Most HDB resale flats remain affordable to first-timers

The majority of Housing Board resale flats remain within reach of Singaporeans, National Development Minister Desmond Lee said on Aug 6 as he addressed concerns about the affordability of public housing.

Mr Lee, who was responding to a question in Parliament by Mr Saktiandi Supaat (Bishan-Toa Payoh GRC), pointed out that around eight in 10 first-timer families who collected keys to their resale flats in 2023 could service their monthly loan instalments with their Central Provident Fund, with minimal or no cash outlay.

High-priced transactions continue to make up a small minority of total resale transactions, Mr Lee said.

A third of these are maisonettes and jumbo flats, which are limited in supply and much larger than most other flats, he added.

More than 70 per cent of the remaining units are five-room flats that are situated in good locations, on a high floor or have a very long remaining lease, he said.

Meanwhile, four-room and smaller flats that have been sold at the higher end of transacted prices make up just 0.5 per cent of all such flats sold in the last two years, he said.

More than half of these flats also have very attractive attributes, including being located in estates in or near the city centre, being on a high floor or having good views.

Mr Saktiandi had asked the minister whether the Government was looking into concerns about housing affordability after HDB resale price records were broken three times in the past three months.

In July, a five-room unit in Margaret Drive in Queenstown transacted for around $1.73 million, breaking the record for the most expensive HDB resale flat in Singapore.

This surpassed earlier records set by a five-room unit in Boon Tiong Road that sold for $1.59 million in April and another such unit at City Vue @ Henderson, which sold for $1.59 million in June.

Mr Saktiandi also asked if the Prime Location Public Housing (PLH) model was driving up the resale prices of non-PLH flats in choicer locations, and if the Government was considering imposing a cap on HDB transaction prices.

Mr Lee pointed out that since the PLH model was launched in 2021, there has been no conclusive evidence that this has driven up HDB resale prices in those towns.

“That said, it has only been less than three years since the PLH model was launched, and it will be some years more before the first of the PLH flats enters the resale market, and we will continue to monitor closely,” he said.

Flats under the PLH model come with stricter conditions, including an 8 per cent subsidy clawback upon resale and a 10-year minimum occupation period.

“Housing policy is complex, and any change in one area may have wide-ranging implications in other areas. Our approach to tackling this has been to address the supply and demand imbalances,” he said.

But these measures will take time to take effect, so the Government has increased the CPF Housing Grant to provide quick and targeted support to first-timers, he added.

Explaining why resale flat prices have increased, Mr Lee said that the Covid-19 pandemic disrupted the Build-To-Order (BTO) building programme and significantly impacted supply.

“At the same time, demand increased as more Singaporeans sought to move out to live on their own, a trend accentuated by the pandemic,” he said, adding that this led to an imbalance in supply and demand.

He said the Government has “significantly ramped up BTO flat supply”, including offering more flats with shorter waiting times.

In 2023, HDB completed about 21,400 flats across 23 housing projects, the highest number of projects and flats completed annually in the last six years, he said. It is on track to complete another 18,000 flats in 2024.

He also said three rounds of cooling measures have been implemented since December 2021 to temper housing demand in the resale market and encourage greater financial prudence among home buyers.

“While the resale market has risen in the last few years, we should not expect housing prices to go up indefinitely. History has taught us that the property market moves in cycles,” he said.

“In a time of market exuberance, prospective buyers should be extra careful, because those who buy high will also be harder hit when the market eventually comes down.”

Meanwhile, Mr Melvin Yong (Radin Mas) asked about the occupancy rates for flats on the Parenthood Provisional Housing Scheme (PPHS) and the take-up rates for PPHS rental vouchers.

The scheme allows families who are waiting for an unfinished flat to rent a unit directly from the HDB in the interim. These families can also tap PPHS rental vouchers to offset rent should they choose to rent a flat or bedroom on the open market.

Mr Lee said the occupancy rate for HDB flats available for rent under the PPHS is around 90 per cent. The remaining flats are available for selection in the ongoing August 2024 PPHS application exercise.

He added that HDB has received 90 applications for the PPHS rental voucher as at July 30, 2024.