Focus on HDB (Part 2): More mature estates?

Leong Sze Hian /

I refer to the article, “Khaw’s advice: Apply for flats in new towns; chances are better” (ST, May 31).

The report says:

“Mr Khaw’s latest announcement (to build more BTOs in mature estates) gives hope to buyers like human resources executive Teo Yingying, 25, who has applied for a BTO flat with her boyfriend five times with no success. She is hoping for a BTO launch in Tanjong Pagar where she now lives with her parents.

‘I want to be near my parents, if we ever have children, my parents can help me take care of them when we’re working’, she said”.

If engaged couples like Miss Teo and her boyfriend decide not to marry, they will have to pay a 10 per cent penalty of the flat’s purchase price.

If a CPF Housing Grant is involved, the penalty to pay back the grant includes accrued interest.

Can HDB disclose how many young, engaged couples changed their mind and ended up being saddled with huge financial losses.

How much in total has the HDB collected from such penalties?

One of the reasons that are contributing to record divorce rates now may be that couples are literally being forced to marry when their flat is due, or marry even if they don’t really want to, because of the withdrawal penalty.

Shouldn’t this policy be reviewed, instead of arguably just playing to the gallery, with talk of more BTOs in mature estates?

Also, unless the Market Subsidy Pricing policy is reviewed, BTOs in mature estates may mean even higher prices – which may lead to greater financial stress, higher risk of default on the mortgage, less funds for retirement, etc. (“CPF Minimum Sum to be revised to $131k”, ST, Jun 1)

To just cite people preferring to stay near their parents as the reason why BTOs in mature estates are heavily over-subscribed, may be somewhat overly simplistic.

There may be other reasons such as:

– There have been very few BTOs in mature estates. Therefore, demand may be due to the very low supply historically.

– Historical price data may indicate that mature estates appreciate in value faster than non-mature estates. Therefore, from an investing or money-for-value perspective, buyers who can afford may prefer mature estates.

– I believe the rentals in mature estates have  also been higher on a rental yield basis.

– As the historical wage data seem to indicate, the majority of middle and lower-income households may no longer be able to afford the much higher mature estates’ BTO prices. However, the 70th to 80th percentile may also not be able to afford private property. So, this group may have a tendency to prefer mature estates’ BTOs, from an affordability – lifestyle preference perspective.

Can the Minister cite some statistics to support his statement – how many of those who applied for mature estates’ BTOs did so primarily to live near their parents?

Higher HDB profits?

Since the construction industry’s capacity is around 20,000 flats a year, building more in mature estates may translate to higher profits for the HDB, and less flats for the lower-income.

Priority to lower-income?

In my view, in light of the current acute housing shortage, particularly for lower-income and financially stretched families due to the HDB’s policies on eligibility for divorcees, singles, second-timers, income ceiling, resale levy, loan eligibility and conditions, etc, the immediate policy review priority should not be towards higher-income Singaporeans at the expense of the lower or middle-income.

Longer construction period?

The average BTO construction delivery period has edged up to around 4 years or 48 months, a far cry from the former National Development Minister’s reply in Parliament just last year, that the average BTO construction period is only 32 months.

What’s the point of saying we will keep building more when it may keep getting longer to get your flat?

Read also: Focus on HDB (Part 1): The more the merrier?

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