We thank Ms Lynne Tan for her feedback (Keep BTO flats no-frills, affordable for young couples, Aug 5).

We agree with her, and affirm the Government's commitment to helping Singaporeans own their first home. In pricing new flats, the key consideration is to ensure affordability for flat buyers, especially first-timers.

HDB first establishes the market value of the flat by considering the prices of comparable resale flats nearby, and a significant subsidy is then applied to the assessed market value so that new flats are priced below market to ensure affordability.

The comparison of new Build-To-Order and comparable resale flat prices is made available at every BTO launch, down to the individual BTO project level. As flat prices do not cover the full development cost, HDB makes losses from the sale of flats yearly.

On top of pricing new flats below market value, HDB offers various housing grants to ensure that flats remain affordable and accessible.

Eligible first-time flat buyers can enjoy the Enhanced CPF Housing Grant of up to $80,000, which provides further support to lower- and middle-income families buying their first home. Those with more pressing housing needs may consider resale flats on the open market, where first-time flat buyers can enjoy housing grants of up to $160,000.

Today, most first-time flat buyers purchasing a new flat use less than a quarter of their monthly income to pay for their loan instalments.

The mortgage servicing ratio - the proportion of monthly income used to service mortgage instalment payments - has remained generally under 25 per cent, well below the international benchmarks for affordable housing of around 30 to 35 per cent. This means most first-time flat buyers will be able to service their mortgage using their monthly CPF contributions, with minimal or no cash outlay.

Our flats are designed to be functional and comfortable.

Flat buyers have the flexibility to decide whether to opt in for floor finishes, internal doors and sanitary fittings to be installed in their new flat under the Optional Component Scheme, depending on their preferences. The cost of these items will be incorporated into the flat price, which can be paid via CPF monies and/or the housing loan, thus reducing the cash outlay needed for renovations.

We will continue to monitor the housing market conditions closely and ensure that Singaporeans have access to affordable, quality public housing.

Ignatius Lourdesamy
Director (Marketing & Development)
Housing & Development Board