I THANK Mr Jason Zheng ('The issue here is cash over valuation'), Mr Steven Yeo ('Should the HDB build 19,000 flats a year instead?') and Mr Loo Fook Kay ('What percentage of income will a single Singaporean earning $2,500 a month pay?') for their views on HDB flats (Sept5).

HDB's key responsibilities are to help first-time home buyers and to ensure flat values are sustained over the long term.

Mr Zheng raised the issue of cash over valuation. COV is what a buyer agrees to pay the seller when he feels a particular flat is worth more than its valuation. COV applies in the private residential market as well. Banks will grant a loan of only up to 90 per cent of valuation, and buyers will have to pay at least 5 per cent of the valuation and the excess in cash.

HDB cannot ban COV or provide loans for it, as suggested by Mr Zheng. People should be free to decide what their flat or intended purchase is worth to them, and not be forced to buy and sell at fixed prices. While financing for COVs may appear helpful, it is more likely to fuel the escalation of prices and worsen the situation.

Mr Yeo commented on the number of marriages and new flats. The 24,000 marriages last year included those with or among foreigners, re-marriages, those with high income and those who have other accommodation. Not all 24,000 qualify for subsidised flats. In recent years, total bookings of new and resale flats with grants were between 13,000 and 15,000 a year.

Mr Loo asked about the affordability of a single buying a three-room resale flat at the quoted price of $200,000. With an $11,000 subsidy, an eligible single earning $2,500 a month would need 29 per cent of his income for the loan. He can pay $575 from his monthly CPF contribution, with the remaining $146 in cash.

The Government has enabled about 80 per cent of the population to own their homes - the highest home ownership rate in the world. HDB will continue to ensure that public housing remains affordable to the majority of Singaporeans.

Yap Chin Beng
Deputy Chief Executive Officer
(Estates & Corporate)
Housing & Development Board

This article was first published in The Straits Times.