BUILDING MORE HDB FLATS

Mr Yeo Toon Chia asked the Minister for National Development, in view of the increasing number of applicants for Housing and Development Board (HDB) flats, whether the HDB will consider building more flats and expediting the allocation to reduce the waiting time and whether the prices of new HDB flats will be increased in the next three years.

Mr Lim Hng Kiang: Whether HDB can increase the number of flats built overall is constrained by the capacity of the construction industry as a whole. HDB already has a significant annual Building Programme of about 30,000 units, and an Upgrading Programme of 15,000 units. In determining the building and upgrading programmes for subsequent years, care must therefore be taken so as not to overheat the construction industry and push up building costs.

Nevertheless, as first-time applicants do have a more urgent need for housing, HDB has implemented several measures to help them get their flats early. The allocation of HDB flats under the Registration for Flat System favours first-timers, as 60% of the flats go to them. First-timers therefore have a shorter waiting period than upgraders

If the applicant requires a new flat urgently, he could consider applying for a 4-room flat in the North Zone, which is less popular than the other zones. The estimated waiting time for new applications received in January 1996 would be about one year for first-timers, and about one and a half years for upgraders.

Secondly, applicants could also consider renting a flat under HDB's Transitional Rental Housing Scheme, while waiting for their new flats. Again, first-timers are given priority over upgraders, and also receive a discount on the rental.

Thirdly, rather than queue for a new flat, first-timers can choose to buy a resale flat instead, with the help of the CPF Housing Grant. The grant is worth $40,000, and $50,000 for those who purchase a resale flat in the same town or within 2 kilometres of their parents' home

As for the prices of new HDB flats, these have to be adjusted periodically to reflect the increase in construction, land cost and cost of improvements. This will help to maintain subsidies at a reasonable level and to avoid future steep price increases.

As it is, the sales proceeds of HDB flats defray only a part of the total development costs. Hence, despite the necessary price adjustments, HDB still continues to suffer losses under its Sales of Flats activity. In FY 94/95, for example, the deficit for the sales of flats amounted to $340 million.

Although the development costs are important factors in the pricing of HDB flats, HDB is also mindful of affordability of the purchasers, especially those from the lower income groups. HDB flats are therefore priced at levels which ensure that 3-room and 4-room flats are affordable to the average income families, while those with higher incomes can opt for the bigger 5-room and Executive flats, depending on their preferences for location, design and finish.