Application rates for Build-To-Order and Sale of Balance flats

This was a Parliamentary Question (PQ) I asked the National Development Minister in Parliament on 20 October 2011, regarding the lower application rates for smaller HDB flats, and the supplementary question I posed following the Minister’s answer.

This was a Parliamentary Question (PQ) I asked the National Development Minister in Parliament on 20 October 2011, and my supplementary question following the Minister’s answer.

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10 Mr Gerald Giam Yean Song asked the Minister for National Development what are the reasons for the lower application rates for smaller (2-room and 3-room) Built-to-Order (BTO) flats and Sale of Balance Flats (SBF) as compared to larger (4-room and 5-room) flats in recent HDB flat sales exercises.
Mr Khaw Boon Wan: Sir, in last month’s launch of Build-to-Order (BTO) flats, the application rates for 3-room, 4-room and 5-room flats were 1.8, 1.6 and 2.4 times respectively. No 2-room BTO flats were offered. For the Sale of Balance (SBF) flats, the application rates for 2-room, 3-room, 4-room and 5-room flats were 0.9, 8.2, 11.9 and 11.1 times respectively. As the Member has correctly observed, the larger flat types tend to attract higher application rates.
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HDB provides a range of flats to cater to Singaporeans with different budgets and life-cycle needs. In planning the supply of the various flat types, HDB takes into account changing demographic profiles, as well as housing needs and propensities. The bulk of the new flats supplied are larger flats to meet first-timer households’ needs for space, to cater to their growing family size. At the same time, we also need to provide a good number of smaller flats to help lower-income households become homeowners and second-timers right-size. The smaller flats will also be needed for our ageing population, allowing more seniors the option to move into smaller flats. Although the application rates differ at the time of launch, all the flats eventually get taken up, as they are completed.
Mr Gerald Giam Yean Song: Mr Speaker, I have three supplementary questions. First, there has to be a reason why there is a lower application rate at that time that flats were launched. Is it because firstly, the poor are not able to navigate the application process, which involves a lot of online submissions and receiving alerts when the launches are eminent? Or secondly, is it because the price of these smaller flats is still out of the income range of these applicants? And thirdly, if the answer to the second question is “yes”, would the Minister consider lowering the price of 3-room and smaller flats in order to make them more affordable to the lower income?
Mr Speaker: Minister, you have one minute and thirty seconds for your reply.
Mr Khaw Boon Wan: Let me try, starting from the last. Making 3-room flats more affordable compared to larger flats – the answer is “yes”. In fact that is so. Yesterday, I gave Members some illustrations about the affordability of 3-room, 4-room and 5-room flats. Generally, the BTO prices less the housing grants equal to about five years of annual salary. But for 2-roomers, it is less than three years of annual income, after all the grants. Members can see there is a clear difference between the pricing of smaller flats compared to bigger flats. As to the Member’s first question about the lower application rates and what could be the reasons: well, the application rate is a function of several factors such as how many units are put onto the market, how many people apply. And you cannot get it precisely matched. It is very hard to do it, such that you get an exactly identical application rate for all the different room types. I think that would be quite impossible. Even if you are able to project to such precision, that also cannot be the way we do things because when we design the housing estate – let us say in existing Tampines — we have to know what is the current housing distribution in Tampines and take that into account. But as I said, regardless of the different application rates, at the end of the day, no units get wasted. They will all be taken up finally. As to whether a lack of IT skills was a deterrent for the lower income applicants, it should not be. At HDB Hub in Toa Payoh, we have staff there to assist, if needed.
3.00 pm
Mr Speaker: Order. End of Question Time.

Mr Gerald Giam Yean Song asked the Minister for National Development what are the reasons for the lower application rates for smaller (2-room and 3-room) Built-to-Order (BTO) flats and Sale of Balance Flats (SBF) as compared to larger (4-room and 5-room) flats in recent HDB flat sales exercises.

Mr Khaw Boon Wan: Sir, in last month’s launch of Build-to-Order (BTO) flats, the application rates for 3-room, 4-room and 5-room flats were 1.8, 1.6 and 2.4 times respectively. No 2-room BTO flats were offered. For the Sale of Balance (SBF) flats, the application rates for 2-room, 3-room, 4-room and 5-room flats were 0.9, 8.2, 11.9 and 11.1 times respectively. As the Member has correctly observed, the larger flat types tend to attract higher application rates.

HDB provides a range of flats to cater to Singaporeans with different budgets and life-cycle needs. In planning the supply of the various flat types, HDB takes into account changing demographic profiles, as well as housing needs and propensities. The bulk of the new flats supplied are larger flats to meet first-timer households’ needs for space, to cater to their growing family size. At the same time, we also need to provide a good number of smaller flats to help lower-income households become homeowners and second-timers right-size. The smaller flats will also be needed for our ageing population, allowing more seniors the option to move into smaller flats. Although the application rates differ at the time of launch, all the flats eventually get taken up, as they are completed.

Mr Gerald Giam Yean Song: Mr Speaker, I have three supplementary questions. First, there has to be a reason why there is a lower application rate at that time that flats were launched. Is it because firstly, the poor are not able to navigate the application process, which involves a lot of online submissions and receiving alerts when the launches are eminent? Or secondly, is it because the price of these smaller flats is still out of the income range of these applicants? And thirdly, if the answer to the second question is “yes”, would the Minister consider lowering the price of 3-room and smaller flats in order to make them more affordable to the lower income?

Mr Speaker: Minister, you have one minute and thirty seconds for your reply.

Mr Khaw Boon Wan: Let me try, starting from the last. Making 3-room flats more affordable compared to larger flats – the answer is “yes”. In fact that is so. Yesterday, I gave Members some illustrations about the affordability of 3-room, 4-room and 5-room flats. Generally, the BTO prices less the housing grants equal to about five years of annual salary. But for 2-roomers, it is less than three years of annual income, after all the grants. Members can see there is a clear difference between the pricing of smaller flats compared to bigger flats. As to the Member’s first question about the lower application rates and what could be the reasons: well, the application rate is a function of several factors such as how many units are put onto the market, how many people apply. And you cannot get it precisely matched. It is very hard to do it, such that you get an exactly identical application rate for all the different room types. I think that would be quite impossible. Even if you are able to project to such precision, that also cannot be the way we do things because when we design the housing estate – let us say in existing Tampines — we have to know what is the current housing distribution in Tampines and take that into account. But as I said, regardless of the different application rates, at the end of the day, no units get wasted. They will all be taken up finally. As to whether a lack of IT skills was a deterrent for the lower income applicants, it should not be. At HDB Hub in Toa Payoh, we have staff there to assist, if needed.

Mr Speaker: Order. End of Question Time.

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.

One thought on “Application rates for Build-To-Order and Sale of Balance flats”

  1. HDB has typically targeted families, so the 4 and 5 room flats would be more popular. Even though on the lower end of the income scale would still want to aspire to own at least a 4 room flat to provide for sufficient space. This is reflected in the application rates.

    I would say if 2 and 3 room flats are opened up to singles, we could see an increased initial take-up rate. Of course, this would move away from the government’s current husband-wife / family approach. Even saying that smaller flats are to cater to seniors may not be necessary true, as one does accumulate a lot of belongings’ over the decades and that a smaller flat will not be large enough to accommodate them.

    It would be good to look at the average size of households in SG, and find data of projected household formations to project future demand for HDB flats.

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