Difficulty in Selling HDB Flats Due to Ethnic Integration Policy

3 Mr Lim Biow Chuan asked the Minister for National Development whether there are any plans to assist flat owners who are unable to sell their HDB flat due to the quota imposed under the Ethnic Integration Policy.

4 Dr Intan Azura Mokhtar asked the Minister for National Development whether there are plans to review and introduce greater flexibility on the Ethnic Integration Policy for HDB flats in light of the sluggish property market where some home owners are finding it even more difficult to sell their flats.

The Minister for National Development (Mr Lawrence Wong): Mdm Speaker, with your permission, I will take Question Nos 3 and 4 together?

Mdm Speaker: Yes, please.

Mr Lawrence Wong: Madam, the Ethnic Integration Policy (EIP) was introduced in 1989 to ensure a balanced mix of ethnic groups living in our Housing and Development Board (HDB) estates, so as to promote racial harmony and strengthen social cohesion. These objectives are still relevant today.

Most flat sellers, from our experience, are still able to secure buyers from eligible ethnic groups, given the large volume of resale transactions annually. In the current property market, flat sellers may need to plan ahead and give themselves more time to secure a buyer. Nevertheless, HDB has and will continue to exercise flexibility for households of mixed parentage or marriages, or where there are exceptional circumstances.

Mdm Speaker: Mr Lim Biow Chuan.

Mr Lim Biow Chuan (Mountbatten): I have been told by my residents that when they bought the flat from HDB, they paid the same price as the other owners. Now that they are trying to sell it, because of the EIP, they have to sell it at a lower price and they are unable to fetch a fair market value for their flats due to this policy. So, would the Ministry of National Development (MND) consider giving them a grant to top up the difference between the fair market value and the actual sale price that they sell the flat for because they are selling at a loss compared to when they bought the property at the time from HDB?

Mr Lawrence Wong: Madam, when buyers bought the flat, the EIP policy was already made clear and the flat was valued with that policy in mind, to begin with. If they were to sell the flat today, it is with the same policy. Nothing has changed. I think it is easy to point at the EIP as the cause for a lower sale price but there may be many other reasons. Even in today's current market situation, there are people who are not subject to EIP limits but are selling their flats at somewhat lower prices because of the general property market conditions. It is probably premature or not fair to point the finger at the EIP per se but recognise that the property market conditions are the way they are. And buyers, therefore, need to plan ahead and think very carefully about these decisions.

Mdm Speaker: Dr Intan Mokhtar.

Dr Intan Azura Mokhtar (Ang Mo Kio): I fully appreciate the intent of the EIP and I support it. But would it be possible, looking at the property market at this moment, to consider reviewing the EIP, not just to look at EIP for each individual block but reviewing the EIP to look at it as EIP for that cluster of blocks? Because if we are talking about integration, it is not just integration of races within a block, but the neighbourhood.

Mr Lawrence Wong: Madam, I appreciate what the Member has said, that the EIP policy is important and it is something that has worked well in our context. I would say it is still relevant today, perhaps even more relevant, given what we see around the world, even in mature countries where ethnic tensions can come up quite easily.

Having said that, as I mentioned earlier, we have already exercised flexibility on EIP appeals. Over the years, from 2014 to 2016, we received about 1,500 appeal cases and about four-fifths of them were rejected, which means that one-fifth were successful. This was, in fact, a question raised by one of the Members of the House which we had addressed and clarified. I cannot get into the specifics of which and why some cases are successful and others are not. Each case is unique and we look at it case by case.

But for many of the cases that we have turned down, we have found that, in fact, if you look at the resale transactions, there were transactions from buyers of that particular ethnic group. So, it is not fair to say that there are no buyers from that particular ethnic group and, therefore, I cannot sell, because the resale market transactions do indicate that buyers from that ethnic group are, indeed, making resale transactions. We will continue this approach. I think that EIP remains, but we exercise flexibility on a case-by-case basis.