Wednesday, April 17, 2019

Tough to get ‘balance right’ when pricing HDB flats in central areas: Lawrence Wong

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It is difficult to get the “balance right” when it comes to pricing public housing flats, particularly for those located close to the city centre, said National Development Minister Lawrence Wong.

07 MARCH, 2019

SINGAPORE — It is difficult to get the “balance right” when it comes to pricing public housing flats, particularly for those located close to the city centre, as the Government has to weigh between pricing them to market value and keeping housing affordable, said National Development Minister Lawrence Wong.

Speaking during his ministry’s Budget debate on Thursday (March 7), Mr Wong was responding to a concern raised by Nominated Member of Parliament (MP) Walter Theseira about social stratification in housing estates.

Associate Professor Theseira, a labour economist with the Singapore University of Social Sciences, had pointed to the widening price disparities between Housing and Development Board (HDB) flats located close to the city centre and those that were not.

Acknowledging the challenges that the Ministry of National Development (MND) faces, Mr Wong said: “It’s difficult to get this balance right”

“If you price it to market, then only the very well-off can afford. If you want to make it affordable, the only way is through a big discount to the BTO (Build-to-Order) price.”

However, Mr Wong said that handing out discount through HDB’s sales exercises of upcoming public flats — also known as BTO — would lead to a “lottery effect”.

“The lucky guy who gets the flat gets a so-called windfall compared to others who buy flats elsewhere. Then it’s not a fair distribution of housing subsidies,” he added.

The long-term solution to tackle this problem is to “ensure that every part of Singapore is well developed” and that each HDB precinct has good amenities and facilities, as well as convenient access to transport network and job centres close to home, said Mr Wong.

“Public housing must continue to integrate Singaporeans of all backgrounds — we must never become segregated by class, race or income,” added the minister.

However, Mr Wong also recognised that these efforts do not “automatically equalise property values”, but that the Government can at least “temper some of the excesses in the market”.

The minister also noted that some residents have an attachment to a particular place that goes beyond “monetary value”.

Assoc Prof Theseira also said that the “favouring of private development over public use for high-value locations” further compounded the problem of social stratification. In a follow-up question on Thursday, he asked if there would still be public housing estates in prime locations with current ones set for redevelopment due to age.

“Will there continue to be a role for public housing even in the heart of town, even in very prime areas? If so, what can be done to ensure that such flats continue to reflect the broad majority of Singaporeans, rather than just the elite,” he said.

In response, Mr Wong said that the Government intends to continue “injecting public housing” in the central areas of Singapore.

“We have already been doing so in small pockets and we will plan to do so in a bigger way with long-term rejuvenation,” he added.

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