Singapore government shows hand in wanting to make smaller HDB flats

Singapore government wants to make smaller flats - essentially raising prices.
Commentary by www.PropertyBUYER.com.sg

"SINGAPORE: Instead of reducing the HDB flat lease of 99 years to make the flats more affordable, the government prefers to use other methods to help those with a lower income own a flat, said National Development Minister Mah Bow Tan.

Mr Mah told Parliament the HDB now provides additional grants to the lower-income group and builds smaller flats that are priced more affordably. Another way is to make sure higher-income flat applicants do not compete with them for the same flat - this is why the HDB has a income ceiling for applicants of two-and three-room flats. "With all these in place, we do not see any problem in making HDB flats affordable for first time lower-income families."

Having shorter leases of 60 years for young couples could also be an issue with time - "we are going to run into trouble especially when that particular family grows old", said the minister."

Mr Mah was also asked by MP Cedric Foo if Singaporeans are not buying the flats situated in poorer locations because they are not "priced correctly".

(TODAY, Ong Dai Lin, Grants, smaller flats instead of shorter lease tenure, 9 March 2010)

Voila, Singapore Government finally shows hand in one of the most blunt admission that it is building ever smaller flats. We predicted this in many earlier articles in Q4, 2009 and early this year that the government land sales program will lead to 2 possible outcomes.

One outcome is that the property prices quantum rise. If affordability is not there, the developer will instead sell a smaller size unit at higher per square feet (PSF) to maintain their margins after paying through their nose for land.

Another outcome is that property developers will sell a lesser lease. As seen in quite a few developments already, the property developer maintains a master lease of Freehold or 999 years leasehold and sells the property as a 103 years lease hold.

Now even HDB wants to it's flats at rock solid prices. If you cannot afford those properties at the prices HDB is asking, then HDB will help you afford it.

HDB will offer you smaller size flats.

Isn't this great? At least you will not be left behind.

HDB is indeed benevolent.


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