Tan Kin Lian - Perspectives Price of HDB flats

The prices for new HDB flats are quite affordable, after deducting the subsidy and the grants. The monthly repayment is about 25% of the family income, for a family that accepts a 3 or 4 room flat in a new town.

The problem is created by the government. They use the resale price in the market to set the price of new flats. As the market price is too high, the government or HDB then apply a subsidy to reduce the price down to a more affordable level. This is a confusing arrangement. 

I quote this example. The average resale price for a 4 room flat in a new town is $500,000. The government gives a subsidy of $150,000 and price a new flat at $350,000. The first time buyer enjoys a grant of $50,000 and pays $300,000. The monthly repayment for a $300,000 flat is $1,500, which is 25% for a family income of $6,000.  This is the actual monthly repayment that most families have to fork out. 

The scare is the media report that HDB resale flats are sold at more than $1 million. This applies to an extreme case. It does not apply to the actual price paid by most families, after subsidy and grant. 

Tan Kin Lian

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