While the new prime location public housing (PLH) model can help to curb price increases of resale HDB flats in prime locations, I feel it does little to address the current inflated HDB resale market (Subsidy clawback, 10-year MOP for new prime flats, Oct 28).
A record number of HDB flats were sold for $1 million or more this year, most of them in prime locations. Prices of resale HDB flats in other districts have also risen, yet income levels have not kept up with the rise (5-room Bishan flat sold for $1.36m after just 3 days, Nov 1).
Wealthy families with high incomes who are unable to buy PLH resale flats due to the income ceiling may turn to flats in other districts – especially those that are close to the prime locations, but which do not fall under the PLH. This will in turn boost demand and increase resale prices. Differences in resale prices across locations may narrow because of this, but it does not solve the issue of rising resale HDB flat prices.
Having an income ceiling and clawing back subsidies for prime location flats may just end up shifting the problem from one location to another, and does not solve the underlying issue.
Moreover, implementing the model only for future projects means its effect on the resale market may be seen only after about 15 to 17 years – taking into account construction time and the new minimum occupation period (MOP).
This means current prime location flats will still continue to transact at outrageous prices, as they are now “limited edition”.
I think the Government should think about applying the scheme to all flats in prime locations that have not reached temporary occupation permit (TOP) status.
Flats that have reached TOP status can be excused from the 10-year MOP, as it may be disruptive to families’ planning.
The new measures are welcome and necessary, but there is much room for improvement.
Teo Te Wei