chua Chu Kang with a 4-room flat offered now in Tampines. They are not the same thing. Just as people would not compare developments in the private sector over different periods and in different places, I think people must get used to the idea that HDB is now building flats which are different. Every contract is virtually different because it takes into account location and builds in improvements that the HDB has tried out. In spite of the increased prices, it is very clear from the applications that people do value location and design and are prepared to pay for it.

When we compare the general increase in prices, we tend to lump together all the flats offered in a quarter. Many of the flats offered may be in the city area and the prices here are high. They can be as much as one-third more than similar size flats in the outlying new towns. In spite of that, applications are also high. In the mature estates, for example, in Queenstown and Geylang, for every flat there are almost seven applicants. In other words, the total number of applications was seven times the number of flats that we offered in spite of the fact that the prices were about one-third more than elsewhere.

As regards design, Members are aware that in the last quarter, we offered, for the first time, flats designed by private architects and built by contractors for the HDB. These prices were about 15% higher than the HDB-designed flats. Yet the applications were 18 1/2 times more than the number of flats offered. So people are prepared to pay for design. But if we get the feedback that people do not want better design or good locations, then of course HDB can go back to smaller flats, cheaper designs and poorer finishes. If people want that and that is the kind of feedback we get from the demand pattern, then we will go down to building such flats.

Mr Low Thia Khiang (Hougang): Mr Speaker, Sir, does the Minister agree that the price of public housing should be kept at a level which is affordable to Singaporeans?

Mr Dhanabalan: Mr Speaker, Sir, that is obviously one of the main considerations - whatever we build, whatever improvements and designs we provide in HDB flats should be within the affordability of Singaporeans. We constantly keep track of this and if the Member had looked at an article in the Business Times of 16th July, which is based on some facts given by the HDB, he would have noted that in spite of the increased price, the monthly income required to afford these flats - calculated on the basis of their CPF contributions - is, in fact, still much less than the average monthly household income. So affordability is an important criterion. We try to make sure that flats are built and priced in such a way that they continue to be affordable to Singaporeans. But what we cannot do is to build flats and price them in such a way that everybody can afford an Executive flat. That is not possible. There are 3-room, 4-room, 5-room and Executive flats. We provide the whole range. People must choose the flat that they can afford. We cannot promise to build the biggest flats in the best area and make them affordable to all Singaporeans.