Price Trend for BTO Flats

Er Dr Lee Bee Wah asked the Minister for National Development (a) what has been the price trend for BTO flats in mature and non-mature estates respectively over the past three years; and (b) what is being done to keep prices of BTO flats affordable amidst inflation.

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Sir, we have, since May last year, largely stabilised our BTO prices, especially for flats in the non-mature estates. That is why overall BTO prices have increased by 12% since January 2009, despite a larger 34% increase in the HDB Resale Price Index (RPI) over the same period – 12% versus 34%.

We take affordability fully into account when pricing BTO flats. New flats enjoy generous discounts off the market price. On top of that, eligible first-timer households can get up to $60,000 of housing grants. HDB also offers housing loans at concessionary interest rates to help eligible households finance their flat purchase.

Currently, first-timers buying new flats in non-mature estates use, on average, 23% of their monthly income to pay for their housing loans. They are able to pay for their monthly instalments fully in CPF, with minimal or no cash outlay.

Mr Speaker, Sir, I took note that in the Minister's reply that the increase was only 12%. But to a lot of residents, their salaries did not increase 12% over this period. Would MND consider making new BTO flat prices stable?

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As I said, when we price BTO flats, we take fully into account the question, "Can buyers afford it?" This is a critical factor. If we judge by the figure that I have given, that is, 23% of their monthly income, I think that is affordable for BTO. A lot of the misunderstanding out there is that they are equating BTO price with resale price. The resale price is beyond my control. That is set by buyer and seller. But for first-timers buying BTO flats, that is within my control. It is my job to ensure that it will be affordable.

Please look carefully and study our BTO prices in recent months. If I may quote some figures just to illustrate the point. For non-mature estates – because that is our commitment – there will always be flats which newly-weds, first-timers can afford. Supposing they buy a 4-room flat, say, in Sengkang or Chua Chu Kang, the BTO price is $251,000. It starts from $250,000 and, at the highest floor, which is the maximum price, $310,000.

That is a reasonable price. Of course, people would want it even cheaper. But looking at it from a situation that we are facing today, I find these figures very reasonable. That is for a 4-room flat. A 5-room flat starts from $320,000; maximum is $385,000. That is what we have been trying to do in the last few months, stabilising the BTO prices. Over time, I hope that the resale price will further moderate and then we can adjust our BTO prices again. But for the moment, I would regard the achievement that we have been able to bring about this cost increase of just 12% versus the 34% increase as quite an achievement. Not enough credit has been given to my Ministry. [Laughter.]

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