Stabilising Pricing of Public Housing

Mr Sitoh Yih Pin asked the Minister for National Development on how HDB aims to stabilise the pricing of public housing given the substantial rise in the open market prices of HDB flats in recent times.

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The rise in HDB resale prices in recent years is due to a temporary mismatch in supply and demand, coupled with global liquidity, low interest rates, and strong economic growth in Singapore. To restore market equilibrium, the Government has put in place a number of demand management and supply measures.

The resale market has shown signs of stabilising. Yearly RPI growth has come down from 14.1% in 2010, to 10.7% last year and to 3.9% in the first three quarters of this year. Quarterly average RPI growth has correspondingly trended down from 3.4% in 2010 to 2.6% last year. The current average is 1.3% per quarter; with an uptick in 3Q2012 (2% based on flash estimates). So, we are not yet out of the woods.

Ample global liquidity and low interest rates continue to contribute to the strong demand for residential property. MAS has recently announced new rules on loan tenures to encourage greater financial prudence among property purchasers in both the public and private housing markets.

On the supply side, HDB has ramped up its BTO supply significantly and we will keep up the pace of new flat supply into 2013. This will enable us to provide more options to suit individual housing needs and budgets. It will take some time for the ramped up supply to catch up with demand. We continue to monitor the public housing market closely.

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