Saturday, 16 March 2013

Moves to cut HDB prices won't hit existing owners: National Development Minister Khaw Boon Wan

The proposals are meant only for new HDB flats, Khaw clarifies
By Daryl Chin, The Straits Times, 15 Mar 2013

PROPOSALS to make new lower-priced Housing Board flats more affordable to first-time buyers will not affect existing home owners, National Development Minister Khaw Boon Wan confirmed yesterday.

He made the clarification to quell concerns that may have arisen after he floated three ideas to help people looking to enter the property market - particularly young couples.

At a community walking event on Sunday, he suggested extending the minimum occupation period before owners can resell their flats, shortening a flat's lease or even reinstating a pre-1971 rule that owners can sell HDB flats only back to the Housing Board.

This last suggestion alarmed some home owners because the reselling of flats on the open market enabled many to earn capital gains and accumulate large nest eggs.

In his blog post, Mr Khaw recounted that a Queenstown resident who had planned to downsize to a newer flat and use the proceeds to fund her retirement had raised concerns to him.

Responding to her distress as well as that of others like her, Mr Khaw said the new restrictions would affect only those going for new flats.

He said that the Government has not forgotten the "interest of the many hundreds of thousands of existing home owners".

He added: "Some plan to rely on their flat to finance retirement needs. Some hope to bequeath their flats to the next generation. Some rely on renting out a room to bring in extra cash proceeds. Their concerns matter to me too."

Existing HDB flat owners breathed a sigh of relief.

University student Serene Choong, 23, who is waiting for her $341,000 four-room in Punggol to be completed, said her main concern was snagging her desired unit.

"Some complain that it's not fair that prices might go down, but we are just happy to have a home," she said.

"To know that it can be profitable down the road is also very welcome news."

Housewife Daphne Wong, 38, said: "I can rest easier, knowing that my flat is still of value to my children and me."

There are about 900,000 Housing Board households.

Of these, 43,000 flats are rented out and another 40,000 owners rent out rooms.

Mr Khaw explained that the Government is looking at a new housing option "which can be a lot cheaper than today's BTO (Build-to-Order) price".

"If we offer such a low-cost housing option, it must come with restrictions to differentiate it from the existing BTO flats," he added, saying this would apply only to the new buyers.

For instance, a four-room flat applicant with a household income of $4,100 a month might see prices drop to $197,000 after housing grants, compared with a price tag of up to $300,000 in the last BTO exercise in January.

ERA Realty key executive officer Eugene Lim said Mr Khaw's comments would calm the property market, although the full implications would be known only when more details emerge.

Mr Lim believes the cheaper properties would be similar to current studio apartments, which are meant for the elderly, sold on 30-year leases and cannot be resold on the open market.

He said: "The difference is that studios are meant for those in their twilight years, while young couples will want asset appreciation in order to get ahead in life.

"This group, who already have affordability issues, might effectively be a social underclass."


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