New rules for prime HDB flats should temper speculative demand, price hikes: Desmond Lee

TIGHTER measures for HDB flats in prime locations should help temper speculative demand and thus dampen price increases, said National Development Minister Desmond Lee at the Singapore Economic Policy Forum 2021 on Friday (Oct 29).

Lee was addressing concerns that first-time sellers of flats under the new prime location public housing (PLH) model could bump up prices to make up for the subsidies HDB will claw back at the point of sale.

The PLH model, which aims to keep prime HDB flats affordable and inclusive, was announced on Oct 27 by the Ministry of National Development (MND) and the Housing Development Board (HDB).

On top of recovering subsidies, there will also be stricter eligibility conditions for resale buyers and a longer 10-year minimum occupation period (MOP).

Why singles are not allowed to buy PLH flats, even on the resale market

Lee noted that the restrictions placed on PLH flat flow from its Built-to-Order (BTO) criteria, which currently only allows singles to buy new 2-room flats in non-mature estates.

He said the government is not taking a step backwards in this regard as the PLH model is brand new and untested in the market. HDB will also not launch many PLH flats initially.

For now, it will prioritise larger households that may need more space for their families.

Addressing concerns that a 10-year MOP is too long

Lee said a longer MOP was needed to "emphasise owner-occupation and reduce speculative demand" - which would be greater for prime location flats.

HDB's data has also suggested that owners typically live in their flats for more than 10 years before selling them, he added. He noted that HDB will still consider appeals on a case-by-case basis for those in extenuating circumstances during their MOP.

On disallowing PLH flat owners from renting out whole flats even after MOP is over

Lee cited feedback from Singaporeans who have voiced frustration at HDB flats being rented out as they feel subsidised housing should be homes and not a source of income. This applies to "normal" HDB flats, not just for PLH flats.

As PLH flats are likely to fetch high rents, the government thought it should prioritise these flats even more for those looking to buy a long-term home.

The first BTO project under this model will be located in Rochor, and launched in November. Resale buyers of these prime HDB flats will also be limited to households that earn no more than S$14,000 a month.

READ MORE:

• New rules for prime HDB flats not likely to impact private market: analysts
• Tighter rules for future prime HDB flats will weigh on windfalls from them
• Most Singaporeans want priority schemes removed, limit resale buyers for HDB flats in prime areas