AFFORDABILITY-BASED SCHEME FOR HDB FLATS

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AFFORDABILITY-BASED SCHEME FOR HDB FLATS

10.

Mr Steve Chia Kiah Hong asked the Minister for National Development (a) what is the basis and rationale for the Government to choose an affordability-based pricing scheme for HDB flats instead of a cost-based pricing system; (b) whether this affordability-based scheme is taking more money than necessary from the people's savings than for other needs like children's education, medical care and retirement; and (c) whether this affordability-based scheme is turning previously well-affordable HDB flats into a backbreaking financial burden for those hard hit by the economic restructuring and who cannot find jobs with the matching pay.

Mr Mah Bow Tan: The Government has committed that the majority of Singaporeans would be able to afford a basic HDB flat. Affordability is therefore the key consideration in pricing HDB flats. All HDB flats come with a market subsidy, ie,they are priced below their equivalent market value.

Last year, 3- and 4-room HDB flat buyers used, on average, less than 20% of their monthly income to service their monthly loans. It is well within the 40% guideline used by financial institutions in credit assessment. It is also lower than international benchmarks of household expenditure on housing, which are typically around 25% or 30% of household income. This clearly shows that HDB flats remain affordable to Singaporeans.

We have consistently adopted an affordability-based pricing system. This has enabled more than 80% of Singaporeans to own their HDB flat.