As per Nov 29, 2007's BT, the Housing and Development Board said they "will continue to monitor demand and could offer another 6,000 units through its build-to-order (BTO) system. However, prices are also likely to go up."
[Why? I ask myself.]
Saying that he did not want to 'fudge the issue', National Development Minister Mah Bow Tan said: 'Prices will go up as a result of resale prices going up.' Mr Mah was speaking at the launch of two new housing projects under the BTO system.
Mr Mah's representation solicited an immediate response from Lu Keehong who wrote to BT's Forum on Nov 30, 2007,. Lu made the following queries about Mr Mah's position on HDB and its pricing policy.
1) Since when the new HBD flat prices are to be influenced by resale market prices?
2) As current resale prices are on an up trend, thus higher prices for new flats expected. So Lu asked whether vice versa was true in the last few years when property prices were in doldrum? Ie. did HDB price its flats lower in the last few years?
In conclusion, a few simple questions.
1) How does HDB price its flats of various sizes?
2) How does HDB determine its supply?
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On Dec 12, 2007, Ms Kee Lay Cheng, the Deputy Director of HDB, replied in BT Forum:-
"The prices of new HDB flats are based on the market prices of resale HDB flats, and not their costs of construction."
"By selling new flats with a market subsidy, HDB has been unable to recover the development cost of new flats. HDB has incurred an average deficit of $457 million a year in its home ownership programme in the last five years."
So when HDB sells its new flats at below market prices, a subsidy has been given by the Government? Am I right? I wonder whether the formula is published somewhere on HDB website. Can someone tell me please?
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