Thursday, January 28, 2010

Quotas under study for PRs buying resale flats

Possible cap on PR proportion in every HDB neighbourhood and block

THE Housing & Development Board (HDB) is considering setting a cap on the proportion of permanent residents (PRs) allowed in every HDB neighbourhood and block.

The possible move – which is now under study – was revealed yesterday by Minister Mentor Lee Kuan Yew, who was speaking at a dialogue session at the International Housing Conference.

HDB, which celebrates its 50th year this year, now has in place an ethnic integration policy which seeks to prevent the formation of racial enclaves by setting the maximum allowable proportion for each ethnic group in every HDB neighbourhood and block.

There have also been concerns, of late, that purchases of resale flats by PRs have been pushing up prices. PRs are now allowed to buy HDB flats only on the resale market.

Recent media reports have quoted housing agents on the ground as saying that cash-rich buyers – both locals and permanent residents (PRs) – are driving the recent rally in HDB resale flat prices and the resulting high cash-over-valuation (COV) levels.

HDB resale prices hit a new record in Q4 2009, with prices climbing 3.9 per cent from the previous quarter. The median COV for all resale transactions doubled to $24,000 in Q4 from $12,000 in Q3.

Mr Lee also addressed concerns about the affordability of HDB flats.

‘It (affordability) will always be an issue,’ said Mr Lee. ‘What is affordability, from the point of view of the buyer, and the point of view of the government that is subsidising you?’

Buyers, he said, always want cheaper and better flats. But the government has to price it at a level that is fair to the revenue it collects as well as fair to individuals – not only present buyers but also past and future buyers, Mr Lee added.

Mr Lee pointed out that HDB is now selling new flats for lower than their market values. This allows Singaporeans to benefit from rising asset prices as the economy grows.

Buyer expectations are also being affected by rising aspirations, Mr Lee said. But rising aspirations have to go hand in hand with rising productivity – which Singapore has not seen.

Singapore, he said, has grown in the last five years mainly by importing foreign labour. But now Singaporeans are uncomfortable as they feel that there are too many foreigners. There are complaints that trains and buses are over-crowded with foreigners. Foreigners have also been blamed for driving up property prices.

‘The answer is simple,’ Mr Lee said. ‘Check the flow of foreigners, raise your productivity, do the job better.’

Earlier in the day, Minister for National Development Mah Bow Tan said during his keynote speech that HDB faces increasing challenges in the 21st century.

‘The core mission of HDB remains unchanged: that of providing affordable quality homes and building up cohesive communities,’ said Mr Mah.

But while HDB will keep that commitment, it faces challenges from shifting demographics and the steadily ageing profile of HDB flats and towns. For example, with more new Singapore citizens, greater integration efforts will be required, Mr Mah said. And as HDB flats and towns age, there will be an urgent need to upgrade, redevelop and rejuvenate older estates, he said.

And HDB also needs to minimise the impact of growth on the environment and to use resources efficiently, Mr Mah said.

‘HDB must rise up to meet these challenges and continue its efforts in achieving the three dimensions of environmental, economic and social sustainability,’ Mr Mah said.

Source: Business Times, 28 Jan 2010

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