REVISED ALLOCATION SYSTEM FOR NEW HDB FLATS IN NON-MATURE ESTATES

Dr Tan Cheng Bock (Ayer Rajah): Mr Speaker, Sir, I would just like to ask a few questions. My first question is: Why three zones? We have a very mobile population and you find that Singaporeans move from North to South and East to West quite readily. Would HDB then consider a single register? It would prevent this problem of having to deal with these crossing-overs. If you do not accept a single register, then perhaps you should give some flexibility to those who are, at present, in the old scheme, trying to make adjustment to the new scheme.

In the management of upgraders, I notice that the Minister has not made a distinction between those who urgently need to upgrade and those who are not in urgent need for upgrading.

An hon. Member: How do you define them?

Dr Tan Cheng Bock: I think it can be easily defined. For example, for those living in the present 3-room flats and their families have grown larger and the space is very small, I think we can consider them to be in fairly urgent need for upgrading. They have to compete with those people who have just moved in. As the Minister has just said, 8.7% of them have just bought their flats and stayed for less than five years also wanted to upgrade. I think we must make a clear distinction between those who are really in urgent need for upgrading and those who are not. Would the Minister therefore consider allowing these people, who really want to upgrade but do not want to be in this scheme, to buy a new flat first, and later let them sell their old flat back to HDB at the valuation price? At least, we meet the needs of this group of residents who want to upgrade.

Now, 5% of the total flat supply will be allocated to the Multi-Tier Family, Joint Selection and Third Child Priority schemes.

Mr Lim Hng Kiang: 5% for each scheme.

Dr Tan Cheng Bock: How much of that will take up the 40% of the supply for upgraders?

Mr Chng Hee Kok: In general, I support this change except that I have to study some of the details. I would like to ask the Minister to speed up the information process as to how he intends to establish a register. Currently, there are 93,000 applicants who want HDB flats. And I think there may be a frantic rush and creates fear in the people. Given the fact that the scheme is not fully announced, they do not know how to go about registering and so on. So I would suggest to the Minister to speed up the process of getting the information out to them.

Mr Heng Chiang Meng (Cheng San GRC): Mr Speaker, Sir, first, I would like to thank the Minister for this new scheme because, as he said, it is a more equitable scheme. But I would like to give my support to the Member for Ayer Rajah's suggestion about having one register. Let me explain why. If we go back to history, in 1989, when the balloting scheme was introduced, it was then to replace the various registers on a queuing system. It was partly a response to cross-overs where, after a while, when they built the flats, for example, in Woodlands, they found that they were not popular and a lot of flats were empty in Woodlands.

Now, with three zones, we may have this problem of cross-overs. Are they allowed to cross over? If so, will one zone be less popular and the flats be empty? Of course, the bigger the zone, the lesser the chances of a Woodlands' situation happening.

On the other hand, there is no reason why we cannot have a whole national register and, using the experience that we have had from the balloting scheme, make sure that we will not have empty flats. Let me give an example. If there is one registration book, for example, and assuming that these 93,000 applicants go in, then you have, let us say, No. 1 to No. 93,000. Before you build the flats in a particular estate, you can still advertise as under the present system. And, let us say, 10,000 units will be built there. You can invite applications. The number of applications might be 15,000. All you need to do is to allocate according to their queuing position, and you choose the top 10,000 applicants who qualify. Although the 10,000 applicants may not have a queuing number of 10,000, they may have a queuing number of 80,000, or 80,000-odd; it does not really matter. My point is that a single registry will work better and we avoid this problem of cross-overs and whether they will lose their priority when they cross over.

The second point I would like to bring up is about the eligibility status. For those with housing assets of $200,000, or less, is their eligibility considered at the point of application, or at the point of allocation? Under the previous system, it was at the point of application. But apparently, under the current system, ie, the balloting system, it is at the point of allocation. So I think this should be clarified by the Minister.

