HDB flats: Facts and Myths

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NATIONAL Development Minister Mah Bow Tan spent some time in Parliament yesterday addressing popular misconceptions about Singapore's public housing market.

MYTH: There are not enough HDB flats to meet demand.
HIS RESPONSE:
The HDB released 13,500 new flats last year and will release another 12,000 or more this year. This is more than the total number of flats in Clementi or Jurong East (about 23,000 flats each).
The massive oversubscription rates for new flats are misleading. That is because half the number of flat applicants choose not to book a flat when invited to do so. Many say this is because they could not get a flat of their choice, yet in recent selection exercises, one-third rejected flats on the first day of selection, when all the flats were available.
Some first-time buyers have complained that they have tried repeatedly to get a flat to no avail. But when the HDB reviewed 477 such cases in the last six months, it found only 29 appeals (6 per cent) were genuine.
CASE STUDY: Mr C complained about his lack of success in getting a flat. The HDB's checks found that he had submitted four applications, three of which were in highly popular mature estates. In six months, he consecutively rejected three offers of flats: one offer of 121 flats in Punggol/Sengkang because he had been 'targeting a unit in Buangkok'; another offer of 143 flats in Punggol because 'the units left are facing the mosque'; and a third offer of 14 flats in Serangoon, Yishun, Ang Mo Kio, Tampines and Woodlands because these were not his 'choice' flats.

MYTH: HDB flats are unaffordable.
HIS RESPONSE:
On top of the CPF Housing Grant of $30,000 or $40,000, there is an Additional Housing Grant (AHG) for lower-income families of up to $40,000. As of Jan 31, the Government disbursed more than $330 million in AHG to more than 20,000 families.
The median house price is 5.8 times the median household income in Singapore. In comparison, the ratio is 7.1 in London and 19.8 in Hong Kong.
The average mortgage payment for new flats in non-mature estates sold in 2009 was 22 per cent of monthly household income. This is well below the affordability benchmark of 30 per cent to 35 per cent.
Four out of five Singaporean new flat buyers service their housing loans from CPF savings, without any cash payment.
CASE STUDY: Mr and Mrs S, with a $4,500 monthly income, bought a four-room flat in Punggol for $297,900. They received $10,000 in grants and took a concessionary loan of $268,100 (90 per cent of the price) from the HDB. The couple's monthly instalment is $1,073, or 24 per cent of their income. They can use $1,035 from the CPF to service the mortgage and end up paying only $38 monthly in cash.

MYTH: PRs push up prices.
HIS RESPONSE:
The median cash-over-valuation (COV) paid by permanent residents have been the same as the median COV nationwide for the last two quarters.
Cases of PRs paying high COV are the exception. Of 37,205 resale transactions in 2009, 58 cases had COV exceeding $70,000. Of this, only eight (14 per cent) involved PRs.
MYTH: Private property owners push up prices.
HIS RESPONSE:
Their number is not large enough to push up prices. Of the 58 resale transactions last year with COV exceeding $70,000, only 11 cases (19 per cent) involved private property owners.

MYTH: Subletting of HDB flats is rampant.
HIS RESPONSE:
Of the 682,000 flats that have fulfilled current Minimum Occupation Period requirements, only 3 per cent are sublet. This suggests most flat owners are buying their flats for occupation, and not rental

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