Like Private Properties, Flat Values Change Often

Source : The Straits Times, Oct 17, 2007

I REFER to the letters by Ms Liew Yi Xui (’Conditions unchanged, why 8% rise in flat price?’) and Mr Lawrence Ng (’Why build flats when so many units unsold?’; ST, Oct 8)about the pricing and supply of new HDB flats.

Like private properties, the market values of HDB flats are constantly changing, in tandem with prevailing market conditions. This is most clearly seen in the prices of resale flats.

Likewise, HDB adjusts the selling prices of new flats in line with the market, while keeping prices below the equivalent market value so that flat buyers enjoy a substantial subsidy.

The executive flat in Jurong West mentioned in Mr Ng’s letter was priced based on the prevailing market conditions when he first bought it in 1998. When the unsold executive flats were re-offered for sale in April this year, nearly 10 years later, they were priced taking into account the prevailing resale prices of comparable executive flats in the vicinity minus a subsidy.

Ms Liew mentioned that the unsold flat below her unit was subject to a $24,000 price increase between last November and June. We would like to clarify that the price increase was $16,500 (or about 5.5 per cent), which is consistent with the resale price movement of similar flats in the vicinity.

Ms Liew compared the selling price she paid for her executive flat with the resale prices of other executive flats transacted in Sengkang recently, and concluded that she had enjoyed a subsidy of only $10,000. This is not correct.

The market-subsidy component for new flats is significantly higher than $10,000. In fact, as recently as July this year, a resale executive flat in Ms Liew’s development was transacted at $75,000 more than what she had paid HDB for her flat.

To ensure that the supply of new flats is in line with market demand, HDB has been offering new flats under the build-to-order system since 2001. Under this system, HDB proceeds to build flats only when a good majority of the supply in a project has been booked.

With the improved economic outlook, demand for new flats has increased in recent months, and HDB’s stock of unsold flats has been reduced significantly to about 3,500 units. In particular, there was very good response to the unsold flats in Jurong West that were offered for sale in April and July this year. The unsold stock in Sengkang and Punggol has also been reduced significantly following similarly good response in recent offers.

Kee Lay Cheng (Ms)
Deputy Director (Marketing & Projects)
For Director (Estate Administration & Property)
Housing & Development Board