CONCERNS OVER HOUSING AFFORDABILITY
The prices of HDB resale flats have increased by 25.5 per cent between the third quarter of 2020 to the third quarter of 2022. The last time that HDB resale prices increased at similar rate was during the property boom of 2010 and 2011.
The recent price increase is even more remarkable considering that it occurred during the pandemic period. In addition, high inflation is taking up an increasing chunk of household budgets for daily necessities, further contributing to the growing concern about housing affordability.
Hence, the topic of housing affordability has become a social issue that could potentially turn into a political issue.
NOT FAIR TO COMPARE HDB PRICES TODAY WITH THOSE SOLD DECADES AGO
On Wednesday, HDB reiterated that it does not make a profit from the sale of BTO flats, unlike the private sector, which is profit-driven.
So why do some members of the public persist in their views that the HDB makes money from selling BTO flats?
It is not fair to compare the prices of HDB flats today with the prices a few decades ago. It is a fact that the prices of HDB flats have increased. But household incomes have also risen over the years. The key question is whether the prices of entry-level HDB flats, i.e. BTO flats, are still affordable.
HDB’s approach is to keep BTO prices affordable, not necessarily at an artificially “low” level.
As household incomes rise along with the prices of other goods and services, so will the development costs of HDB flats.
An essential factor to keep HDB BTO flats affordable is the Government’s ability and willingness to continue to subsidise the public housing programme. For homebuyers with lower household incomes, the Government offers larger housing grants to keep the BTO flats affordable.
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