ST : Mah Bow Tan Q & A‏

Apr 7, 2010

Q & A

Q Some new HDB flats have been criticised for being too expensive. Is this justified?

When you look at the whole menu of flats today, compared to those in the 80s, it's totally different because times have changed. People's expectations have changed.

So it's a real challenge. Why? Because when I build those new generation flats, people go: 'Wah, HDB flats so expensive, why are you charging up to $600,000?'

I say: 'Look, those who are earning close to $8,000 want those kinds of flats (like Pinnacle@Duxton or Dawson), and they can afford it.' And they rush for it, because they know that even though they are paying that price, the flat is worth much more.

If you are earning less, at $3,000 to $5,000, HDB has got other flats for you. Such flats are the bulk of HDB's supply.

If we were just catering to the bottom 20 per cent minimum model, I don't have to do all this. I'll just build basic, standard three-room flats. That's it. Everybody will be eligible for three-room flats of standard model and size only.

Q Why has housing supply not risen quickly enough to meet rising demand?

The point is when demand shoots up, that's where we have to increase the supply. And this supply and demand mismatch is something that we've been trying to meet through HDB's BTO (build-to-order) system.

For new flats, we are able to meet the demand right now. The increase in prices is now in the resale flat market, and it's there that we have taken a hands-off approach, because we don't control the prices.

Q Some home buyers have called for the cash-over-valuation (COV) in the resale market to be removed or controlled. Is this at all possible?

If we decide we don't want to control resale price (as HDB has adopted a market system), then we can't control the COV. We just have to let it be subject to market forces...and when the market comes down, COV prices will come down. The COV is not unique to (the HDB market), it's part and parcel of a total selling price, even for private homes.