No drastic price drop for HDB flats: Khaw Boon Wan

He acknowledges that flats are an asset for many homeowners

Addressing fears that homeowners may lose their retirement nest eggs should prices of flats plunge, National Development Minister Khaw Boon Wan said on Sunday that he wants to lower the prices of flats by just "a few per cent" over the next few years.

Mr Khaw did not specify if he was referring to new or resale flats, but he acknowledged that any price drop should not be too drastic.

"For many people, it's an asset... if their house suddenly devalues by say 30 per cent, their dream of downgrading and still having some money in the bank (for retirement) will suddenly vanish," he told participants at an Our Singapore Conversation (OSC) dialogue on housing.

Speaking in Mandarin, he reiterated that the prices of public flats will not rise forever. "If housing prices keep rising, it won't be good. If we can maintain them or even lower them by a few per cent, for example 5 per cent, that's good. When I came into MND (Ministry of National Development) two years ago, that was my target," he said.

The debate over whether public flats should be homes foremost or assets first has been raging since March, when Mr Khaw broached the subject in Parliament.

He added then that he wanted to bring down the prices of new flats in non-mature estates by about 30 per cent.

At the OSC session at Singapore Press Holdings' News Centre, organised by Lianhe Zaobao, much of the dialogue focused on this topic.

Many of the 40 participants rejected the idea of selling back new flats only to the Housing Board, as this would limit the profit homeowners can make, as opposed to selling their flats on the open market.

Mr Khaw also clarified his recent comments that "something is wrong somewhere" with the executive condominium (EC) scheme. He said his bugbear is that EC owners still receive government subsidies despite making huge profits.

In principle, he does not oppose the idea of EC owners making a tidy sum when they sell their units.

Turning to first-time buyers, he emphasised that every newly- wed couple would be able to afford public housing. This is because the HDB is able to set the prices of new flats ever since they were "de-linked" from the prices of resale flats.

But Mr Khaw acknowledged that engineering a similar price drop for resale flats, especially a gentle one, may not be so easy.

"Resale flat (prices) are different because they're decided by the market," he said.

"If you want to sell a flat for $700,000 or $800,000, how can we stop you? No way."

SLP International executive director Nicholas Mak, who attended the OSC session, speculated that one way to dampen resale prices could be to lower the prices of Build-To-Order flats in the same estate.

But this would be a "zero-sum game", as homeowners who previously bought flats at higher prices would not be happy.

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