Sunday, May 29, 2011

More HDB flats - and at a faster rate

NEW National Development Minister Khaw Boon Wan has wasted no time in addressing the backlog in demand for new Housing Board (HDB) flats.

He promised yesterday to build even more flats this year and next year, and get them ready faster.

A record 25,000 new flats will be built this year, up from earlier plans for 22,000, which was already a record.

He also committed to keeping up the new pace of building next year. This could mean launching an unprecedented 50,000 new HDB flats in just two years.

Buyers can also expect their keys sooner. Flats will be built 'ahead of order', a key shift from the build-to-order (BTO) system where the construction tender is called only after there are buyers for at least 70 per cent of the units launched.

Now, the HDB will call for a tender as soon as architectural drawings and tender documents are ready.

'Given robust demand, I told (HDB) to proceed to build, knowing that the orders will definitely come. In other words, build ahead of demand, during this period of demand backlog,' he wrote in his blog.

The HDB said it was in the process of determining how much waiting time this will save for flat buyers. Experts estimate that the change could see buyers getting their flats one to three months sooner.

It means the HDB will go ahead and build new flats regardless of the response. Previously, if the take-up was less than 70 per cent, construction would be delayed until that threshold was met.

The move builds on an earlier move to cut the waiting time for new flats - from the point of booking a flat to collecting the keys - to about 21/2 years.

Mr Khaw made clear though that building ahead of orders would only be a temporary measure to clear the demand backlog; the HDB would go back to the BTO approach once the situation stabilised.

For this year, 22,000 flats will be launched by September, while 3,000 flats originally scheduled for early next year will be brought forward.

Yesterday, HDB launched close to 4,000 new flats in six BTO projects - the largest batch in a single launch.

Mr Khaw said the bigger supply would help young couples own their homes as soon as possible so they could start a family, which is a national priority.

There are 15,000 first marriages each year among Singaporeans, a possible gauge of demand for new flats.

'As we intend to ease the $8,000 income ceiling on HDB flats, we can expect additional demand and we have to prepare for that,' Mr Khaw said.

He is keen to see more new couples get their first homes through BTO flats. About 70 per cent currently do so while the rest buy on the resale market, he said.

'This is not bad, but I think there is scope to do more. I think we should strive to have the vast majority of new couples start off their first set of homes in HDB, preferably via the BTO route.'

But even as the pace of building is ramped up, he emphasised the need to ensure that the quality of finish, workmanship and worksite safety stayed strong.

Responding to the minister's action to build more and build faster, experts said Mr Khaw was keeping his word to help young couples buy their first home.

But they said the change also underscored the size of the demand backlog.

ERA Realty key executive Eugene Lim warned, however, that even as the building pace is quickened, the HDB would have to be careful not to overbuild and end up with large stocks of unsold flats as had happened in the past.

'There are 10,000 more homes than... marriages yearly. Since 95 per cent of new flats must be sold to first-timers, the HDB will have to watch this closely to avoid having unsold homes.'

PropNex chief executive Mohamed Ismail welcomed the changes, as most recent BTO launches had been oversubscribed and many interested buyers were left on the waiting list.

Engineer Lee Wen Pin, 28, who is getting married in June next year, said: 'I think the change that sees the waiting time shortened is the most beneficial.

'A couple usually get married about two years after the proposal so any time saved that allows them to get a home sooner is always welcome.'

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