UNSOLD NEW HDB FLATS

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UNSOLD NEW HDB FLATS: 7.

Dr Teo Ho Pin asked the Minister for National Development (a) what is the number by estates of unsold HDB new flats; (b) will HDB consider reducing the prices of these unsold flats; and (c) what further measures are being taken to sell or rent them.

The Minister for National Development (Mr Mah Bow Tan): Mr Speaker, Sir, HDB has about 10,000 flats available for sale. Of these, about 8,000 are located in the non-mature estates such as Choa Chu Kang, Woodlands, Jurong West, Sengkang and Punggol. These are either flats previously built under the now-suspended Registration for Flat System, or are surplus SERS replacement flats that have become available after meeting the rehousing needs of SERS lessees.

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In pricing flats, HDB takes into account the attributes of the flats, such as the age, facing and storey height, as well as the prevailing resale prices of comparable flats. The prices of HDB flats are pegged below their equivalent market prices at the time of offer so that eligible flat buyers enjoy a subsidy.

The large number of unsold flats is due to the economic downturn, when demand for flats dropped sharply. To take into account the weaker resale prices and the age of these flats, HDB has adjusted their prices downwards when re-offering them for sale. HDB has also implemented new modes of sale for these flats. Those that are in ample supply are offered under Walk-In Selection, which allows buyers to walk in and book a unit on the spot. The more popular flats, such as SERS replacement flats located in the mature estates, are offered through regular balloting exercises. These have proven effective in enabling HDB to sell its unsold flats.

HDB will continue to promote the sale of the unsold flats to eligible families, while scaling back new supply of flats. HDB has in fact stopped building new 5-room flats for sale to the public since 2002. It will do so until the current stock of unsold 5-room and larger flats is reduced. HDB will also employ various marketing initiatives, such as roadshows and media advertisements, to reach out to prospective buyers. I expect the demand for HDB flats to improve, with the improvement in the economy, and the unsold flats will be taken up in due course.

Dr Teo Ho Pin (Holland-Bukit Panjang): Sir, may I ask the Minister whether the Ministry can consider a hire-and-purchase scheme for these unsold flats where you allow more flexibility for Singaporeans to rent these flats, based on annual value, and thereafter to allow them to purchase them when they become eligible?

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Mr Mah Bow Tan: Sir, I presume the purpose of such a scheme, as proposed by the Member, is to help the families who are not eligible for loans to get a flat. First of all, I would like to assure the House and the Member that HDB does exercise flexibility and consider loans for such families on a case-by-case basis. It will give them a concessionary loan after looking into the merits of the case and, if there are extenuating circumsances such as hardship, they will grant such a loan.

Of course, there are other alternatives available, including the financial assistance schemes offered by the HDB. Those who wish to downgrade can also make use of their proceeds to buy a smaller flat. In fact, for such families, I would say further that it makes more sense for them to buy than to rent. Because if they buy, they can actually make use of their CPF to pay for their mortgages, whereas they would need to use cash for their rentals. But having said that, there are those who still prefer to rent for whatever reasons, and here there are other schemes that are available for such families to rent, such as the Rent and Purchase Scheme. There is also the Public Rental Scheme. And we have recently revised the eligibility for the Public Rental Scheme. Then, of course, there are HDB flats which are available for rental, as a result of the relaxation of some of the rules for subletting that were introduced in October last year.

So, with all these options available, I would say that the proposal of the Member for a hire-and-purchase scheme may not be so necessary at this stage.

The final point I would just like to mention is, of course, that some of these flats that are being offered for sale are really not suitable for rental. They are not fitted out; they do not have proper flooring, lighting, etc. So it would require some effort to actually fit them out and to offer them for rental. But I would say that this is a practical problem which can

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be overcome. The main crux of the matter really is that there are many other options available to such families who are in difficulties, and I hope that these options will be made use of.

Dr Mohamad Maliki Bin Osman: Sir, can I ask the Minister, among the 8,000 flats that are in non-mature estates that are not sold currently, what is the percentage or proportion of them that is already built for five years and not being bought yet, and how long does HDB think it takes to sell them off? They are not being purchased after five years already. Are there any plans to get them sold off as quickly as possible?

Mr Mah Bow Tan: I do not have the exact percentage of the flats that are five years and older. It is not very high. But whether they have been built five years or earlier, they would still be in the system. They would be sold eventually. As I indicated in my reply, I believe that they will eventually be taken up because, first of all, the demand is growing and, secondly, the supply is being cut back. I believe that as new households are being formed, there will be a demand for such flats, especially when the prices have been reduced to what, I think, are very attractive levels.

Dr Teo Ho Pin: Sir, some of these flats are still around after more than three years, and they are still unsold. They actually pose some maintenance problems because the flats are not occupied. What are the measures taken by HDB to look after all these unsold flats?

Mr Mah Bow Tan: Sir, there are certain areas or particular blocks where the number of unsold flats is much higher. For these areas, HDB would pay particular attention to the issue of security. And the Town Councils have also been alerted, so that when it comes to issues like

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maintenance and cleaning and so on, particular attention is paid to them.

I come back to the main point, which is the 10,000 flats that are availabe in these estates. It is not a very large number and I guess, as the demand picks up, they will be sold. So, this is a temporary problem. So long as HDB and the Town Councils are aware of it and take the necessary steps, I do not think that there is any cause for concern.