Mah addresses public criticism in HDB prices

Addressing yesterday the rising public criticism in home prices, Mah Bow Tan, the National Development Minister, stressed to guarantee affordability of HDB flats by closely monitoring its prices.

”We'll keep the prices such that they are pegged to the income, so this is how we manage affordability. We make sure that the prices do not exceed the 30 per cent benchmark,” he explained.

Mister Mah also said that such benchmark will see to ensure that every household will pay not more than 30 percent of their income every month to service a home loan. He also added that within the income brackets of each home buyer, about 20 percent or so is allotted for expenses on housing for a new unit in the newly established estates.

He compared the recent prices of public flats with those in the last 20 years and said it’s meaningless. ”If we did that, we'd be comparing many things that we did 20 years ago, do we want to go back 20 years?” said Mr. Mah.

Recently, the method of HDB in gauging the affordability of flats has been publicly scrutinised, with some contending that such benchmark, estimated with loan tenure of 30 years, should instead use 20 years.

Mister Mah, however, emphasised that the loan term of 30 years is used by commercial banks and in international standards.

“If you want to argue it's too high, you can use all sorts of arguments,” he pointed out. The major point is this is an essential part of a financial scheme, which will permit home buyers to acquire an asset that will enable them later in life to make use of it to generate an income. This may involve applying for the lease repurchase scheme of HDB and selling the property, giving homeowners with a source of income when they retire, he expressed.