http://www.businesstimes.com.sg/sub/...35680,00.html?

Published April 21, 2011

GENERAL ELECTION 2011

HDB paying less for land is raid on reserves: Mah


THE Housing and Development Board (HDB) cannot lower flat prices by paying less for land as it would be an 'illegal raid' on Singapore's reserves, National Development Minister Mah Bow Tan said yesterday.

Paying less for land to build flats is 'not a casual matter of left pocket to right pocket as the WP (Workers' Party) have put it, but of raiding our reserves (contrary to our Constitution), which are meant for future generations, and spending the money on ourselves now', Mr Mah said.

He said last week that the WP proposal to lower HDB prices by pegging new flat prices to median incomes will hurt resale prices and increase HDB's budget deficit. The WP unveiled the proposal in its general election manifesto.

Responding to Mr Mah, WP chief Low Thia Khiang last Friday said that he believes land costs make up the bulk of HDB's expenses in building flats.

And if that is lowered by the Singapore Land Authority (SLA), HDB would not have to suffer such a loss, and savings could be passed on to first-time homebuyers, he added.

Mr Low also maintained that his party's proposal to lower new flat prices will have 'minimal impact' on resale prices.

The Hougang MP gave two reasons: The number of new HDB flats is relatively small. New flats are also subject to a minimum occupancy period of five years before they can be sold on the resale market.

In rebuttal, Mr Mah said yesterday that state land forms part of the reserves protected by Singapore's elected president.

He also maintained that if new flat prices are lowered significantly, resale flat prices will fall as more buyers will buy new flats instead of resale units.

First- and second-time homebuyers who buy resale flats formed over half (17,000 out of 32,000, or 53 per cent) of total resale transactions in 2010, Mr Mah said. These buyers are eligible to buy new flats from HDB.

'If we depress new flat prices, many of them will switch to buying new flats. This will lengthen the waiting time for all new flat buyers and depress prices of resale flats,' Mr Mah said.