Finally, I would like to come out with an old hobbyhorse of mine concerning the ageing population. There are people, just husband and wife, living in 5-room flats, or Executive flats, when their children are all married and have moved out, and they want to downgrade. Why should we always think of upgrading? Is there anything wrong if a couple has some CPF left, and they have got an Executive flat that is probably worth about $300,000 or $400,000 on the open market and now they want to downgrade to a 3-room flat which, if they had purchased from the HDB might only cost about $70,000-$80,000? And assuming that this couple had only purchased one unit during their life-time, why can't they be allowed to downgrade to a smaller unit? The other way round, they are allowed to upgrade from a 3-room flat to a 5-room flat and HDB gives a number of incentives for them to upgrade. But there are absolutely no incentives for them to downgrade. What is wrong with downgrading; especially when it means having a large sum of money left for their old age. It is a form of retirement, or a pension, for them. I think the HDB should really look into this question of allowing people in this situation to downgrade.

Dr Wang Kai Yuen: Mr Speaker, Sir, I would like to say that I also support the new scheme. But, however, if I were an HDB applicant today, and after listening to the Minister, I would have two questions in my mind. Firstly, what will happen to my priority that I have applied in the past? Secondly, how long do I have to wait? I understand that the Minister has said that HDB will announce the details in the next couple of weeks. But, as Mr Chng has said, this is causing a lot of anxiety among these 90,000 families.

I am also confident that the Minister and his Ministry have thought through the rationale and the principle of how to switch from the current system to the new system. Perhaps, he will take time to outline that principle to us. Also, I would like the Minister to give an estimate of how long, under the new allocation system, a first-timer and an upgrader have to wait for their flats.

Mr Choo Wee Khiang (Jalan Besar GRC): I would like to join in the debate. First of all, I think it is good news to many first-timers. However, what I am worried about is that a lot of first-timers will ask why the ratio is 60%:40%. Given the anxiety among the first-timers, I wonder whether the Minister will give a higher percentage to the first-timers as opposed to the 60% now. I am sure many questions will be asked on why 60% and 40%. Probably the Minister could consider giving a higher percentage to the first-timers for the initial couple of years and then gradually go down to 60-40% or whatever appropriate percentages.

The other thing that I am a bit worried is this. With this new scheme in place, there will be a lot more people who are really not in need of getting their flats for the immediate future and who will apply for HDB flats as first-timers. Such an influx of applicants will probably jeopardise those who are really in need as first-time purchasers. How is the Ministry going to tackle this particular influx of applicants?

Also, I would like to know how the Minister is going to deal with mature estates like Jalan Besar GRC where there will be, I am sure, some small pockets of land being developed. Will the Ministry specially look into a mature estate like my constituency?

Lastly, Mr Heng Chiang Meng and Dr Tan Cheng Bock mentioned about a single registration scheme. I do not quite agree with it. When first-timers apply for a flat, I am sure somehow they have already narrowed down to whichever area that they want to move to, and cross-over cases should not be too many. Probably special consideration could be given to such cross-over cases. By and large, I think we should really segmentise such applications. It will be easier and more expeditious.

Mr Low Thia Khiang: Sir, I would like to know from the Acting Minister, under the new queuing system, how long would the following upgraders need to wait to upgrade to a 5-room or Executive flat? For instance, an upgrader residing in a 3-room flat wishes to upgrade to a 4-room, 5-room or Executive flat, and those residing in 4-room or 5-room flats and wishing to upgrade to a bigger flat, ie, 5-room or Executive flat.

In regard to the increase in the percentage of the levy payable to the HDB for those who sell their flats and apply from the HDB, what is the basis for the increase in the percentage for 4-room, 5-room and Executive flat owners who want to sell their flat and upgrade? For those who sell their existing HDB flat and buy a flat from the open market or buy a private property, do they need to pay this levy to the HDB?

