BTO flat prices remain ‘affordable’ at around 5 times of median annual household income or less: Desmond Lee
SINGAPORE: Market values of new Build-to-Order (BTO) flats are determined by prices of comparable resale flats nearby, individual attributes of the flat and prevailing market conditions, said National Development Minister Desmond Lee in Parliament on Wednesday (Oct 14).
Thereafter, a subsidy is applied to ensure that flats are priced at a “significant discount” to the market, he said, adding that the approach is similar for BTO flats in mature and non-mature estates.
Mr Lee was responding to a question by People’s Action Party (PAP) Member of Parliament (MP) Gan Thiam Poh about the pricing policy of BTO flats.
“On top of the subsidised price, HDB (Housing and Development Board) also offers first-time flat buyers the Enhanced CPF Housing Grant (EHG) of up to $80,000, to give more help to lower- to middle-income households buying their first home,” said Mr Lee.
HDB introduced the EHG, which does not restrict buyers' choice of flat type and location, last year.
With all these “significant subsidies” keeping flats “affordable”, HDB BTO flat prices remain at around five times of the median annual household income or less, said Mr Lee, noting that the ratio can be nearly 10 or 20 times in other major cities in the world.
“The vast majority of first-timer families are able to buy BTO flats in the non-mature estates and service their monthly mortgage instalments using CPF, with zero or minimal cash outlay.”
While several resale flats have transacted at prices of more than a million dollars, these transactions are a “small minority” and represent less than 0.3 per cent of total resale transactions this year, or 38 out of more than 14,400 resale transactions so far this year, he said.