My Proposed Solutions – Plan B
This proposal tackles the issue of providing cost-plus low price housing without adversely affecting current HDB flat prices.
The current types of HDB available:
- Rental Flats – very cheap rental housing provided for poor and needy citizen families
Studio Apartments – only available for folks 55 years and above, and have a short lease of only 30 years.
Build-to-order (BTO) – 2/3/4/5 room flats make up the bulk of new flats, which a range of prices depending on the flat locations.
Design Build and Sell Scheme (DBSS) – they are essentially condo-like flats, and thus are more expensive than BTOs.
Executive Condominiums (EC) – first created to allow the sandwiched class to get a condo (with full facilities), but at a lower prices. ECs are fully privatised after 10 years.
Most of the Opposition parties are proposing BTO flat prices to be slightly above cost or pegged to the median household income. Seeing how flat prices has ballooned by as much as 50% in less than a decade, selling flat prices at much lower prices will definitely affect recent flat owners. Some would be sitting on homes worth more than their loans when these flats enter the resale market in 8 years.
But with flat prices going up, and families having to take up 30 year loans just to pay it off, future generations might never be able to buy a place they can call home. So something definitely has to be done.
What if a new category of flats were to be created? Let’s call these flat “Type B” flats, while existing BTO flats shall be known as “Type A”.
Type B flats:
- – Should be pegged to median household incomes
– Should be delinked from the market
– When sold, price will be pegged to prevailing median household income
– Can only be sold to other 1st time buyers or Type B upgraders/downgraders
– Cannot be sold to PRs
– Are meant solely for owner occupation, and whole units cannot be rented out
(this is to prevent people for buying said flats for investment purposes)
– Like rental flats, will be within current estates to prevent a division of classes
– Only first timers or Type B upgraders/downgraders are eligible to purchase
Type B flats will be affordable, but owners will not “profit” from the sale of their flats, unlike Type A flats which is pegged to market prices.
Type B flat owners can choose to switch to Type A resale flats should they want to benefit from normal market prices (which would benefit those who intend to upgrade to condos).
The existence of Type B flats will keep Type A flat prices in check, but will not adversely cause a drop in prices for Type A resale flats. As most first timers will choose to go for Type B flats, eventually, the demand for Type A flats will cool, but will not drop adversely there will still be buyers in the form of PRs, 1st timers who can’t afford to wait for a new flat to be build, or current HDB flat owners who wish to move, upgrade or downgrade.
Perhaps down the road, median income will grow at a faster rate, and the gap between Type A and Type B flats will close up. At that point in time, the classification could be dropped if they no longer serve its purpose.
Of course this is all hypothetical. It may or may not work. Just some thoughts. That’s all.