ST Forum : Relook price benchmark for first flats

16 Feb 2011,
Three Budget wishes

Relook price benchmark for first flats

AS THE father of a daughter who will be entering the market for a flat with her fiance for the first time, I wonder if the issue of housing affordability can be addressed if the Housing Board changes the way it sets prices.

Currently, new HDB flat prices are benchmarked against resale transaction prices. This approach worked well in the past because it was aimed at solving a simpler situation reflecting organic population growth and housing upgrading.

Today, while the first-time home market segment remains as robust as it was previously, the resale market has been hammered by a demand shock from a very sizeable segment of permanent residents.

Given that the resale market and first-time segments have different dynamics, and as the prime policy concern is aimed at helping first-time buyers, should we now decouple the benchmarking of new HDB flat prices from resale prices?

There may be alternative ways to set prices that can strongly couple with affordability - for instance, prices can be indexed to a multiple of, say, average starting salaries, or salaries of a percentile of taxpayers in the 25 to 30 age group.

I am not sure if the idea is coloured by my daughter's dilemma, but many of my friends have also confided that they were forced to fork out hefty sums to help their children buy their first flats.

I cannot see how this can be sustainable for future generations when our children's children come knocking.

Chiang Shao Soong