A costly commitment

High price of DBSS flats mean buyers may have to spend a significant portion of their lives paying off loans

THE recent launch of City View @ Boon Keng and the identification by the Housing and Development Board (HDB) of three more sites in Simei, Toa Payoh and Bedok for such developments has taken the price of public housing to a new level.

When compared to other private properties in the area, it seems the prices offered are cheaper. However, one of the points that needs to be answered is whether this is public or private housing?

All reports about this latest development have labelled it as HDB flats, but are these HDB prices?

As part of its Design, Build and Sell Scheme (DBSS), the HDB has allowed private developers to buy and then build on the sites and sell the flats.

Benefits of this scheme have been widely published in the print media as well as HDB’s website.

On paper, it seems a wonderful situation for both the public and the HDB – the public gets to have flats with better quality finishes, while the HDB does not have to run the construction itself.

One of the criteria set by the HDB is that the combined family income of the applicants must be below $8,000. Thus, if a couple buys the most expensive flat at City View @ Boon Keng at just over $700,000, they face the prospect of paying more than $2,000 in monthly instalments based on a 90-per-cent loan over 30 years. They would also have to fork out cash on top of their CPF contributions.

The rationale is the same even if they had bought the average-priced ones at about $500,000.

It seems that unless the applicants have healthy savings, they will be spending a significant portion of their lives paying off their loans.

I believe the HDB might need to review the criteria that it has set for DBSS. If the HDB decides that DBSS is the way to go for Singapore’s future housing development, it should take a serious look at the prices that private developers would be setting.

Affordable housing might no longer be realistic if we leave these potential issues unaddressed.

Source : Today – 8 Jan 2008

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