Tag Archives: HDB

Why we peg to market rates: HDB

Posted on 25 Sep 2009 | 1 comment

Letter from Ignatius Lourdesamy Deputy Director (Marketing & Projects) for Director (Estate Administration & Property), Housing & Development Board

I REFER to the letter “It’s not all about the numbers”, (Sept 16) by Mr See Leong Kit.

It is misleading for Mr See to use the example of flats at Pinnacle@Duxton to conclude that HDB is profiteering from the sale of public housing flats. HDB is able to recover the cost for some projects, while incurring significant losses for others. Overall, in the last three years, HDB incurred an average deficit of $1,045 million a year in its home ownership programme. This cost subsidy, which has to be financed by the Government, is reported in HDB’s audited financial statements.

Why does HDB benchmark its flat prices to market in spite of these huge deficits? Because this is the fairest way of pricing new HDB flats while ensuring equitable distribution of subsidies.

How is this done? HDB first determines a flat’s equivalent market price by taking into account various factors such as location, finishes for the flat and other attributes. This price reflects the flat’s value at the point of sale. It is what people are willing to pay in the open market. HDB then sells the flat at a significant discount, which is the subsidy given by the Government. Continue reading →

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HDB rental market stabilises for now

Posted on 24 Sep 2009 | Comments Off on HDB rental market stabilises for now

OVER one year, HDB-approved sub-letting cases surged by some 20 per cent from 12,808 units in 2007 to 15,344 cases in 2008. In the same period, the increased demand pushed HDB rentals across the board upwards by 23 per cent.

The main tenants for HDB flats are typically Asian professionals, service-industry staff, foreign students and permanent residents (PRs).

Typically, 3-room flats account for about 35 per cent of rental transactions; 4-room – 34 per cent; 5-room – 23 per cent; and executive flats – 8 per cent.

The market hit its peak in Q2 2008 with an all-time high of over 4,100 rental transactions. However, with the slowdown in the economy and overall employment, rental transactions slowed to an average of 3,700 units a quarter for the next one year (Q3 2008 to Q2 2009).

This has helped to stabilise median monthly rents at $1,500 for 3-room flats; $1,900 for 4- and 5-room flats; and $2,000 for executive flats; for now.

However, as the two integrated resorts step up their hiring of foreign staff, we could see the rental demand for HDB flats increase in the months ahead.

Also, as the economy recovers, new demand from inbound foreign professionals and students may further increase demand.

We may see quarterly demand nearing 4,000 units per quarter next year and this would probably push rentals up again, possibly by another 5-10 per cent.

The market hit its peak in the second quarter of ’08.

Source : Business Times – 24 Sep 2009

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