Mr Chua Kheng Wee Louis (Sengkang): Chairman, there are two main issues regarding the Prime Location Public Housing (PLH) model, which I would like to address. The first is that windfall gains or the so-called “lottery effect” from the PLH are inadequately addressed.
When a PLH flat is sold on the open market for the first time, owners will have to pay 6% of the higher of resale or valuation, as a subsidy clawback. However, my view is that the obvious outcome of this is that 6% will simply be factored into the asking price of the flats in the future – “priced in” in market lingo.
And if you are to use the example of The Pinnacle@Duxton, which frequently transects for over a million dollars, this 6% will be less significant than the windfall gains the first-time seller of the PLH flat would stand to make. Furthermore, having a 10-year MOP may reduce the number of property speculators, but it does not go far enough in reducing the lottery effect and merely kicks the can down the road.
Chairman, rather than having these onerous mechanisms, which distort the market, a simpler and more equitable solution, especially from the perspective of those who may not have the good fortune to buy into the new BTO PLH flats, who far outnumber the lucky few who managed to, is to reduce the quantum of subsidy given at the onset and provide higher subsidies for resale flat buyers who perhaps need them more.
Reduced subsidies at the onset better tackles the issue of windfall profits and the perception of fairness to the broader Singapore population, while giving less room for market distortion. This is especially so when considering that there are already many HDB flats today located in various prime locations that are transacting at very steep market values and hence generating much windfall profits – a record 261 million-dollar transactions in 2021 based on The Straits Times article in January, for example.
Arguably, the widest subset of such HDB resale flats would have very high market values and would require significant additional subsidies to keep such flats affordable. Their need for additional subsidies is much more so than the still limited new launches of PLH flats. And for many Singaporeans, the resale market is the only available housing option if they remain unsuccessful in the BTO lottery.
The second issue is that singles that are not being allowed to buy PLH flats even on the resale market. One of the most baffling aspects of the PLH model is its discrimination to singles, whereby singles are not allowed to buy PLH flats even on the resale market. As it stands, singles are not allowed to be sole owners of large BTO flats in mature estates and can only buy resale non-PLH flats if they are aged 35 and above.
Chairman, if there is no coherent reason why MND should impose additional restrictions on singles on PLH flats in the resale market, the message that this sends is that the needs, aspirations and sacrifices of singles are less valued despite the Minister’s claim that the MND is not taking a step backward in this regard, as you would have the perception of doing so.
While the PLH model is new and will need to be reviewed over time, I had asked specifically in January this year if singles were eventually be allowed to be sole owners of new or resale PLH flats and if this were to happen one day, what are the key considerations before these are lifted. Minister Desmond Lee stated in January that the PLH model is designed with the objective of being inclusive for Singaporeans. And I trust that singles should be considered Singaporeans as well.
8 March 2022
Ministry of National Development