Tan Kin Lian - Perspectives Pricing of HDB BTO flats
The average price of a 3-room BTO (Build-To-Order) HDB flat in a new town in Singapore, after accounting for government grants, can vary based on the location and other factors. As of 2024, prices typically range from about SGD 200,000 to SGD 300,000.

However, this can fluctuate depending on the specific new town and the exact grant amount applicable to your situation.

I consider this price to be affordable. However, I do not like the method used for pricing these BTO flats.

Instead of pricing it at, $250,000 (say), the government said that the market price is $400,000. They said that it is subsidized by $100,000 and the government grant is $50,000, to arrive at $250,000.

This creates the impression in the minds of the buyer that they can make a windfall gain of $150,000 when they sell their HDB flat after it becomes available for sale in 5 years time.

Many buyers want to buy a larger flat because the windfall gain would be corresponding higher. This creates speculation and forces the buyers to spend a larger part of their income towards housing, than is wise according to their financial situatiuon.

The market price of $400,000 is caused by a limited supply and a higher demand from permanent residents, who might be buying the flats for speculation as well.

What is the alternative method of pricing the BTO flats?

My opinion is that it is better to price it directly as $250,000, which is probably equivalent to 4 years of the family income. The focus is on an affordable cost of housing, rather than the opportunity to make a windfall profit.

If the government (through the HDB) makes a large supply of flats for purchase or rental, there is no reason for the price to be pushed to a speculative level, giving the impression that they are unaffordable.

The government should also make HDB flats available for rental at a rental rates that reflects a balanced market, which is not jacked up by speculative demand.

If the family has the option to rent the flats at an affordable rental, there is no need for them to buy the flat when it does not really suit their family finances.

There is also no need for young people to register to get married prematurely, in order to qualify to buy a BTO flat. There are many divorces when the couples found that they were not compatible.

Our HDB policy is good in some respects, in providing housing for the people. But it is bad in other respects, as it led to unhealthy speculation.

Tan Kin Lian

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