I also share the concern of Mr Choo Wee Khiang on mature estates. I recall sometime ago someone in this House suggested going back to the old queuing or registration system. The answer from the Minister then was that because of a lopsided supply and demand which existed in mature estates, where there was a great number of applicants against a very small development, the registration system or the queuing system just cannot be applied any more under those circumstances. That is why I am wondering why we are now going back to the old system. If we are now going back to the old system of queuing or registration, why was there a need for the HDB, in the first place, to change the system into a balloting system? People are now running about and questioning about the new system. Those people who had applied earlier and, let us say, there was no balloting system, they would have got their flats by now. But I think many of them are still now waiting for the balloting. Why? Can I take it that, in these instances, given the scenario of a very important public service, ie, housing, the HDB has made a blunder in changing from one system to another and then swinging back again.

Mr Leong Horn Kee (Thomson GRC): Sir, I would also like to express my support for the new scheme. In fact, I have spoken to ask for this change to the queuing system in the Committee of Supply debate last year.

Sir, I have a few comments. First, I support Dr Tan Cheng Bock in asking why should there be three zones. I think one basic register would be fairer to Singaporeans. Another simple reason to add to why we should not have only one zone is for those who live right in between the boundaries: how should they decide which zone they should choose and they may have families and relatives living in between the two zones.

Next, I want to ask the Minister how he arrived at the 60%-40% percentages. It may be a fair formula if you state that a certain advantage is given to the first-timers, but I like to suggest that this formula should be made quite clear. Later, the proportion could be varied, because every year, the numbers of first-timers and upgraders will be different and we should adjust the percentages each year so that a very transparent and clear advantage is given to first-timers. If it is a fixed percentage, then it can cause distortion, as the relative numbers change over the years.

Finally, in view of the increase in the cost of living, salaries and prices, is the Minister not thinking about adjusting the ceiling criteria for eligibility of flats for Singaporeans?

Dr Arthur Beng Kian Lam: Sir, I also support the new scheme. I would like to ask for two clarifications from the Minister. Firstly, for the old 3-room flats that have just been sold to tenants, I hope that the whole period of tenancy will be taken as the period of occupation, because there will be some priority given for those who have stayed longer. The flats have just been sold in the beginning of this year. And I hope that the whole period of their tenancy, whereby they are actually staying in that flat, will be taken as the period in which they will qualify for priority.

Secondly, rather than raise the premium of 10% to 20% in one jump, I hope that he will also consider using this length of stay as a criterion in gauging this quantum leap, because I think the whole idea is to discourage unnecessary movement.

Dr John Chen Seow Phun (Hong Kah GRC): Sir, I just want to ask one question. I would like to ask how is priority to be given to the 3-room upgraders. Because we are going to have two queues. One is for the first-timers and the other is for the upgraders. For the 3-room upgraders, how is priority to be given to them?

Dr Ong Chit Chung (Bukit Batok): Sir, I wish to thank the Minister for addressing the problem which was brought up by members of the public and Members of this House. I think this is a more equitable system. Of course, we cannot satisfy everybody in any system, but I think it is much more acceptable. I have just one question for the Minister and this is on the question of supply. He said that 34,000 units will be built by 1995. However, he also mentioned that we should not go to the extreme as what we did in the 1980s when we built 50,000 flats per year and we had poor quality flats in many of the estates. I wish to ask that, in view of the larger population base today as compared to the 1980s, higher aspirations, higher demand, and I am sure our productivity has gone up in the building industry and with better supervision, can we not raise the supply to, say, 40,000 or 45,000? Because it is not just a matter of changing the allocation system. The vital question remains, which is the supply.

Dr Kanwaljit Soin: Sir, would the Minister clarify which policy takes precedence and in which order: one, the ethnic quota; two, upgraders in the Joint Selection System; three, upgraders in the Multi-Tier Family Scheme; and, four, upgraders in the Third Child Priority Scheme?

Mr Chia Shi Teck: Sir, the Minister has said that many people rush in for fear that the prices will continue to go up and that the Government has assured affordability. How is this affordability measured? Is there a formula whereby you can assure people who do not need a house now not to rush in? Because that will push up the demand.

