HDB Glut Shrinks In Rising Market

Source : The Straits Times, Oct 18, 2007

Number of unsold flats plunges from 10,000 to 3,500 in just three years; more will be built

MORE than 10,000 Housing Board flats were languishing unsold in a tepid market just three years ago.

But the rapidly rising residential market has meant that the stock of unsold flats has fallen dramatically to 3,500.

And by the end of this year, that figure will plunge even further to only about 2,200 units, as eager buyers snap up homes.

In response, HDB is pulling out all the stops to meet burgeoning demand.

'The rosy economic outlook and improved market sentiment have resulted in rising demand for new flats,' said HDB chief executive Tay Kim Poh at a briefing held on Tuesday on HDB's newly released annual report.

Demand is now so strong that HDB's bi-monthly sale this month attracted 4,800 applicants for just 489 flats.

Mr Tay said HDB is committed to building more flats to meet the rising demand as supply shrinks.

In the next six months, it will offer about 4,500 new flats under the build-to-order (BTO) system, which puts flats on the market only if there is sufficient demand.

So far, in the first nine months of the year, HDB has offered 2,700 new flats under the BTO system.

It will also release another three new Design, Build and Sell Scheme sites, which will yield about 1,500 flats in total.

'Definitely, whatever that we have, we will push it out,' said Mr Tay of its stock.

This is a far cry from just two years ago, when HDB was still devising new ways to clear about 9,000 unsold units.

Today, strong demand has meant that buyers in central areas are paying bigger sums over valuation, for instance.

HDB's initial estimate for the third quarter, released earlier this month, showed that resale flat prices have risen 6.5 per cent, up from a 3 per cent rise in the previous quarter and by far the biggest quarterly jump since 1999.

And prices could rise further in line with the general market.

'Our prices move with the market,' said Mr Tay. 'But if you were to look at how resale prices compare with the market, our movement for HDB flats is not as great as private housing.'

The HDB market has a 'stabilising effect' as buyers can choose to buy from the resale market or purchase a new flat, he said.

'When we price our flats, we do look at prevailing market prices. Then after that, we will give a market discount.'