HDB to build more affordable flats next year

The Singaporean government has pledged to construct 22,000 new HDB flats next year, up from 16,000 this year, in a bid to meet the increasing demand for public housing. To complement this effort, the HDB also intends to finish newly launched projects in a shorter timeframe.

"This promise is a huge move on the Government's part to check the constantly rising prices in the secondary public housing market and is to be commended," said Mr. Mohamed Ismail, chief executive of PropNex. Mr. Ismail was referring to the soaring HDB Resale Price Index, which reached a new record-high level in the second quarter, along with a 20 percent increase in cash over valuation (COV) levels across the island to $30,000.

These actions are being implemented by HDB to guarantee that public housing remains within the reach of people in the long term, said Mr. Ismail, who believes that the move was necessary to fight higher COV levels.

"The impact of this news is not expected to be immediate," warned Mr. Ismail. "COV prices are still expected to rise, albeit at a slower pace of about 10 percent for the rest of 2010. We can expect to see a dip of about 20 percent in 2011 as new homeowners take up the generous supply of new flats, and a further 30 percent drop thereafter in 2013, when the flats reach completion."

Mr. Ismail does not expect COV levels to reach zero, since a premium would always be payable for choice resale flats.