The Government's role, I believe, is to ensure that everyone has a roof over his head. The upgraders are actually rushing in out of need or out of the fact that there is a lot of money to be made. The Minister seems to be worried that satisfying the demand would bring down the prices in the resale market. But what is the problem? If we are satisfying the demand of the people, it is a one-off situation. Or is he worried about an over building situation? From the way we are going, there would be a day when we will have too many houses and too few people.

Mr Loh Meng See (Kampong Glam GRC): Sir, I am a bit disappointed with the three zones that the Minister has indicated. There is none in the city and urban areas. Can he confirm that there would not be any flats to be built in the city and urban areas?

I think one of the concerns about the zonal registration is really the doubt as to the number of flats available per zone. If some indication can be given as to how many flats will be available per zone, I think people will be able to make a choice. Otherwise, it has to be balanced against the central registry. I feel this will be the main concern of applicants.

The other thing is the $30,000 grant for children wanting to live near their parents. I think it is important for consideration to be given to parents living in mature estates. Because I think this is where the bulk of the elderly parents are and most elderly parents living in mature estates really do not wish to move out of the mature areas. I think we have to consider the elderly parents who are living in the mature estates and favourable consideration should be given to these people..

Dr Toh Keng Kiat (Nominated Member): Mr Speaker, Sir, there seems to be some unhappiness over how the ratio of 60%:40% has been derived. May I suggest that we keep this a variable figure and work out a simple mathematical solution, in the sense that according to the number of first-timers and upgraders, the allocation be made proportionately.

Mr Kenneth Chen Koon Lap (Hong Kah GRC): Sir, I just want one clarification from the Minister. With the introduction of this new scheme, does it mean that the walk-in system is abolished? Because this system has created a lot of unhappiness. For every happy applicant, there were hundreds of frustrated unsuccessful applicants.

Mr Lew Syn Pau (Tanglin): Sir, I would like to ask the Acting Minister, under the $30,000 grant to encourage children to live near their parents, would children whose parents live in private housing estates be eligible for this scheme? Because in Tanglin, for example, we have public housing right next to private housing.

Mr Lim Hng Kiang: Mr Speaker, Sir, I thought I was just making an announcement on the allocation system. It looks like it has invited a whole host of questions. I will try to answer all of them, but I will stay away from details.

First, let me explain that this switch to a queuing system is for the non-mature estates, and not for mature estates. My comments in previous sittings about the overwhelming demand for mature estates and that a queuing system is not suitable for mature estates are still valid. This system is only for non-mature estates in the three zones that I described. In the North Zone, it will constitute new towns like Woodlands, Yishun and Sembawang. In the North East Zone, it will constitute new towns like Hougang, Serangoon, Kangkar and, in the future, Punggol. In the Western Zone, it will constitute new towns like Bukit Batok, Bukit Panjang and every town west in that area. So this new system does not cater to the mature estates in the city area or developments in other mature estates. We are looking into the system for the mature estates. We will make the announcement in due course.

The second question is: why three zones? Why not a single register? Again, my earlier comments about Singaporeans being particular about the area they want to buy their flat are still valid. I think if we have a single register and the applicant is thinking of a flat in Hougang and we offer him a flat in Jurong West, he is not going to be happy. If he gets knocked out of the queue position he will be extremely unhappy. So it is better to break them up into three areas so that there is some better matching in preference of the estate they want.

The balloting system, of course, is the other extreme. You actually apply for the estate and those developments that you saw in the advertisement. I think the balloting is very useful in making certainty about the area that you are going to. Of course, the uncertainty is when will you get it. In the queuing system, there is certainty. Everybody is in the queue. But if you have it in one register, then you will be uncertain where you will be offered one. We are now trying to strike a balance in having three zones so that people can apply for the zone they want and still be assured that they will be called up according to the queue position.

