Thursday, April 28, 2011

HDB issues data to show affordability of new flats

Straits Times: Wed, Apr 27
THE Government yesterday moved to address the growing debate on the affordability of new flats by issuing fresh data and an online video.


The Housing Board (HDB) provided new calculations to show that average prices of new flats last year remained within reach of first-time home buyers in different income groups.


Key to the affordability of new flats is the Government's Additional Housing Grant (AHG), which is given to most first-time buyers with a household income of less than $5,000 a month.


And in a move that lent a personal touch to his message, National Development Minister Mah Bow Tan appeared for the first time in a video message posted on his ministry's website assuring Singaporeans that housing will remain affordable.


He acknowledged in the five-minute video that 'the question that people are asking, and worried about, is whether... they can continue to afford good-quality homes'.


'Here, I would like to make this categorical assurance and commitment that we will continue to provide good-quality, affordable homes for as many people as possible, through good times and bad,' he said.


'And not only provide the homes but sustain the value of those homes over time, as our economy grows (and) as Singapore grows. That is the commitment that this government makes.'


His comments add to a debate on public housing that has become one of the hottest topics this General Election.


Opposition parties have called for new flat prices to be further reduced, with some suggesting that they be pegged to the median incomes of Singaporeans or to the cost of building them.


Meanwhile, the HDB provided new data that supports Mr Mah's claim on Sunday that most first-time buyers of new flats will need to fork out little or no cash to pay for their new HDB flats.


He cited the example of how a couple below the age of 30, who earn a combined $4,000 a month, need to work for only half a year to buy a new four-room HDB flat with no cash upfront and less than $50 in cash in monthly home loan payments.


These numbers have since been questioned by some ST Forum letter writers and netizens online.


Some have calculated that for such a couple to fork out so little cash after working for only six months, an HDB flat they buy has to be priced at $110,000, whereas the average price of a new four-room flat is around $270,000.


In its response to media queries yesterday, HDB said that Mr Mah's calculations are correct because they include an Additional Housing Grant (AHG) of $10,000 which is given to a household that earns between $4,001 and $4,500 (See table).


It produced more examples to show that because of the AHG, which can go up to $40,000 depending on the household income, couples buying two- or three-room flats and earning $1,500 and $2,300 a month respectively do not even need to wait a single month to be able to make the down payment for their new flats.


Mr Mah added in the video yesterday that he hopes 'Singaporeans do not forget the fundamental principles that have brought us to where we are today, which is a home-owning society'.


The principles he mentioned referred to home ownership as compared to rental, homes as an asset and homes for the masses, he said, adding: 'No other country has the same extent of home ownership that we have.'


jcheam@sph.com.sg

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