If the income ceiling for Build-To-Order (BTO) flats is raised, National Development Minister Mah Bow Tan will be watching closely one set of figures: The average incomes of applicants for each flat type.
Based on those numbers, he will price the flats within a range they can afford. And in the long term, it will be a price range equivalent to a monthly mortgage within one-third of household income.
That is how he will manage affordability for the future, Mr Mah told Today in a one-to-one interview, two days after the surprise announcement that the income ceiling for BTO flats may be raised to S$10,000, from S$8,000.
News of the six-month review has come both as a relief to some middle-income Singaporeans and a concern to others.
Apart from the worry that BTO prices may creep up further, the question is whether the queues will get longer.
Speaking at a PAP Community Foundation kindergarten in Tampines, Mr Mah made his second promise: He will bump up supply to meet any increased demand if the income ceiling is raised.
One way to gauge demand is to look at the application numbers of current BTO launches, although it may not be a “perfect indicator”, as there are various queues for different flat types in different areas, he said.
The income ceiling review comes after a lot of feedback from the sandwiched class, Mr Mah said, and also on the back of strong economic growth and the National Wages Council’s call for higher wages.
And as he shared more on what homebuyers can expect, he also gave his take on the big housing debate at these elections. To the minister, much of the current debate is on whether a 30-year loan is too long.
“But if you want to take a 20-year loan, you can do so … whatever loan you take, the rule of thumb is don’t spend more than one-third of your salary on housing. And that, in the final analysis, is what people consider to be affordable,” he said.
The Housing and Development Board now prices new flats such that buyers spend less than 25 per cent of their household income for monthly mortgages on the 30-year loan.
In the last two years, though, property prices have risen sharply. And this is what Mr Mah wants to stress: Singaporeans should not take the “very abnormal situation” now as a gauge of price increases in the future.
Noting that property prices fluctuate in cycles, he said: “It’s very important for people to realise that things don’t just keep going in a straight line. And to base our assumptions and to base our approach on this basis, I think, would be a bit dangerous.”
The anxiety about affordability and availability of flats was not there four years ago, he said, and what the Government is trying to do is to stabilise the market.
Opposition parties have taken on Mr Mah over the housing issue and with the latest BTO review, National Solidarity Party secretary-general Goh Meng Seng has said the income ceiling should be lifted entirely “to provide a mechanism to re-adjust the private property prices when it’s too hot”.
Asked for his comments, Mr Mah said he “doesn’t see” how that will work and that, without a ceiling, even the high-income group will get a share of housing subsidies.
Still, Mr Mah had this to say about his NSP opponents in Tampines Group Representation Constituency: “We treat them as respectable people because they’ve come forward to offer themselves as alternatives. It’s much better than hiding behind anonymity and criticising.”
Asked if he felt that the criticisms against him over housing issues were fair, he said without hesitation: “Of course.”
“Anybody who doesn’t get a house the first or second time, they’ll be unhappy,” he said. “Anybody who … looks at the house price his friend bought three years ago, he’ll be unhappy.
“(But) can we sell a house in today’s market at a price three years ago? Will that be fair? I think that’s the issue.”
Source : Today – 5 May 2011