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12 Mar 2024  (2819 Views) 
Tan Kin Lian - Perspectives

Build HDB flats in advance of demand
Some people expressed the fear that if HDB builds flats in advance of demand, it may lead to an over supply that will crash the HDB market.

This will not happen.

The HDB does not need to sell the flats to get the cash flow. It can afford to keep the flats vacant until demand appears or rent out the flats in the meantime.

This will need financing from the government. The government can afford to finance the holding cost, as the land was acquired at an extremely low cost many decades earlier.

In fact, the land was kept vacant for several decades.

The additional cost was the construction of the flats and the infrastructure, which in total was less than the value of the land.

By selling the flats at an "affordable" price, there is a guaranteed market for the HDB flats within the next few years, due to population growth.

The HDB does not need to lower the price when there is lower demand. It should maintain the price and adjust it in line with earnings. This is a good strategy to safeguard the value of the HDB flat.
It will also prevent the sharp appreciation of the HDB flats, which is better for ordinary people over the long run.

The speculators will be unhappy. It cannot be helped. They should seek other avenues for their speculation.

I prefer that HDB should build flats in advance of demand. These flats will be available to eligible buyers at an affordable price and without a long waiting period.

Tan Kin Lian

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