HOUSING AND DEVELOPMENT BOARD FLATS (Increase in sale price in third quarter of 1994)

Mr Low Thia Khiang asked the Acting Minister for National Development whether the following increases in the sale price of Housing and Development Board flats for booking in the third quarter of 1994 as compared with the second quarter were justified: (a) an increase of $3,300 for a four-room flat in Bukit Batok; (b) an increase of $12,000 for a five-room flat in Bukit Batok; and (c) an increase of $44,600 for an executive apartment in Jurong West.

Mr Matthias Yao Chih (for the Acting Minister for National Development): Sir, HDB flats are priced under the Differential Pricing Policy, whereby flat prices vary according to differences in size, location, design, finishes and storey height, among many other factors. Flats offered for booking in different quarters are therefore not priced similarly, even for the same type of flats in the same new towns, because of variations in floor areas, features, designs and finishes. Such differences make a simple comparison of the average selling prices between quarters misleading.

For instance, the 4-room and 5-room flats offered for booking at Bukit Batok in the third quarter come with better design and finishes than those offered in the second quarter. Hence, the average price differences ranging from $3,300 for 4-room flats to $12,000 for 5-room flats.

As for the Executive flats at Jurong West, those offered for booking in the second quarter were flats which were not selected in previous booking exercises more than a year ago. The third quarter flats are also bigger and of better design and finishes.

HDB flats remain highly affordable to the average Singaporean. Based on the average selling prices for the third quarter, the ratio of monthly mortgage instalments to median household income of the applicants for 4-room flats is only 23%. This is the same level as two years ago.

Mr Low Thia Khiang: It seems to me that the reason for the increase in sale price is due to better design and bigger area. So would the Senior Parliamentary Secretary tell us what exactly are "better design and finishes"? And how much would it cost exactly, and justify the cost increases?

Mr Matthias Yao Chih: Sir, I have here [indicating] a better design, Design A, and the next page, Design B, which is not so nice, but very comfortable and functional. As for other differences, HDB has changed from white tiles for the kitchen, toilets and bathrooms to coloured tiles. Better grilles and a better type of doors are provided. I cannot categorise for each item how much the increase is justifiable because they vary from contract to contract. But from the second quarter to the third quarter, for the flats in Bukit Batok, the finishes, the facade, facilities, are indeed better, and the prices are justified.

Mr Low Thia Khiang: Does the Senior Parliamentary Secretary agree that he cannot convince Singaporeans by merely saying "better design". I am sure there is a way to work out: how much it will cost, let us say, per unit for this kind of design with better quality of tiles. Would he release the figures to the public?

Mr Matthias Yao Chih: The price difference is based on the tender prices by the different contractors. It is not set by the HDB or the Ministry.

Mr Chng Hee Kok: Sir, will the Senior Parliamentary Secretary say that the fact that the level of demand is so high for these flats is an indication that the prices are justified?

Mr Matthias Yao Chih: Sir, indeed there is a great demand for flats at Bukit Batok and Jurong West and many other parts of Singapore. We will try to keep the prices affordable. We will maintain the ratio of what they have to pay in instalments to the household income at 23%, which is well within their CPF contributions, and what they can pay out of their CPF accounts. The demand is there. People are willing to pay much higher prices on the resale market. Anyone who gets a Bukit Batok flat today, and he puts it on the market immediately the next day, he will probably command a far higher resale value. Therefore, to answer Mr Chng's point, indeed there is a demand and people are willing to pay those prices.

Mr Low Thia Khiang: Sir, does it mean that because people can pay and are willing to pay for a higher price, compared with the resale market, therefore, the HDB can just increase prices?

Mr Matthias Yao Chih: Not at all, Sir.

Mr Low Thia Khiang: Sir, I think the Senior Parliamentary Secretary should release the figures in terms of tender price, in terms of land cost, work it out per unit, and how much HDB would recoup from selling the flat. Would he agree to do that for these particular projects because there is ground for comparison in the same area?

Mr Matthias Yao Chih: Sir, the differences are in the finishes. The contract prices are open for inspection. The successful tenderers have offered certain prices and HDB chooses the best offer for coloured tiles, the best offer for better grilles and therefore, it puts all these things into calculation. HDB then calculates the subsidy to be given for each of these flats and puts up the listed price. I do not see what is the problem that Mr Low has in wanting to have details as to how much a toilet bowl costs. 1.30 pm

Mr Speaker: Order. It is 1.30 pm. End of Question time.

[Pursuant to Standing Order No. 21(3), Questions Nos. 14-16 have been postponed to the sitting of Parliament on 26th July, 1994.]