Questions about HDB flats
Jan 7, 2023
By   Internet
  • Guide
  • HDB Pricing
  • HDB Costs
  • HDB Prices
Abstract: The price of HDB flats is a long-standing topic of concern, and it has become the focus of public opinion again this time because of the escalating resale price.

How is the pricing of BTO HDB flats set? Why is it not transparent?


HDB is the largest housing developer in Singapore and some people compare it with private developers.


The pricing principles of government HDB flats and private developers are completely different.


While private developers consider profit in pricing, HDB is only concerned with the affordability of HDB flats and profit is not a consideration.


This is because the mission of HDB is to help Singaporeans to own their homes.


HDB is the place where people raise their children, where they live, and where they build strong communities.


Despite this, there have been allegations that HDB does not disclose the full details of each HDB project and is not as transparent as private developers.


According to the HDB, the pricing of new HDB flats contains a lot of public information.


I. Price comparison between new HDB flats and nearby resale HDB flats


In each round of pre-purchase HDB sales activities, the selling price of new HDB flats is disclosed along with the recent resale price of similar HDB flats in the vicinity for reference. The difference between the two price ranges roughly reflects the amount of government subsidy placed on individual projects.


For example, in Kallang Horizon, a pre-purchase HDB project in Kallang Whampoa just launched in November, the selling price of a four-room flat without purchase subsidy ranges from $509,000 to $690,000, while the resale price of a nearby HDB flat ranges from $638,000 to $933,000.


Based on this projection, the amount of subsidy invested by the government is about $130,000 to $240,000, and the amount of subsidy for other new projects in this round is not far off.


II. Provide several examples of housing types that are affordable to families with different incomes


This can also help buyers to choose the HDB flats that meet their budget and needs. In contrast, private housing projects do not usually display this type of information.


Does HDB pricing increase with cost?


The development cost of a new HDB project is mainly made up of construction and land costs.


HDB has repeatedly emphasized that the pricing of new HDB flats is not related to development costs.


One of the most direct manifestations of this is that construction costs rose by nearly 30% during the coronary epidemic, but instead of passing on the costs to buyers, subsidies were increased to keep the prices of new HDB flats stable, and thus HDB's deficit widened further.


From an affordability point of view, the median household income of local residents in employment has increased by 26% in the past decade, and the increase in the selling price of new HDB flats has remained between 16% and 22%, indicating that residents can still afford new HDB flats.


How do you know the construction cost of HDB flats?


HDB points out that the construction and development costs of pre-purchased HDB projects can also be found on the public platform.


Through HDB's website and the government's e-commerce website GeBIZ, the public can view the contract value of each project winner, which is the construction cost of the project.


Private developers do not disclose this figure.


To find out the cost of building HDB flats and the proceeds from the sale of the flats, you can refer to HDB's annual reports to find out the total sum of costs and revenues.


This is similar to the practice of private developers, whose annual reports usually show how much profit the company made, while HDB's annual reports show a deficit every year.


HDB land prices are cheaper than private housing?


Land is part of the national reserve, although HDB is a public housing developer, it has to pay the fair market price of land when building HDB flats to ensure that it does not use the national reserve and spend future money.


However, the land used to build HDB flats is cheaper than private housing in the same area.


This is because the chief valuer took into account that HDB land is intended to provide affordable housing for people and is a public good, and HDB buyers have to meet more conditions to purchase pre-purchased HDB flats, such as income restrictions, must be a citizen and must live in the minimum number of years before resale.


The price of new HDB flats has also gone up?


Over the past two years, the resale price of HDB flats has been rising, with millions of HDB flats being sold in various districts, and people are worried that the next generation will not be able to afford HDB flats or become slaves with long-term mortgages.


According to the HDB's explanation, the resale price of HDB flats is soaring high, but it does not affect the sale price of new HDB flats. Because the government will adjust the subsidy so that people can afford to buy.


According to the HDB's explanation of pricing, it will first establish the market price of new HDB flats based on three major factors, and then give a substantial subsidy on top of that so that the new HDB flats will be sold at an affordable level.