Housing Development Board Pricing of new HDB flats
1. Many young people find the prices of new flats (aka BTO flats) to be too high and unaffordable. The general public has asked the government to use a lower land value, so that the flats can be sold more at a lower price.

2. The government is unwilling to use a lower land value, as a drop in the prices of HDB flats will be bad for existing owners, especially those who bought the flats recently at higher prices.

3. I suggest the following approach to deal with this issue:

The government should price the new flats at the level that existing in 2019, i.e. before the pandemic.

The increase in HDB prices in the recent years is due to the shortage of supply of new flats caused by the stoppage of construction during the pandemic. This supply shortage caused the prices of property to increase sharply. This increase can be considered to be temporary.

The government has already given orders to build 150,000 new flats over the next three years. This increased supply can meet the new demand.

4. If the prices of new flats are kept at 2019 level, there will be increased demand, as they look attractive when compared to the increase in the resale prices of HDB flats.

Even if the demand is higher than the new flats under construction, the government has sufficiently vacant land to build more flats.

5. There is a risk that there will be an oversupply of new flats in the future, and some will not be sold and be left vacant.

If this situation should arise, the government can keep the flats vacant or rent them to tenants.

The vacant flats can be made available to new buyers, who will not have to wait for several years to get a flat.

Even if the flats are left vacant for a few years, the actual construction cost is not a large sum.

6. The prices of new flats in the future can be adjusted based on increase in the median wage level in the country.

This strategy is to fix the prices at an "affordable level" and use this price to influence the future property prices.

As the government is a large land owner with a large supply of vacant land, they can influence the property market by ensuring an adequate supply of new flats to meet future demand. 

Under this strategy, the government will use the supply of new flats to influence the property prices, rather than allow the market price to determine the future prices of HDB flats.

7. I look forward to the day where there is a ready supply of vacant flats that buyers can buy and get the keys immediately. They should not have to wait several years for the flats to be ready.

Tan Kin Lian

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