I have explained the two main principles of giving preferences to those who have stayed longer and to those who are moving from small flats to big flats. The way to go about it is not easy. If you have a point system, it will be an extremely messy system. Right now, we have opted for a very simple system, which is a cut-off of five years. So only if you have stayed for five years, then you are eligible. Of course, it does not satisfy several MPs here who suggest that there should be some weightage for the number of years that they have stayed. We will look into that, but right now it is a simple cut-off of five years before they can apply as an upgrader.

The second way, of course, is by the pricing mechanism. By making the premium at 20%, you are favouring the 3-room upgraders, and those who are moving laterally will find it not so attractive to apply for a bigger flat if they already have a big flat. So our approach of giving priority to the 3-room applicants is through these two mechanisms. I will be happy to listen to other suggestions on how this priority can be given and I am sure that over the next few years there will be many more debates and modifications to the system.

The third area which many Members have raised is how do we process the applications. Dr Soin asked which schemes should take priority. First of all, the ethnic ceiling is fixed for all estates, whether it is for new allocation of flats or resale flats. There is a ceiling, and HDB does not breach the ceiling. So when it allocates, it will allocate below the ceiling. Secondly, we will allocate according to the priority schemes: 5% to the Multi-Tier Family Scheme, 5% to the Third-Child Priority Scheme, and 5% to the Joint Selection Scheme. The remaining would then be allocated with 60% to first-timers and 40% to upgraders. So that will be how the system would work.

Mr Chng Hee Kok asked for the speeding up of information. I said that HDB will announce the details next week. HDB will announce all the details on Monday. So it is not that we are going to keep people in suspense. Today, I announce the main parameters. HDB will give the details on Monday.

Let me just reassure everybody that the priority of those who have applied previously will be kept. HDB would, over the next one month, send letters to the 93,000 applicants who have applied before and show them the application history so that they can confirm that this was indeed their application history, ie, the number of times they have applied. We will group those who have applied the highest number of times together, and we will ballot them, and this group, of course, will be given the highest queue position. Then we will group the next batch with the highest number of times of applications, and they will be balloted, and they will get the subsequent queue position, and so on and so forth.

On 1st October, we will open up the application to all new applicants. We do not want a riot. It will be balloted for the whole month of October. So you can apply on the first day of October or the last day of October, you will be grouped together and there will be a ballot. From 1st November, it will be on a queue system, ie, on a first-come-first-served basis. This is how the transition will be carried out. HDB will explain this on Monday.

When you have three zones you have better matching between the geographical preference and the offer. If you have one zone, the person will be hoarding his position and he will be choosing the flat and the zone, and he will exercise his queue position at the right time. That is not fair to all those people at the end of the queue. So I think we have a zonal system and we will allow cross-over of zones, but there will be a penalty in the queue position whenever you cross the zone. Again, HDB will explain this on Monday.

As for downgrading from a 5-room to 3-room flat, unless I am wrong, HDB does not deter people from downgrading from a 5-room to 3-room flat. You can apply for your next flat and whatever type you want. The majority, of course, apply for a bigger flat. If you apply for a smaller flat, you are also allowed to do so. I will check on that.

An hon. Member: What happens if they cross over the income ceiling?

Mr Lim Hng Kiang: If they cross over the income ceiling, they cannot apply. Just like upgrading, if you cross over the income ceiling, you also cannot apply.

The next key area which many Members raise is the ratio of 60:40%. Let me explain the thinking. As I have explained in the Statement, we have about 25,000 newly-weds every year. That is our new household formation every year. With new permanent residents, plus expatriates, etc., you get a total of about 30,000 to 32,000 new households every year who need new housing. But from Singapore citizens, there are about 25,000 newly-weds, plus or minus, every year. Out of these 25,000, about 10% would buy private property. They would not come into the HDB system. Another 10% would buy the 3-room resale flats, the Buy-Back Scheme the HDB is introducing in October. So you have about 80% of our newly-weds who will be catered for in this system, which means something like 20,000 every year. We intend to build 34,000 units. So if we allocate 60% of that, it will be about 20,000 units. Even after you minus all the priority schemes, it will be around 60:40%, because first-timers also take advantage of the Multi-Tier Family Scheme and also the Joint Selection scheme. So that is the rough number. That means we are in a fairly stable system. We allocate 60:40%. It will cater for the yearly demand of new households - the 20,000 that we expect to apply every year.

