HDB approach reflects true subsidy

HDB approach reflects true subsidy

 

WE refer to Mr See Leong Kit’s comments on the pricing of HDB flats in his letter ‘HDB contributing to price spiral’, (BT, June 20).

 

HDB adopts a market-based pricing approach so as to reflect the true subsidy that buyers are enjoying. Under this approach, HDB determines the market value of the flat, based on its location, the finishes and other attributes. Then, it sells the flat at a discount to the market value.

 

HDB buyers understand this, and appreciate that new HDB flats are priced lower than resale flats. Similarly, when they want to sell their flats in the open market, they are allowed to do so at the prevailing market value, not at their cost of purchase of the flat.

 

We also wish to highlight that under this approach, the current sharp escalation in construction costs does not directly affect the selling price of HDB flats.

 

Currently, a new 4-room flat can cost close to $300,000 to develop, taking into account land, building and other costs. This is significantly higher than the subsidised price of a 4-room flat sold by HDB at about $200,000-$260,000.

 

Kee Lay Cheng (Ms),

Deputy Director,

Marketing & Projects for Director,

Estate Administration & Property,

Housing & Development Board

 

Source: Business Times

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