By Mr. Propwise

Over the weekend Housing Minister Khaw Boon Wan gave an interview to the Straits Times, where he spoke about what I believe to be a radical shift in policy for the pricing of new Housing Development Board (HDB) flats. In this article we’ll look at the potential changes and how they could negatively affect property prices, especially in the mass market segment.

HDB to be price-setter, not follower

Historically, the prices of new HDB flats have been pegged to the movements of resale HDB prices, i.e. they followed market-based pricing. This created a vicious (or virtuous, depending on whether you were a potential buyer or a home owner) cycle where rising private property and resale HDB prices would push up the pricing of new HDB flats, which would then serve to further bolster pricing in the secondary market.

Over the past six years, resale HDB prices ...