We have a temporary problem because there is a surge in applications by the new households, but once we clear the backlog, this ratio of 60:40% will cater for the long term. As I agree with many speakers here, we will adjust these numbers as the demand pattern changes. We are not in favour of having a proportionate system because, with the large number of upgraders, the first-timers will find that they are not getting the priority. If you have a proportionate system based on the proportion of first-timers and upgraders, then of course you are even-handed, but the first-timers will not get the flats in time.

How long will people have to wait? We will have to go through the exercise before we can finalise the numbers. Every time we change over a system, we find that there is quite a significant drop-out rate, and many people apply because it is Hougang or because it is Tampines. But once you tell them it is three zones and by the time they get their flat, it will be Kangkar or Punggol, they are no longer interested. They prefer to buy from the resale market. Once we go through the exercise, we will get the numbers. But for the first-timers, there is a better "fix" because we know that there are only so many newly-weds every year and we have so many flats. So the first-timers can expect to be asked to select their flats between 1 1/2 years and 2 years after their first application during this transition period. Once we get into a steady stream and the backlog is cleared, hopefully, the demand and supply will balance out and they will need only to wait one year.

For the upgraders, I am afraid I cannot give a good number. The back-of-envelope calculation will show you that if all the 53,000 upgraders remain on the queue and we are allocating 16,000 to them, then whoever applies on 1st October or 1st November will have to wait more than four years. But do not shoot the messenger. Whether it is the balloting system or the queuing system, the 93,000 applicants are also remaining in the queue and in the system, and they also have to wait four or five years before their turn. What we hope to achieve in the queuing system is a fairer and more equitable way. We know there is a big demand from the upgraders. It is how to allocate it fairly.

Mr Low Thia Khiang asked how we calculate the levy and premium system. The choice is up to the applicant - whether he opts to pay the levy or the premium. If he opts to pay the premium, then he pays 20% of the price of the second flat that he is buying, ie, 20% premium. If he opts to pay the levy, then it depends what flat he is selling. If he is selling a 3-room flat, he pays 10% lvey of the sale price. If he is selling a bigger flat, the levy is according to the type of the flat - 15%, 20%, 25%. So the choice is up to the applicant. As I have explained, those who are in a 3-room flat and upgrading to bigger flats, most of them will opt for the levy. So they pay 3% of the resale price of their 3-room flatand they will get a bigger flat from HDB at the price HDB is selling.

Mr Leong Horn Kee - he is not here - asked for a review of the income ceiling eligibility. HDB does this regularly. The next round of review is due in November. So when November comes, we will look at the income ceiling and the percentage of people who qualify. If it is due for an increase, we will increase accordingly.

Dr Arthur Beng asked whether people who recently bought their 3-room rental flats under the Sale to Tenants scheme would have their previous years of tenancy computed in the five years. I am afraid the answer is no. Once you buy you start from that period.

Dr Arthur Beng also asked why the premium has jumped from 10% to 20%. I think that makes the levy/premium system more equitable. If you keep it at 10%, then it favours the owners of big flats. With the 20% premium, it is fairer and there will be less of those people who have an Executive flat buying another Executive flat.

An hon. Member: What about linkage to length of stay?

Mr Lim Hng Kiang: As for linkage to length of stay, HDB will consider all other novel suggestions. All these suggestions will be noted. Anything which is novel, we will keep it for future review.

