WE refer to Mr See Leong Kit's comments on the pricing of Housing Board flats in his letter, "Can't keep up with HDB prices" (The New Paper, 28 Feb).

All new HDB flats are priced below their market value so that buyers can enjoy a generous subsidy.

The concept of market price or market value is familiar to all HDB owners.

When they want to sell their flats in the open market, they do so at the prevailing market value, not at their cost of purchase of the flat.

HDB adopts a market-based pricing approach to reflect the true subsidy that buyers are enjoying.

The housing subsidies given to buyers are real, and this is reflected by the average deficit of about $530 million incurred under HDB's Home Ownership Activity over the past three years.

These figures are reported in HDB's audited financial statements, which are available to the public.

The writer has said that from 2000 data, the total breakeven cost for five-room new flats was estimated to be around $120,000.

This figure is grossly underestimated based on today's costs.

Currently, a new four-room flat can cost close to $300,000 to develop, taking into account land, building and other costs.

This is significantly higher than the subsidised price of a four-room flat sold by HDB at about $200,000 - $260,000.

Kee Lay Cheng,
Deputy Director (Marketing & Projects)
For Director (Estate Administration &
Property) Housing Board