November 19, 2008 Wednesday

Coming up: More smaller HDB flats

Two- and three-room units in demand from low-income families, downgraders

By Aaron Low

SINGAPORE will have more two- and three-room HDB flats next year to meet rising demand.

The Government is building these smaller flats to help more low-income families own homes and those home owners who need to downgrade because of financial difficulties.

National Development Minister Mah Bow Tan made the announcement in Parliament yesterday.

However, he did not say how many more of these flats were to be built.

Instead, he stressed these flats were to meet a 'niche demand' and that the bulk of HDB homes being built will be three- and four-roomers.

The Housing Board stopped building two- and three-roomers in the 1980s.

But in 2004, three-roomers were re-introduced. Two years later, the HDB said it would resume building two-roomers to meet increasing demand and, since then, it has put on sale 539 of them.

The growing popularity of these smaller flats is a turnaround from the mid1990s when the overwhelming demand was for bigger four- and five-room flats, with few takers for the two- and three-roomers.

However, since 1997, following the Asian financial crisis, more and more people have clamoured for them as they were forced to downgrade.

These smaller homes, meant for lower-income families, cost between $77,000 and $275,000 each.

Adding to the demand in recent years are older singles, who have been snapping up the three-roomers in central areas such as Tiong Bahru and Queenstown.

Most recently, there was overwhelming interest when 150 smaller flats - from studios to three-roomers - were put on sale last month. These were sited across the island, from Geylang to Sengkang and Marine Parade.

In one week, 2,426 applications were received.

Realtors interviewed expect the demand to keep on rising, especially with the lousy economic outlook.

PropNex CEO Mohamed Ismail foresees the 2002 scenario re-enacted next year. 'In the last cycle, with rising retrenchment figures, we saw many people who couldn't maintain their four- and five-room flats selling them for smaller ones, some doing so even at a loss.'

In Parliament yesterday, MPs worried aloud about the economic impact of the global recession on their residents.

At least three MPs, including Madam Cynthia Phua (Aljunied GRC), said they were seeing four to five people each week seeking cheaper housing options.

Replying, Parliamentary Secretary for National Development Maliki Osman assured them the Government would do all it can to help Singaporeans hold on to their homes in bad economic times.

Mr Mah noted that HDB flats are affordable, pointing out that on average, owners use less than a quarter of their monthly household income for their mortgage. This is below the international benchmark of 30 per cent, he said.

Also, seven out of 10 new flat buyers service their mortgage entirely using their Central Provident Fund savings. 'Based on this, HDB flats have remained affordable, even though property prices have risen over the years in tandem with Singapore's economic growth,' he said.

[email protected]