There are also several questions why we did not raise the supply to 40,000 or 45,000 units. I think Dr Ong Chit Chung raised this question. There are better productivity growth rates and better quality control. As I have explained, the issue is not just quality, productivity and cost. The other issues also the impact on the resale price. This is something which Mr Chia Shi Teck brought up. We have 30,000 to 32,000 new households every year, comprising the 25,000 newly-weds, permanent residents and expatriates, etc. We are physically building 40,000 flats. If HDB builds 45,000 flats and the private sector builds 10,000 units, that means physically we are building 55,000 units. Somebody has to take up 55,000 flats. As I said, there are only 30,000 to 32,000 new households who need new housing every year. So if you have this over production of flats, it will invariably affect the resale prices. Mr Chia Shi Teck asked: why worry if the resale prices tumble? It is our job to worry.

There are several questions about the CPF Housing Grant Scheme. Let me explain. There seems to be some misunderstanding. The $30,000 CPF Housing Grant Scheme also applies to the mature estates. It is not meant only for the New Towns. So first-time applicants who are buying a flat in the mature estates so as to be close to their parents can apply for this $30,000 grant. Why then do we not apply to private housing? Let us keep the scheme within the HDB estates first. We will consider extending this scheme to private estates in subsequent reviews.

Mr Kenneth Chen asks; what happens to walk-in selection? I thought walk-in selection has already gone.

Mr Speaker, Sir, I think that more or less covers all the questions. If there are any more questions, I will answer them.

Mr Chia Shi Teck: Mr Speaker, the Minister has missed out my question on affordability. I would like the Minister's assurance. Nobody believes in the word "affordability", as the prices are moving up. Will HDB, for instance, freeze the selling prices for the next five or 10 years to ensure affordability?

Mr Speaker: Can I remind Members that they can only seek clarifications on the Statement.

Mr Heng Chiang Meng: Thank you Mr Speaker for your indulgence. I actually want to seek clarification on the Minister's reply to my suggestion of having one zone, because I think he has missed out my point when I gave an example. I am asking for a combination of the old queuing system, where we try and match supply to demand, and the current system where we have balloting.

Mr Speaker, Sir, let me once again show that a matching system is not really necessary under my suggestion. Let us take this present group of 93,000 applicants, and let us say that they are given allotment No. 1 to No. 93,000. The queue is there already. The registry is there. If we have got a new development, say, in Kangkar of 7,000 units, HDB can always advertise these 7,000 units in the newspapers, like the current system, and invite applications. There might be 10,000 applicants. The 10,000th applicant might be numbered 52,725. It may not be the 10,000. But all you need to do is therefore to select the first 7,000, and these people will qualify for the new development in Kangkar. Those who do not go for the selection or do not apply will retain their queuing position. They do not lose it at all. And I see no reason why this cannot be done. He spoke about holding the position on the queue. But, basically, I do not find anything wrong with this because after all, they were there first. There is no reason why they should not retain their position and let others behind them go ahead of them, if they are not interested in a particular estate that is being developed. But even if that is the case, there are ways and means of discouraging this. For example, you can have a ---

Mr Speaker: Order. Mr Heng, you are making another speech. Could you finish with your clarification?

Mr Heng Chiang Meng: Okay, Sir. This is not so much a clarification but to tell the Minister not to frighten the upgraders about the five years'requirement. By my own back-of-the-envelope calculation, there will be roughly about 10,000 units available for the upgraderseach year, based on 40% of 85% of 30,000. The luckiest upgraders will get their flats in the first year. The most unlucky ones will probably get their flats in the fifth year. So the average waiting time as a whole will be 2 1/2 years.

Dr Tan Cheng Bock: Mr Speaker, Sir, I think the Minister has forgotten to answer my question. Perhaps let me re-phrase it for him.

Mr Speaker: Dr Tan, could you just refer to the question? You do not have to re-phrase it.

