Impact of HDB Resale Prices on Process of Valuing Land for BTO Flats

Parliamentary Question by Assoc Prof Jamus Jerome Lim:

 To ask the Prime Minister and Minister for Finance (a) whether the Chief Valuer applies a discount or multiplier to resale transactions used as comparables when valuing land for Build-To-Order flats; and (b) if so, what is the average factor for (i) Standard (ii) Plus and (iii) Prime projects respectively.

Parliamentary Reply by Second Minister for Finance, Ms Indranee Rajah:

HDB pays fair market value when it purchases State Land for Build-To-Order (BTO) flats. The fair market value is determined by the Chief Valuer, an independent professional office, using established valuation principles no different from that of other professional valuers. This includes referencing relevant resale flat transactions and considering site-specific attributes and resale conditions.   

The issue of land cost should not be conflated with the issue of pricing for BTO flats, be they Standard, Plus, or Prime flats. The land cost is the amount paid by HDB for the land. This is different from the flat price, which is what the BTO flat buyer pays HDB for the unit. BTO flat pricing is based on affordability, not cost.