HOUSING AND DEVELOPMENT BOARD FLATS (Revision of sale price)

Mr Ong Kian Min asked the Minister for National Development whether the Housing and Development Board will revise the sale price of new HDB flats in view of (i) the drop in values of resale HDB flats and private properties, and (ii) the present economic conditions, in general.

Mr Koo Tsai Kee (for the Minister for National Development): Mr Speaker, Sir, the Government is committed to provide affordable housing to Singapore citizens, especially first-timers and low-income families, despite the current economic conditions.

HDB considers several factors in setting prices of new flats. The main one is affordability. HDB prices new flats such that 90% of Singaporean households can afford at least a 3-room flat, and 70% at least a 4-room flat.

HDB also takes into account individual attributes of the flats such as location, proximity to MRT/LRT stations, the view from the flats, and special design features and finishes. New flats tend to have better designs and finishes, and are located in towns with better facilities and infrastructure.

HDB does not consider the prices of private residential properties when it sets prices of new HDB flats. However, it does factor in current HDB resale market prices, because resale prices are an indication of how willing and able Singaporeans are to pay for HDB flats. Prices of new HDB flats are below the market values of equivalent flats.

At present prices, new HDB flats continue to be heavily subsidized. The overall sales proceeds do not cover their total development costs. The loss incurred by HDB has to be funded by a Government grant.

Mr Low Thia Khiang (Hougang): Sir, in view of the drop in prices of resale flats, does the HDB take into consideration the so-called market subsidy in setting its price?

Mr Koo Tsai Kee: Sir, we have debated this before in the House. I have to remind the Member for Hougang that the prices of new flats are heavily subsidised compared to market prices of equivalent flats in the market today.

Mr J B Jeyaretnam (Non-Constituency Member): Sir, the Parliamentary Secretary - and we have heard this before - talks about heavily subsidising HDB flats. Does the HDB publish, every time they embark upon a construction, the cost to the HDB of the construction of that particular estate or block?

Mr Koo Tsai Kee: Sir, HDB has just released their Annual Report and the CEO of HDB conducted a press conference last weekend. May I refer Members to the financial review pages and they will get all the relevant statistics. In particular, may I refer the Member to the balance sheet and the income statement. The income statement shows quite clearly the losses incurred by the Government in the sale of new flats and this figure was also highlighted by the CEO of HDB. For the year 1997/98 it amounted to $591 million. This is something like 60% of the total deficit incurred by HDB, which was about $1 billion.

Mr Jeyaretnam: Mr Speaker, Sir, I was not asking for figures in the annual statement of the HDB. I am asking whether it would not be a good thing if the HDB publishes its cost for every development and say at what prices they are going to sell the apartments.

Mr Koo Tsai Kee: Sir, the development cost of each individual block is not published but if the Member wishes to know the development cost of a particular block or precinct, he is welcome to file a Question in Parliament. The reason why we do not publish these figures is that every precinct has different characteristics. New precincts have got markets and roads at different stages of construction. But the selling prices of new flats are published and made known to the people who are asked to select the flats. But these figures are not state secrets. If he wants to know the development cost we will let him know. But we incurred a great loss because of the total development cost. I think Members confuse development cost with construction cost. Over the last one year, construction cost has indeed gone down, but the land cost has not gone down that much. If you talk about flats built today, ie, ready for selection and to go in for occupation , they were bought by the Government several years back. At that time, the land cost was very expensive and the construction cost was equally high.