HDB boosts flat supply to 13,500

Ramp-up from planned 6,000 due to demand turnaround in H2

THE Housing and Development Board (HDB) estimates it has to offer 10,000 to 12,000 new flats every year for the next five years to meet demand, National Development Minister Mah Bow Tan told Parliament yesterday.

Responding to strong demand, HDB will offer 13,500 flats in 2009, he said. This is about ‘half the number of flats in Bukit Panjang or Pasir Ris town’.

Public housing was a hot topic in Parliament yesterday, as applications surged for new flats and resale flat prices soared to record levels in the third quarter.

According to Mr Mah, HDB started the year with a planned flat supply of 6,000, as the economy was stuck in recession. It had to ramp up flat supply as an unexpected turnaround in the second half of the year boosted demand.

‘If take-up of BTO (Build-To-Order) flats remains strong, we will continue to push out more flats under BTO next year – at least one every month if necessary,’ he said.

In the next five years, HDB projects that it has to offer 10,000 to 12,000 new flats per year, he continued. The agency arrived at these figures after taking into account various factors, in particular the number of new households formed from marriages and immigration, and resale flat transactions.

This medium-term projection serves as a guide for the BTO system, Mr Mah said. But he stressed: ‘What actually happens a few years down the road is not known. Demand is also not constant. It varies from year to year, depending on economic and other factors.’

Mr Mah also said HDB has a ’small buffer’ of flats over and above those from the BTO scheme. HDB did not intentionally plan this buffer – it comprises surplus flats from other programmes such as the Selective En-bloc Redevelopment Scheme.

PropNex chief executive Mohamed Ismail believes that the projected 10,000 to 12,000 new flats a year is adequate. ‘Over-supply would only serve to dampen the asset value of a majority of Singaporeans who live in HDB flats,’ he said. ‘We must also consider the continual supply of resale flats, potentially amounting to 40,000 transactions this year alone.’

Chesterton Suntec International research and consultancy director Colin Tan agrees the projected number of new HDB flats seems reasonable. But he is concerned about whether there is a mechanism to warn HDB of a potential sudden increase in demand.

Population growth and immigration will drive up demand for flats. In a report issued yesterday, DBS Vickers projected in a base case scenario that Singapore’s population could reach 6.5 million in 2027. It estimates that HDB may have to build an average of 14,000 flats a year over the next 20 years to meet public housing demand.

Source: Business Times, 24 Nov 2009