Govt may have to apply more subsidies to keep prime HDB flats affordable: Desmond Lee

Minister also raises issue of fairness when these extra subsidies add to higher capital gains

Sat, Dec 12, 2020

RACHEL MUI


TO keep future HDB projects in prime locations affordable, the government may have to apply more subsidies, on top of those already provided for Build-To-Order (BTO) flat buyers, National Development Minister Desmond Lee said in a Facebook post on Friday.

There is also the "issue of fairness to consider when these additional subsidies add to higher capital gains for buyers of such flats in prime locations", he noted.

Besides this, measures for upcoming new flats in prime areas would have to balance between various objectives, including preserving the character of public housing in these estates to remain inclusive over time, Mr Lee said.

He added that his ministry has received many suggestions, such as the introduction of some restrictions on the resale conditions for future prime-area projects.

"There is a whole range of ideas that can apply to these future flats under the new housing model, and the Ministry of National Development (MND) is carefully studying these various suggestions," Mr Lee said, adding that the ministry welcomes ideas from the public.

In a recent interview with Chinese daily Lianhe Zaobao, he shared plans at MND, including its plan to build public housing in new areas with "very prime attributes, such as in the city centre, or along the Southern Waterfront", Mr Lee noted in his Facebook post.

"A new housing model is necessary for such areas, to ensure these new public housing - regardless of location - remain affordable for ordinary Singaporeans as they will be a lot more expensive than current BTO flats...

"We will also introduce a diverse range of flat types, including two-room Flexi flats and rental housing where possible, to cater to different needs and keep our public housing inclusive and diverse," Mr Lee said on Friday.

The minister's latest announcement comes after he previously acknowledged the "lottery effect" of HDB flats in prime areas, which may result in a "likely windfall" for those who sell government-subsidised BTO flats on the resale market.

Property analysts The Business Times spoke to last week suggested some measures to mitigate this effect. These include a shorter lease, longer minimum occupation period, sell-back to HDB, and taxes or levies. But there are no simple answers, the analysts added, as any measure would have wide implications.

In addition, the HDB resale market could also affect the private property market and have other socio-economic implications.

According to data released by real estate portal SRX on Thursday, the number of HDB resale flats sold for S$1 million or more has hit a new high, following 13 transactions done in November 2020. The 72 million-dollar flats sold compare to 64 such units for the whole of last year.

SRX's flash estimates for November also show that HDB resale prices rose for the fifth consecutive month, though the volume of transactions dipped.

At the top end of the HDB resale market, a five-room unit at The Pinnacle @ Duxton sold for about S$1.25 million, which was the highest transacted price registered for a resale flat last month.