PUBLIC HOUSING PRICES

Mr Chia Shi Teck asked the Minister for National Development if he will state i) the average yearly increase in public housing land prices which the Housing and Development Board paid to the Government from 1988 to 1992; ii) the effects of these increases on the subsequent selling prices of HDB flats for those years; and iii) the possibility of increasing the plot ratio or density of land usage to control and possibly reduce the selling prices of HDB flats.

Dr Richard Hu Tsu Tau: HDB purchases its land from the Land Office at market rates assessed by the Chief Valuer. Factors such as location and intensity of the development are taken into account in determining the market land rate.

From 1985 to 1992, land cost for HDB flats rose at an average of 4% per year. In the last 5 years, however, from 1988 to 1992, land cost rose at an average of 11% per year.

HDB currently buys land for public housing at about $1,000 psm for a Gross Plot Ratio (GPR) of about 2.8 to 3. By comparison, successful tenders for residential land in HDB estates under the Sale of Sites Programme are typically in the region of about $2,000 psm for a lower GPR of 2. Public housing land prices have therefore risen much slower than tender prices for sale of sites.

Pricing of HDB flats is primarily cost driven. The two major components of total development cost for HDB flats are land and construction costs. Land cost rose by about 55% and construction cost by about 97% over the period 1988 to 1992. As a result, total development cost for HDB flats increased by about 81% over the same period. By comparison, the average price increase for all flat types over the period 1988 to 1992 was only 75%. Price increases over the same period for the smaller flat types which are meant for the lower income groups was only about 32%. Government has absorbed part of the cost increases over the period 1988 to 1992 so that housing continues to be affordable for Singaporeans.

Given the limited land available in Singapore, HDB has always strived to optimise the use of public housing land without unduly compromising the quality of the living environment in HDB estates. HDB has, in fact, been increasing the development intensity of public housing estates over the years. HDB estates built in the 1960s and 1970s, such as Queenstown and Toa Payoh, have GPRs of about 1.9, while estates such as Ang Mo Kio and Clementi, which were developed in the 1980s, have GPRs of about 2.5. The newer estates such as Pasir Ris and Tampines have a higher GPR of about 2.8. The higher GPR is because we are building bigger flats whereas family size is getting smaller. Singaporeans have generally accepted the higher GPR in the newer HDB estates because the ambience and quality of the external environment is maintained. Further increases in GPR must be considered carefully to avoid a deterioration in the environment in HDB estates.