Market Value of Future BTO Flats from High Demand and Prices of HDB Resale Flats and Ensuring Affordability for All Singaporeans
Ministry of National DevelopmentSpeakers
Summary
This question concerns whether high demand and prices for resale flats will impact the market value of future Build-To-Order (BTO) flats and how housing affordability can be maintained for Singaporeans. Minister for National Development Desmond Lee explained that HDB prices new flats below market value by applying significant subsidies to assessed market values derived from comparable resale prices. He highlighted that first-timer families benefit from the Enhanced CPF Housing Grant of up to $80,000 for new flats and housing grants of up to $160,000 for resale flats. The Minister noted that the average mortgage servicing ratio remains at or below 23%, allowing most buyers to service loans using CPF contributions with little cash outlay. Finally, he stated that HDB will ramp up flat supply to 23,000 units annually in 2022 and 2023, while monitoring the impact of the December 2021 cooling measures.
Transcript
59 Mr Yip Hon Weng asked the Minister for National Development (a) whether the current high demand and prices for HDB resale flats will have a knock-on effect on the market value of future HDB BTO flats; and (b) if so, how can affordability be ensured for all Singaporeans.
Mr Desmond Lee: All new HDB flats are priced below the market. When pricing new flats, HDB first establishes their market value by considering the prices of comparable resale flats nearby as well as the individual attributes of the flats and prevailing market conditions. To derive the selling prices, HDB then applies a significant subsidy to the assessed market values to ensure that new flats are affordable to those buying their first home. In addition, eligible first-timer flat buyers can also enjoy the Enhanced CPF Housing Grant (EHG) of up to $80,000, which provides further support to lower- and middle-income families buying their first home. For resale flats, the Government provides housing grants of up to $160,000 to ensure resale flats remain affordable for eligible first-timer families.
With these generous subsidies and grants, both new and resale flats have remained affordable. Over the past three years, the mortgage servicing ratio (MSR), which is the proportion of monthly income used to service mortgage instalment payments, has remained at about 23% or below for both new and resale flat buyers taking an HDB housing loan, on average. This means that buyers, generally, require little or no cash outlay in servicing the payments for their flats as their mortgage loans can be paid using their CPF contributions.
To meet the demand for HDB flats, HDB has offered about 17,100 BTO flats in 2021. HDB will ramp up the flat supply by 35% over the next two years and launch up to 23,000 BTO flats per year in 2022 and 2023. Looking ahead, HDB is prepared to launch up to 100,000 flats in total from 2021 to 2025, if needed, subject to prevailing demand. The Government has also implemented a set of measures to cool the private and public housing markets on 16 December 2021, to ensure that homes remain affordable over time.
MND/HDB remain committed to keeping public housing affordable and accessible to support the homeownership aspirations of Singaporeans and will continue to monitor housing market conditions closely.