HOUSING AND DEVELOPMENT BOARD FLATS IN SENGKANG

Mr Low Thia Khiang asked the Minister for National Development (a) if he will provide the detailed costs of development of Housing and Development Board flats under (i) Sengkang Neighbourhood 3 Contract 1 (ii) Sengkang Neighbourhood 2 Contract 27 (iii) Sengkang Neighbourhood 2 Contract 28 (iv) Jurong West Neighbourhood 6 Contract 26, and the selling prices of individual units built under these contracts; and (b) how are the individual units constructed under these contracts priced and what are the details of these pricing factors.

Mr Lim Hng Kiang: The MP for Hougang has requested for the development costs and selling prices of four building contracts at Sengkang N 2 C27, N3 C1 and N2 C28 and Jurong West N6 C26. The flats in the first two building contracts in Sengkang were offered for booking in 4th Quarter 1997, whereas the third building contract is scheduled for booking in 1st Quarter 1998. The new flats in Jurong West N6 C26 have not been offered for booking and their development costs and selling prices have yet to be finalised.

The development costs and selling prices of the three building contracts in Sengkang as requested by the MP are in Table 1 below. The prices of flats in the Sengkang contracts are generally higher than those of other towns. This is mainly due to factors such as better building designs, higher demand and good location near the MRT station and Town Centre. Sengkang is also the first town to be built with the LRT incorporated in the town planning and the LRT built before the town is fully developed. The average market subsidy of a Sengkang flat is $103,300.

The Government's policy is to subsidise the smaller flats more heavily than the bigger flats. To encourage applicants to choose the less popular towns in Jurong West and Woodlands, the flats in these estates are priced lower than in Sengkang and hence the development loss is greater (see Table 1). TABLE 1 Town Bkg Contracts Units Average Cost Sale Devt Loss Equivalent Subsidy Qtr Price /(Gain) Market Price Constrn Land Total ($) ($) ($) ($) ($) ($) ($) Sengkang 4Q97 N2C27 795 104,395 130,473 239,268 278,489 (39,221) 349,037 70,548 N3C1 442 100,436 122,758 227,595 256,698 (29,104) 331,694 74,996 1Q98 N2C28 444 104,918 121,931 231,249 232,265 (1,016) 310,644 78,380 Woodlands 4Q97 N5C12 447 100,478 124,893 229,771 171,453 58,318 268,159 96,706 Jurong West 4Q97 N6C15 497 95,626 106,458 206,484 160,510 45,974 250,045 89,536

The overall development costs, selling prices and development loss of all HDB flats offered for 1997 are shown in Table 2 below: Table 2: Development Costs And Sales Prices Of New HDB Flats in FY 1997 Flats Estimated Costs of Sales Price Estimated Offered Development Development For Loss Booking In 1997 Total Ave Unit Total Ave Unit Total Ave Loss Costs Cost Revenue Cost Price Loss Per Unit 27,938 $6.43 b $230,000 $6.14b $219,800 $280 m* $10,200

• Excludes subsidy incurred for the purchase of 3-room resale flats at market prices for sale at subsidised prices to the lower income families.

The above table shows that for new HDB flats offered for booking in 1997, HDB is expected to suffer a development loss of $280 million. This loss will be funded by the Government through the annual grant given to HDB.

The MP has also asked about the pricing of HDB flats. In the last Parliament sitting, I have explained that the selling prices are determined by the location, floor area, design features, and finishes as well as other attributes of the flats. Other factors like good view, proximity to MRT/LRT stations, the demand for flats in the different towns are also taken into account in the selling prices of the flats. The selling prices of flats offered for booking are therefore derived from a combination of factors depending on their individual attributes and are not directly comparable from one building contract to another.

To ensure affordability of HDB flats to the lower income families, the Government is committed to pricing the HDB flats such that 90% of the first timer households can afford at least a 3-room flat and 70% of the first timer households can afford at least a 4-room flat.