By Olivia Siong | POSTED: 03 Jun 2013 5:16 PM | CNA


The Housing and Development Board (HDB) has been ramping up the number of flats it has launched in the last few years but National Development Minister Khaw Boon Wan said this number could slow down after 2015 to prevent a glut in the market.

Mr Khaw was speaking to the media on Monday after witnessing the handover of a completed Build-To-Order block in Woodlands from the contractor to HDB.

25,000 BTO flats were launched in 2011 and another 27,000 were launched last year.

While this has helped satisfy the backlog of demand from first and second time home buyers, Mr Khaw stressed this cannot continue.

This year alone, HDB plans to launch at least 25,000 new flats but Mr Khaw said this continued ramped up supply is not sustainable in the long run.

Mr Khaw said he is not as worried about a small glut forming in the public sector as he wants to help more groups, like singles. However, he cautioned the market needs to go back to a steady state.

He said: “Don’t expect this 25,000 units per year or the construction ramped up programme to continue forever. It can’t be. It is not sustainable, bearing in mind that new family formation is only at 15,000 a year. As we clear the back log, we should be able to move back to the steady state.

“The steady state does not necessarily mean 15,000 units construction per year. Some may prefer to buy resale flats so that they can move in immediately. More importantly, they can select which flats to buy and which areas to buy because their parents might not be in the non-mature estates or their parents might not want to move into non-mature estates so we should always keep those options open.”

Mr Khaw also said he is confident that HDB will be able to deliver on the flats it has promised.

This is despite the tightening of foreign manpower into Singapore. Mr Khaw pointed out the use of pre-fabricated components in HDB projects has helped to address this constraint.

Mr Khaw said HDB is on track to deliver the 13,600 units planned for completion this year and he added the effect of the ramped up supply is beginning to be felt this year while the full effect will be felt over the next two years.

About 6,000 HDB residential units have already been completed as of end May.

“The steady state is a sustainable property market. I think property prices will probably always float upwards unless the economy crashes. We hope not to have prolonged recession. So long as economy is growing steadily, wages will go up steadily, and therefore property prices will also go up steadily.

“But there will be times when the asset appreciates much faster than wage increases, like in the last five years, so that is not sustainable. That was a period for happy sellers and very unhappy buyers but we are slowly tilting and hopefully we will reach a happier state, a fairer state between buyer and seller sometime soon.”

On the ongoing ‘Our Singapore Conversation’ on housing, Mr Khaw said there have been plenty of suggestions but he addressed some participants’ calls to scrap the Cash-Over-Valuation (COV) component for HDB resale flats.

He pointed out the transaction is an agreement between buyer and seller and said if home buyers are keen to pay above valuation, there is little he can to do to prevent it.

“Sometimes, you may love the place so much that (you are) prepared to pay higher – that is how COV crops up. How do I prevent it from happening? If you insist on doing so, (either by) under the counter or giving an ‘angpow’ (red packet) three days later in a wet market somewhere, how am I going to catch you? So it doesn’t work to say let’s ban COV.”

Mr Khaw added he is working on making BTO flats more affordable.

While he hopes to bring down the cost from five years of a couple’s annual income to four years, Mr Khaw said home buyers will also need to have the right expectations.

– CNA/fa