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Why does HDB need to increase prices of flats so rapidly?

By Leong Sze Hian

I REFER to the article, 'HDB launches sixth build-to-order project in Fernvale.' (ST, Sept 21).

The HDB's pricing policy recently has increased the prices of new flats, and may lead to Singaporeans having to incur higher mortgage liabilities.

This may result in lesser CPF funds for retirement, more mortgages in arrears, defaults, etc.

For example, the prices of four-room flats in the HDB's latest build-to-order project (Coral Spring) in Fernvale are between $188,000 and $252,000, compared to Fernvale Vista Phase 2 ($145,000 to $200,000) in May, and Fernvale Court ($138,000 to $177,000) two years ago.

Based on the average prices of the three projects, which are in the same location, the increase is about 40 per cent from two years ago, and 28 per cent from just four months ago.

On an annual basis, the increase is 18 per cent per annum over the last two years, and 75 per cent per annum over just the last four months.

Why does the HDB have to increase its prices by so much so rapidly?

 

 

Below is the reply from HDB to Sze Hian’s letter (as published in the Straits Times, Oct 2, 2007):

Oct 2, 2007

Fernvale flat prices: Comparisons inapt

I REFER to the letter, 'HDB flat prices in Fernvale rose too rapidly' (ST, Sept 26), by Mr Leong Sze Hian.

Mr Leong compared the selling prices of HDB's latest build-to-order project, Coral Spring, with the selling prices of Fernvale Vista and Fernvale Court launched in May this year and September 2005 respectively.

The comparisons are inappropriate, as they did not take into account prevailing market values and the different design features of the flats.

Coral Spring is a Premium project while the two earlier projects cited by Mr Leong are Standard projects.

HDB's Premium projects come with enhanced architectural designs, landscaping and better-quality finishes, compared to Standard projects.

In addition, the flats at Coral Spring also come with many improved design features, such as bay windows and planters, as well as a larger floor area.

The Fernvale area has also undergone significant development since the launch of Fernvale Court two years ago. With the LRT system in operation, improved road network, as well as more amenities and established facilities, the flats in the Fernvale area have appreciated in market value. This can be seen from recent resale transactions in the area, where four-room flats were transacted at between $275,000 and $287,000.

We would like to reiterate that HDB has continued to price its flats such that they are affordable to the vast majority of flat buyers.

New HDB flats are priced below their equivalent market values so that buyers can enjoy a substantial subsidy from the Government.

In addition, the Government has recently revised the Additional CPF Housing Grant Scheme for first-timers to allow households earning up to $4,000 in income to qualify, with the highest-tier grant increased from $20,000 to $30,000.

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