www.shaproperty.com

Sep 17, 2007

Allow direct flat purchase by middle-income group

RECENT changes to public housing rules, including increasing the subsidy for the low-income group and the balloting chances for newly married couples, have served to better meet the objectives of the HDB.

It is perhaps time to review the policy of restricting the middle-income group from applying for a flat directly from the HDB. The current policy restricts households with incomes greater than $8,000 a month from doing so.

Firstly, household income may not be a good comparator on housing affordability. This is because the middle-income family may incur higher expenses, as they are likely to have children, may employ domestic help as the mother is also working, and is also more likely to incur expenses in maintaining retired or aged parents.

Compare this with a young graduate couple, earning say $5,000 a month, with little family needs.

Secondly, the middle-income family with two children, domestic help and aged parents would have a greater need for a bigger flat as compared with a young couple, for whom it is more of a luxury than a need.

It does not take an investment guru to advise newly married couples to apply for a new five-room or bigger flat in the mature estates, as they stand to potentially gain a good sum after five years, not to mention benefits such as CPF housing grant and low- interest HDB housing loan.

However, the middle-income family will have to pay up at least $100,000 more - being the price difference between a resale and a new flat, with no housing grant and a higher interest on the loan. That too for a second-hand flat, with a shorter lease.

There are good reasons why many middle-income families would choose to stay in an HDB flat in the mature estates such as being close to parents and proximity to schools. Newer, better designed HDB flats also provide value for money.

The needs of the middle-income group would be better served if the HDB made it eligible for them to purchase a flat directly.

Heng Kwee Tong