In Singapore, the cost of HDB flats is an emotive issue, considering more than 80% of us live in one.
Thus, Leader of the Opposition Pritam Singh saw fit to ask whether HDB will provide a cost breakdown for the development of Build-To-Order (BTO) flats.
Source: HDB
However, Second Minister for National Development Indranee Rajah demurred, saying affordability was more important.
Mr Singh had filed a parliamentary question on Monday (7 Nov), asking whether HDB would provide a clear breakdown of the total development costs of all new flats in future.
He also asked exactly how much in terms of subsidies was applied to the assessed market price of these flats.
The question cited a recent Protection from Online Falsehoods and Manipulation Act (POFMA) correction direction issued to former GIC chief economist Yeoh Lam Keong.
Over two Facebook posts, he made statements about the cost of state land purchased for a BTO project.
After a back-and-forth exchange with Mr Singh over the relevance of the POFMA in this case, Ms Indranee said they “don’t think anything would be achieved” by releasing the total development costs.
She felt that the “real important thing to Singaporeans” is whether they are able to afford the flat.
Source: MCI Singapore on YouTube
Every Singaporean who buys a BTO knows that they’re paying less than the pure market price, the minister said, that’s why BTOs are so popular.
Mr Singh suggested that this info could be meaningful to Prime Location Housing (PLH) flat buyers.
This is because upon selling the flat, they must return the quantum of additional subsidies provided as a percentage of the original assessed market value.
Source: HDB
Another reason was soaring resale prices pushing up the market price of land, he said.
As the Ministry of National Development (MND) had delinked BTO prices from the resale market, he added that the size of subsidies has also likely gone up to ensure BTO affordability.
Thus, the info could be used to scrutinise and track the amount of subsidies being diverted for home-ownership purposes, he noted, adding,
In view of these new reasons, what is preventing HDB from publishing the dollar value of HDB subsidies for new BTO flats?
In response, Ms Indranee, who is also Minister in the Prime Minister’s Office, repeated her point that affordability is the ultimate concern for the buyer.
She pointed out that PLH flats will have a greater subsidy, and that’s no secret.
However, it’s just “not meaningful” to disclose the development costs of every single project, she said, adding,
The key thing is, to the buyer: Is this affordable? And that’s what HDB does.
Earlier, Ms Indranee told Parliament that development cost comprises land and construction costs.
After subsidies and grants are applied to its market value, the effective selling price of a flat is derived.
She also explained that the HDB is selling to Singaporeans at a net loss in virtually all cases as they’re selling below market value.
In October, Minister for National Development Desmond Lee said in Parliament that the HDB would make a S$270 million loss from the Ang Mo Kio BTO project.
S$250 million of the amount is due to development costs, he added.
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Featured image adapted from MCI Singapore on YouTube.
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