How prices of new HDB flats arrived at

[Fire76]

Nov 17, 2006
How prices of new HDB flats arrived at

I REFER to the letter, 'How does HDB price WIS flats?' (ST, Nov 10), by Ms Tan Wee Ping.

In pricing new flats, HDB first derives their market values, taking into account the transacted resale prices of comparable flats in the vicinity, adjusted for differences in attributes such as age, location, design, floor area, finishes, orientation, view and storey height.

New HDB flats are then priced below their equivalent market values so that buyers enjoy a substantial market subsidy.

It would not be appropriate to compare the new HDB flat prices of a particular town against movements in HDB's Resale Price Index (RPI), as the RPI is a composite index that indicates the overall price movement of resale HDB flats across the various towns and flat types.

The new HDB flats being offered would have differing attributes (such as location, orientation and view) and such attributes have a great influence on the prices of the flats offered.

HDB offers a wide range of flat types at varying prices to cater to the different housing needs of flat buyers.

Flats offered under HDB's Balloting Exercises (BE) tend to have higher prices that reflect their more popular locations within mature estates. Specifically, the new four-room flats in Queenstown mentioned by Ms Tan are located near the MRT station and other amenities.

Those seeking more affordable housing options can apply for new HDB flats offered in other locations under Walk-In Selection Exercises.

Alternatively, eligible buyers can consider buying a resale HDB flat from the open market with the CPF Housing Grant.

We thank Ms Tan for her feedback.

Kee Lay Cheng (Ms)
Deputy Director
(Marketing & Projects)
For Director
(Estate Administration & Property)
Housing & Development Board

**************

Nov 10, 2006
How does HDB price WIS flats?

I HOPE the HDB can clarify how it prices the flats for Walk-in-Selection (WIS) and the balloting exercise.

The HDB Resale Price Index (www.hdb.gov.sg) has increased by one point from Q2/2005 to Q3/2006. Even when the overall property market sentiment seems to be improving during Q3/2006, the HDB's index dropped by 0.2 point.

In comparison, I noticed that the prices of flats in the WIS in Sengkang (Nov 2006) have increased by 3 to 5 per cent compared to the one conducted in October 2005, despite the fact that those flats have aged.

I also notice that the prices in the recent balloting exercise in Queentown are high. For example, new four-room flats are priced about $3,345 per sqm compared to about $3,328 per sqm for resale flats from August to October 2006.

Tan Wee Ping

[Fire76]

from ST 10/1/07

I REFER to the letters from Mr Viktor Ye Kok Kheong and Mr Leong Sze Hian (ST, Jan 1 and 2, respectively) pertaining to the subsidy for new HDB flats.

First, Mr Ye asked if it is true that the Chief Valuer values all land in Singapore using Raffles Place as the benchmark. We wish to state that it is not so.

It is a fundamental valuation principle that lands are valued based on the specific attributes of the site, such as location, the permitted use of the land, and tenure.

The Chief Valuer's valuation has to be supported by comparative land-sales evidence.

It is simply not tenable to benchmark every plot of land to Raffles Place pricing, as this would drive property prices beyond the reach of most Singaporeans.

For example, state land alienated by the Singapore Land Authority for housing in Tampines will be valued taking into account the market values of housing in Tampines, while state land for industrial use in Tuas will take into account industrial- land values in Tuas, etc.

Second, Mr Leong asked HDB to reveal its land and construction costs to prove that HDB flats are subsidised. He has missed the point.

To understand the full extent of public-housing subsidy for new HDB flats, one should be comparing the market value of the flats with the sale prices charged by HDB, rather than look at the input costs of land and building.

New flats are subsidised as they are being sold at prices that are lower than what they would otherwise fetch in the open market.

If this subsidy is not real, why should many flat buyers choose to buy new flats from HDB instead of resale flats in the open market using the CPF Housing Grant?

Third, Mr Leong asserted that HDB has not kept up with the standards of disclosure in the private sector. He is wrong.

HDB's financial statements are prepared in accordance with the Financial Reporting Standards, audited by the Auditor-General and tabled in Parliament for information.

HDB's standards of disclosure and governance are no less than those required of publicly listed companies and real-estate investment trusts in Singapore.

Overall, HDB is unable to recover the development cost of new flats that it offers to the public, and has incurred a deficit averaging $390 million in its home-ownership programme in the last five years. These figures are reported in HDB's audited financial statements, which are publicly available for inspection and scrutiny.

Kee Lay Cheng (Ms)
Deputy Director
(Marketing & Projects)
For Director (Estate Administration & Property)
Housing & Development Board

[Alaska]

This is also applicable to our Punggol estate.

WIS price is cheaper now compared to what we paid 5-6 years ago with the same flats.

Recent Case at Blk 114

17th floor's price lower than 12th floor price with the same unit number. Is it logical?

[gaonrat]

Overall, HDB is unable to recover the development cost of new flats that it offers to the public, and has incurred a deficit averaging $390 million in its home-ownership programme in the last five years. These figures are reported in HDB's audited financial statements, which are publicly available for inspection and scrutiny.

funny leh..in that case HDB should be bankurpt long time ago liao and MBT should be step down due to so much be loss unless i'm wrong some where.