Debated in Parliament on 9 Jan 2024.
Mr Pritam Singh asked the Minister for National Development with a new subsidy recovery threshold of 8% established for Prime Location Public Housing (PLH) flats at the December 2023 HDB BTO exercise, whether the HDB has done any study to ascertain the inflationary and behavioural impact of the subsidy recovery regime on (i) prices of non‐PLH flats near PLH flats and (ii) the prospect of the subsidy priced into the selling price of PLH flats upon resale.
The Prime Location Public Housing (PLH) model seeks to ensure that new public housing in prime locations remains affordable, accessible and inclusive for Singaporeans.
To ensure affordability, we price Build-To-Order (BTO) flats with significant market discounts. On top of these market discounts, flats offered under the PLH model are priced with additional subsidies. To maintain parity with other BTO flat owners who are not accorded these additional subsidies, PLH flat owners who buy their flats from the Housing and Development Board (HDB) will have to return to HDB a percentage of the resale price or the valuation of the flat (whichever is the higher) upon the sale of their flats. The subsidy recovery rate is broadly commensurate with the extent of additional subsidies provided. For PLH projects launched in the December 2023 BTO exercise, the subsidy recovery rate was eight percent.
The PLH model also has additional features to moderate resale PLH flat prices, so that these flats are kept affordable for a wider group of Singaporeans over time. These include tighter ownership conditions, such as a 10-year minimum occupation period and the ringfencing of resale flat buyers to those who meet the prevailing BTO eligibility conditions. Taken together, the additional subsidy at initial flat purchase and tighter ownership and resale conditions aim to keep HDB estates in prime locations affordable, accessible and inclusive for Singaporeans.
The resale prices of non-PLH and PLH flats will depend on various factors including homebuyers' preferences; market conditions, such as the prevailing economic outlook; supply; demand; and financing conditions. HDB resale flats are transacted based on market prices negotiated and mutually agreed upon between buyers and sellers. After the first batch of PLH flats are available for resale in about 15 years' time, the bulk of the resale flat supply will still comprise non-PLH flats for many more years to come. These non-PLH flats will generally be older as PLH projects tend to be launched in more central towns with a high proportion of older flats. The supply of new flats will also continue to provide prospective buyers with additional housing options, on top of resale flats. The wide range of new and resale flats, catering to different budgets and needs, would also have the effect of supporting stable prices in the resale market.
Future PLH flat sellers who attempt to price the subsidy recovery into their asking prices may face greater difficulty selling their flats. This is because the prospective buyers will also have to consider the tighter ownership and resale conditions that will be similarly imposed upon them. In addition, they must meet the prevailing BTO eligibility conditions, such as income ceiling and non-ownership of private property in the last 30 months. These PLH features will help to moderate resale PLH flat prices.
Together, these features seek to keep the resale market on an even keel. We will continue to keep a close watch on the housing market and review our policies where necessary.
PAPERCUTS