New BTO HDB flats in matured estates of Queenstown and Kallang-Whampoa are seeing low take-up rate because prices are unaffordable to first-time homeowners. With a 4-room HDB BTO flat of 99-year lease going for at least nearly half a million at S$455,000 in Queenstown, a first-time homeowner will need to pay at least S$1,500 a month according to the mortgage calculator from DBS at 3.5% interest rate repayment. There are an outstanding balance of sale flats in Queenstown at 523 units and Kallang-Whampoa at 263 units.
A total of 3,946 BTO units will also be joining 4,802 units offered in the latest sale of BTO flats launched yesterday (May 18). This exercise also saw the highest number of unsold balance units carried forward from previous sales exercises. A HDB spokesperson denied that there has been an oversupply due to poor planning or unaffordable pricing, and instead fault the high leftover units to personal preferences:
“”The number of flats offered in each SBF exercise will differ from year to year, depending on the take-up by flat buyers in previous sales exercises. For example, some may decide not to select the flats during the selection exercise, or cancel their flat booking after having booked a flat.”
Despite the increased in housing supply, the HDB refuse to lower selling prices. Unlike other countries, HDB does not provide breakdown of construction costs and land costs. Calculation of HDB prices are shrouded in secrecy because the Singapore government does not want Singaporeans to calculate the amount of profits made in land sale by the Urban Redevelopment Authority (URA). Previously, former Minister of National Development Khaw Boon Wan posted a half-truth in Parliament saying that the government incurred billions of losses every year building HDB BTO flats. However, URA is at the receiving end of HDB’s losses, and the government agency receives undisclosed billions in revenue from land sales to HDB. The transfer of funds is also widely known in Singapore as a “left pocket to right pocket” practice.
The 99-year leasehold of HDB apartment units went under public scrutiny recently when Minister for National Development Lawrence Wong confirmed that HDB is a depreciating asset and that the government will not give any compensation if the leases are up. The news dented public confidence of the asset-enhancement policy presented by his predecessor Mah Bow Tan.
More Singaporeans are also now more cautious about taking long-term liabilities given today’s economic uncertainties. Minister of State Chan Chun Sing and Manpower Minister Lim Swee Say have repeatedly emphasized that no jobs are secured today and that Singaporeans will have to switch jobs mid-careers to stay employed. A 30-year mortgage loan would mean forced possession by the bank or HDB if a family lost its household income due to unforeseen circumstances leading to unemployment.
The current economic conditions remain weak with unemployment rate of Singaporeans hitting a 7-year-high of 3.2%. As such, the HDB BTO flat sales volume is likely to weaken resulting in a greater oversupply of housing, unless the government lower selling prices.