PRs, foreigners form 12% of HDB dwellers

Dear Dr Foo,

On 19 Feb 2010, Straits Times reported you saying that PRs and foreigners are not likely to have caused significant increases in flat prices because they make up only 12% of HDB residents. Firstly, the fact that PRs and foreigners make up 12% of HDB residents doesn’t mean they occupy 12% of HDB flats. They could occupy more or less flats depending on average family size.

Secondly, it is the flats that are sold that determine resale prices rather than the flats unsold. Suppose there are 100 flats of which 12 belong to non-Singaporeans. Of these 100 flats, 5 flats are sold. Would the resale price be determined by the 5 flats sold or the 12 flats belonging to non-Singaporeans? The resale price will be determined by the 5 flats sold, not the 12 flats belonging to non-Singaporeans unless they are part of the 5 that are sold. Hence the fact that PRs and foreigners make up only 12% of HDB residents is immaterial to the pricing of flats.

Lastly, we cannot conclude the effects of PRs and foreigners just by looking at the HDB resale market alone because the resale market is also affected by the buying or renting activities of PRs and foreigners in the private property market. When PRs or foreigners take up private dwelling units, either by renting them or buying them, less becomes available for Singaporeans who would in turn be forced into the HDB resale market that would in turn lead to higher resale prices.

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