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2- and 3-room flats 'still affordable'

Published on Oct 21, 2011

By Daryl Chin


TWO- and three-room flats remain affordable to lower-income households, National Development Minister Khaw Boon Wan said yesterday.

Giving an example, he said the cost of a typical two-room Build-To-Order flat - restricted to buyers with a monthly household income of up to $2,000 - was less than three years of annual income, factoring in the grants available.

In contrast, the cost of larger-sized flats like four- or five-room units, sold to those with monthly household incomes of less than $10,000, would take up to five years of annual income to pay off.

In the last launch in September, the selling price of a two-room flat in Hougang after grants was about $30,000, while that of a four-room flat in Sengkang was $210,000.

Mr Khaw was responding to questions from Non-Constituency MP Gerald Giam on whether smaller-sized flats were out of reach for the lower-income group, given that application rates for these are lower than those for larger units.

He said subscription rates are due to a combination of factors. New launches cannot be planned around application rates, but have to take into account existing flat types already in the area, demographic profiles and housing needs, for instance.

'Although the application rates differ at the time of launch, all the flats eventually get taken up as they are completed,' he noted.

Mr Khaw said the HDB is also on track to build more rental flats for needy households, and should be able to clear new demand as well as applicants in the queue.

There are currently 44,000 households in HDB rental flats and 1,600 applicants on the waiting list. The average waiting time, which was previously eight months, is now six months.

The supply of rental flats will soon reach 47,000, to which another 3,000 units will be added next year. The rental stock will hit 57,000 by 2015, in line with goals set by the Prime Minister earlier this year. This will make up 5 per cent of all HDB households.

Rental flats are meant for the poor and needy who cannot afford their own home and lack family support and other housing options. They are offered at subsidised rates - ranging from $30 to $275 a month, to households earning less than $1,500 a month.

Asked by Mr Giam whether there will be more rental flats in the light of a gloomy economic outlook, Mr Khaw said that current supply is higher than usual projections. Still, such numbers are dynamic and he is keeping an open mind.

On whether HDB would abolish its partnership with commercial landlords such as EM Services for interim rental housing, Mr Khaw said he was reviewing rental policy as a whole but would abide by contracts previously signed.

Some 1,400 of the 2,200 Sers flats are offered at market rental rates while 800 are set aside for interim rental housing, which caters to the less needy. Under Sers, selected older blocks are redeveloped to optimise land use.

'My own thinking is that eventually, we will take over all the rental units and leave the rest to the market,' he said.