HDB'S SCHEME TO REPURCHASE 3-ROOM FLATS

Dr S. Vasoo asked the Acting Minister for National Development whether the Housing and Development Board's scheme to repurchase 3-room flats is being actively pursued and whether the response to the scheme has been so far positive.

Mr Lim Hng Kiang: Mr Speaker, Sir, in May this year, I announced that HDB would be offering 300 3-room flats for sale to low income families in October. HDB has since appointed two agents to source for 3-room flats from the resale market for its Buy- Back Scheme. Based on the progress so far, HDB is confident that it would be able to offer the 300 flats in October as planned.

Dr Kanwaljit Soin: Sir, what is the average difference in price that the HDB buys the flat from the open market and then sells it to the low income families?

Mr Lim Hng Kiang: At this moment, we have bought the flats. We have not established the price. But as I announced in May, we expect that there will be a fairly deep discount of between $30,000 and $35,000 from the market price.

Mr Chng Hee Kok: Sir, has the action of the Ministry resulted in a rise in prices for such units?

Mr Lim Hng Kiang: So far, we have purchased about 200 such units. The resale market is about 30,000 units per year. So the impact is minimal.

Dr Wang Kai Yuen: Could I ask the Minister whether the reverse will happen? In other words, had we not pursued this policy, will the price drop further?

Mr Lim Hng Kiang: If it is minimal for upside, it is also minimal downside.

Dr Kanwaljit Soin: Would the Minister consider letting the applicants buy directly from the resale market and then subsidizing it, rather than going about in this roundabout way?

Mr Lim Hng Kiang: HDB buying back in this manner is a more practical solution because of some of the peculiarities in the resale market. Right now, as many Members know, most sellers of resale flats demand a cash payment upfront. For these low income families, even if we give them $30,000 into their CPF, to be able to afford a cash downpayment upfront may not be possible. So it is better for HDB to purchase them and allocate to the low income families. Then they can service the loans through their mortgage payments using CPF.

Mr Low Thia Khiang: Sir, is a single parent eligible under the scheme?

Mr Lim Hng Kiang: This scheme is meant for first-time families, not for single parents, or unmarried parents, or singles.