The average price per square foot of The Reserve Residences in mature estates rose 21.9% faster than the non-mature estates.
According to figures released Monday 7 November by the Ministry of National Development, the average selling price per square foot of BTO Flats in mature Estates has risen from S$479 to S$584 during the first three quarters of 2020. This results in a 21.9% increase in price per square foot over the past 10 years.
The average selling price per square foot of BTO flats on non-mature estates has increased from S$311 to S$362 between 2012 and 2022. These areas’ BTO flat prices have increased by 16.4%. This is slower than the increase in new flats on mature estates.
In the meantime, the average selling price per square foot of flats in the Prime Location Public Housing model was S$697 for the first nine months. MND didn’t state whether the average 2022 price psf for BTO flats in mature estates included the average price of PLH flats.
These figures are part of Leong Mun Wai’s written parliamentary response to the MND to Non-Constituency MP Leong Mun Wai who asked for the average selling price and land cost of BTO flats between 2012 and 2022.
MND replied that the BTO flats are priced by HDB based on the prevailing market conditions, nearby comparable resale prices, and individual attributes such as the location and height of the flat. These flats will then be affordable by applying subsidies.
It was noted that the subsidy amount applied to projects is dependent on the market conditions, the location and the attributes of the flats.
Our Researcher data shows that prices for HDB flats have increased at the same rate in the same time period at 17.32%, 18.63%, respectively.
The data shows that the prices of resale flats on non-mature estates has increased at 23.01% over the 19.65% price rise for mature estates.
MND stated that it has increased subsidies in order to maintain stable prices for BTO flats despite the 30% increase in construction cost over the past two years.
The reply was, “As such it is not meaningful for it to be compared across years.”
Why is land not available for HDB development at no cost?
Indranee Rajah , the Second Minister for National Development, stated in Parliament Monday that land interest (such as leases), can be taken out and given to others for the term of the lease. It is a conversion of state land from a tangible asset to a financial asset when it is sold. The Government invests the proceeds of sale into its financial reserves.
The average lease term for land that is sold by the state lasts 99 years.
She also stated that the financial proceeds will be used to compensate for the loss of 99-year-old land use by the state.
The land will return to its original state after the lease ends.
Leong has requested a response.
She also explained why HDB pays the fair market value of land from the state instead of having it transferred at no cost because it is a transaction between a government agency and the government.
HDB will sell the land to HDB, which would mean that it is removed from past reserves. Past reserves would be diminished if it was not paid for at market value.
To reveal development costs, “Not meaningful” is used
Indranee and Pritam Singh, the Leader of the Opposition, debated whether it was appropriate to reveal the development costs for new BTO flats.
Singh’s question was prompted by the most recent correction directive to Yeoh Lam Keong, former chief economist at GIC. He had posted on Facebook about the S$270million loss in the Central Web@AMK BTO Project.
After some back and forth exchange Indranee stated it was “not meaningful to reveal development costs”, adding that affordability is the key factor for buyers.
HDB revealed last week that it had suffered a record deficit in the financial year 2021. The largest part of the deficit was caused by the expected loss of flats under construction, gross loss on flat sales and disbursement CPF housing grants.
This is in response to rising concerns about affordability of public housing. There are increasing numbers of headline-grabbing million dollar flat transactions. Ang Mo Kio BTO attracted significant attention in August when 5-room flats went on sale. Prices ranged from S$720,000 to S$877,000.