GOVERNMENT GRANT TO PURCHASERS OF EXECUTIVE CONDOMINIUMS (Extension to purchasers of private residential units)

Mr Tay Beng Chuan asked the Minister for National Development what is the rationale for the $40,000 government grant given to first-time home buyers to finance the purchase of their Executive Condominiums and whether his Ministry will consider extending such grant to first-time home buyers who wish to take advantage of the falling property prices to buy a private residential unit straightaway instead of joining or remaining on the long waiting list of home buyers for Housing and Development Board flats or executive condominiums.

The Parliamentary Secretary to the Minister for National Development (Mr Koo Tsai Kee) (for the Minister for National Development): Mr Speaker, Sir, the CPF Housing Grant Scheme was implemented in 1994 to assist young citizen families who have not previously enjoyed any housing subsidy to purchase a resale HDB flat to set up their own homes, thus obviating the need to queue up for a new HDB flat. The grant is treated as a housing subsidy enjoyed by the eligible recipient, in lieu of buying a new subsidised flat from HDB.

In 1995, the Government introduced the Executive Condominium (EC) Housing Scheme to meet the aspirations of young couples, many of whom are graduates and professionals, who want to own private homes quickly.

To encourage these couples to apply for an EC instead of joining the HDB queue, the Government decided in 1996 to extend the CPF Housing Grant to first-timers buying an EC. The grant of $40,000 makes the ECs more affordable, since the grant can be used towards the 20% downpayment.

To the NMP's question: will the $40,000 CPF housing grant be extended to those who want to buy private properties, the answer is no. Because unlike private apartments or condominiums, ECs are sold under the conditions of the EC Housing Scheme Act and Rules which have several restrictions. The eligibility conditions are, however, similar to those of public housing. In addition, a purchaser is also subjected to the following conditions of ownership:

(1) the purchaser must occupy the EC for the first five years after taking possession of the EC;

(2) the purchaser can only sell the EC after completion of the 5-year occupation period, and from the 6th to the 10th year of ownership, he can only sell the EC to Singapore citizens or Singapore Permanent Residents; and

(3) the purchaser and spouse are permanently debarred from buying subsidised public housing from HDB. In other words, they are totally out of the public housing scheme.

In the case of private apartments or condominiums, they are sold by private developers under very different conditions. The Government does not control ownership of these residential properties which the purchasers can use either for owner-occupation or for investment or for speculation. The purchasers for private residential properties are also from the higher income groups. Hence, the Government has no plans to extend the housing grant to purchasers of private properties.

Is the problem of housing shortage serious? It is not so serious. The waiting time to book the ECs is very short. Indeed, it is zero today. With the completion of HDB's referral of applicants on the Executive Flat (EF) queue to the Executive Condominium developers, 95% of all the ECs are now available for sale under the open category. In other words, anybody who meets the housing conditions can apply to buy an EC. Applicants are now able to book an EC immediately at the launch of any EC projects. Yew Mei is on the market for buying and Summerdale has just been launched last weekend. For those first-timers wishing to buy HDB flats, the average waiting time has also been lowered from the previous 4.5 years to 2.5 years now. If the applicant is not fussy about location, he can get a 4- or 5-room flat in the West Zone at an average waiting time of 1.25 to 1.5 years which, I think, is a reasonable waiting time.

Hence, first-time couples today have many choices to own their own homes. They can either buy a private property if they have the means; or they can buy a more restrictive Executive Condominium with the CPF housing scheme; or they can buy a HDB flat from the resale market with the CPF housing scheme; or they can apply for a new HDB flat. Finally, there is the option to live with dad and mum, and that is the option I encourage most.