Dr Tan Cheng Bock: I think I better re-phrase it for him. I am staying in a 3-room flat and now I want to upgrade to a 4-room flat, as my family has grown from four to maybe seven members. I really need a bigger flat very urgently. I am prepared to sell my flat to HDB at HDB's price. Would HDB let me buy the flat first over those 8.7% of the upgraders that the Minister talked about earlier in his speech?

Dr Arthur Beng Kian Lam: Point of clarification, Mr Speaker, Sir. The Minister mentioned that there will be another system for mature estates. Does he mean that the redevelopment that is going on within our present estates will have a totally different scheme from this?

Mr Umar Abdul Hamid: Point of clarification. The Minister mentioned about the buying-back scheme. Can an applicant be entitled to the Buy-Back Scheme and at the same time be eligible for the $30,000 grant given by the Government?

Mr Lim Hng Kiang: On the question of affordability - I have said this many times - when HDB prices its new flats, it takes into consideration thecost in building the flats and at the same time the affordability of the applicants. We do that by having the income profileof the applicants and we try to make the servicing of the mortgage loans for new HDB flats not to exceed 25% of the income of the median applicants. So there is an affordability assessment based on the income of the median applicants and we try to keep the servicing of the mortgage loans within 25%. So, by and large, 80% to 90% of HDB applicants service their mortgage loans using their CPF, and we try to keep the prices within that limit.

On this question about one zone and Mr Heng Chiang Meng's suggestion, in fact, that is exactly what happened in the 1980s. We had a queuing system and we allowed people to opt. It was not a calling-up by number, but we had three choices. So they never exercised their third choice. As a result, we had a lot of flats in Woodlands and we could not offer to anybody because everybody was holding on to their queue position and queue number and waiting for that flat in the city area or Tampines.

Mr Heng Chiang Meng: Advertise.

Mr Lim Hng Kiang: Even if we advertise now, or we may not physically build it, everybody will be holding on to their chips and calling in their chips only when they see a flat in Bukit Batok where they want. Other than that, they will not put in their names. And this was exactly what happened in 1986. We ended up building more because the queuing system ended up with 45,000 applicants, but we never seemed to clear the queue. We were building 10,000 units in Woodlands, but we still had 45,000 applicants in the queue.

So I think we will evaluate this system of one zone and one register in which you put in your number when you find the location of your choice. But my first reaction is that it looks very much the same problem that we have had in Woodlands.

Again Mr Heng Chiang Meng is a good statistician. I am afraid I am a bit more honest. Although, on average, they wait 2 1/2 years, my point is that anybody who applies on 1st October has to take into consideration the 53,000 upgraders already in the system as of today. And if all 53,000 of them return to the queuing system, and there are about 16,000 flats allocated to upgraders, it will take about four years. Sir, I am talking about a person who now wants to put in an application. An upgrader who now has to put in an application in October.

Dr Tan Cheng Bock's suggestion about returning the flat to HDB at posted price so as to be given priority to buy a new flat, we will evaluate the suggestion and see how applicable that is.

On Mr Umar's question about the Buy-Back Scheme, you can only put yourself on the queue for the 3-room Buy-Back Scheme or you take advantage of the $30,000 grant. You cannot have both.

On redevelopment of mature estates - I have said this previously - because of the overwhelming demand for mature estates, we are back to the same problem of excessive demand and limited supply. You can either have a queuing system, in which case there will be riots; you can either have a balloting system, in which case some Members will claim it is a tikam-tikam; or you can have a tender system, in which case we allocate based on price. We are still studying the system and we will make the announcement in due course.

An hon. Member: Eligibility.

Mr Lim Hng Kiang: The eligibility will be assessed at the time of application.

Mr Speaker: Mr Lim, would you like to withdraw your motion?

Mr Lim Hng Kiang: Mr Speaker, Sir, I beg leave to withdraw the motion.

Motion, by leave, withdrawn.

Mr Speaker: Order. I suspend the sitting and will take the Chair again at 10 minutes to three o'clock.

Sitting accordingly suspended at 2.27 pm until 2.50 pm. Sitting resumed at 2.50 pm