Published September 18, 2008

Strong demand cuts HDB's stock of unsold units

Bookings for new flats jump 49% to 12,580 in financial year ended March

By EMILYN YAP
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THE strong property market in the Housing and Development Board's (HDB) last financial year whittled down its stock of unsold flats. The board now holds about 1,500 completed units, compared with 3,500 last year.

Reflecting the boom, bookings for new flats rose 49 per cent year on year to 12,580 in the financial year ended March 31.

'There has been an increase in demand for new flats,' HDB chief executive Tay Kim Poh said at a press briefing on the board's annual report. 'We have been ramping up the building programme.'

The growing need for public housing prompted HDB to offer 8,400 new Build-To-Order (BTO) flats this year - 40 per cent higher than the 6,000 last year and more than three times the 2,400 in 2006.

Of this year's planned supply, about 5,000 new flats have already been launched, leaving more than 3,000 for the remaining months of 2008.

More flats from the BTO pipeline will be situated at Punggol and Sengkang. About 2,500 units are in Punggol, as part of HDB's plan to build up a critical mass to support a thriving town centre. The other new flats will be spread across various towns including Yishun, Woodlands and Bukit Panjang.

HDB has not decided on the supply of new BTO flats for 2009.



'We'll monitor demand,' said Mr Tay. 'When necessary, we'll make adjustments to our building programme to make sure our supply matches demand.'

ERA Asia-Pacific's assistant vice-president Eugene Lim said: 'So far, take-up for new BTO flats has been pretty good.'

Demand comes largely from first-time buyers, he said. But it can take up to three years for such flats to be ready, so some buyers turn instead to existing units in the resale market.

PropNex chief executive Mohamed Ismail expects demand for resale housing to remain strong, and reckons the Resale Price Index may grow another 5 per cent in H2 2008. The HDB market should suffer little or no effect from the US financial crisis, he said.

According to HDB's Mr Tay, resale flat demand has been driven by various market segments, including permanent residents and first-time and second-time home buyers. No details have been released on the profiles of resale flat buyers.

Beyond new and resale flats, demand for rental flats has also grown, prompting HDB to build another 2,000 units this year.

It plans to increase its stock of rental flats from 42,000 now to about 50,000 in the next few years and is reviewing eligibility rules to ensure these units go to people in genuine need.

HDB completed 6,247 flats last financial year, more than three times the number the year before. HDB also had 18,073 flats under construction, 27 per cent more than in the previous year.

Against a backdrop of rising construction costs, Mr Tay reaffirmed HDB's commitment to keep flats affordable. 'We are monitoring the situation closely,' he said.

According to HDB, a new four-room flat can cost about $300,000 to develop today, taking into account land, building and other costs. This is higher than the subsidised price of a four-room flat sold by HDB at $200,000 to $260,000.

HDB's greatest challenge is to continue to ensure that people in the mass consumer segment have affordable roofs over their heads, said PropNex's Mr Ismail. 'This may mean having to review certain policies, such as the income ceiling for HDB flat applicants, and perhaps even abolishing the resale levy.'