Market – an appropriate driver for pricing HDB flats

New HDB flats are priced based on the worth of units at the time of purchase and disregards the costs.

According to Mah Bow Tan, Minister of National Development, this market-based approach was the most appropriate way of pricing new flats.

“It reflects what the flat is worth at the point of purchase, which may have no relation to what it cost to build,” Tan says in response to Mr. Lian Eng Hwa’s question in the Parliament yesterday about the probability that the government may consider the costs in pricing flats.

He also said that since the HDB did not consider account costs, its building programme incurred $530 million losses a year in the past three consecutive years. He even compares the amount of a typical four-room flat in Sengkang which is more than $300,000 to build, above the $200,000–$260,000 price where HDB sells it.

Other concerns on premium flats were raised, like excessive pricing, which ranges between $457,000 and $645,000. However, Mr. Mah claimed that the prices just reflected the value of the flats. He even added that seven people intended to but every unit on sale.  He added, “It shows people are willing to pay for flats with good value.”

Likewise, Grace Fu, State for National Development’s senior minister, emphasised that the main factor that affects prices of the sales of HDB flats is the buying market.