A flurry of negative feedback has emerged on the social media after it was announced that the priciest-ever new HDB flats went up for sale in Tampines under a Design, Build and Sell Scheme (DBSS).
Five-room flats at Centrale 8, built by developer Sim Lian, will cost $880,000. This works out to be almost $750psf.
The developer had previously paid $261psf for the land.
MND Minister has clarified that DBSS flats are actually not HDB, but a type of housing between HDB and executive condominiums (EC).
DBSS flats are public housing units designed and built by private-sector developers and they typically come with more luxurious fittings. Prices for the units are not stipulated by HDB nor is there any pricing formula set out in the original contract.
But I do find it hard to reconcile the fact that this developer is able to price freely for something that is supposed to be public housing.
After all, buyers of new DBSS flats are able to get a $30,000 grant if they meet the eligibility criteria. This makes the units available at a discount compared to similar private housing. Furthermore, they are available to people in the monthly income range of $8,001 to $10,000.
Nevertheless, Minister Khaw had said that while they are not able to tell the developer to change it’s price, there are things that both HDB and would-be buyers can do. To me, that is a very clear “yellow card” to the developer.
1) HDB will be ramping up larger BTO launches and pricing them appropriately.
2) Buyers should walk away if they find the prices too high.
Combined with the fact that the income ceiling of $8,000 for new HDB flats will probably be raised very soon, this developer might very well be forced to give a discount on its original price when the buyers in the $8,000 to $10,000 income range all decide to apply for normal HDB units instead.
Property prices is hugely influenced by demand, supply and sentiment issues. Supply is now playing catch-up with 26,000 HDB BTO to be released this year. In the preceding five years, there were only:
- 16,000 BTO in 2010
- 9000 BTO in 2009
- 8400 BTO in 2008
- 6000 BTO in 2007
- 2400 BTO in 2006
That supply was clearly insufficient to match with our growing population over the past five years.
