The focus for now is to ensure there are enough new flats for young couples and families buying a home for the first time, said PM Lawrence Wong. - Photo: ST
SINGAPORE: Housing Board flats will remain affordable in the long run, said Prime Minister Lawrence Wong as he sought to assure Singaporeans that the Government will ensure their basic needs would always remain within reach.
The focus for now is to make sure there are enough new flats for young couples and families buying a home for the first time.
Once the overall market has stabilised, the Government will have scope to look at meeting the needs of other groups of flat buyers, PM Wong added.
“Overall, in the longer term, we are confident that HDB prices will remain affordable,” he said on Friday (Feb 28) as he rounded up the Budget debate.
“Why? Because only Singaporeans can buy HDB flats, and we can, and we will build enough housing for every Singaporean household.”
During the three-day debate, Progress Singapore Party (PSP) Non-Constituency MP (NCMP) Hazel Poa criticised the Government’s policy of selling state land to the HDB at market value and returning the proceeds to the past reserves.
This places a heavy burden on Singaporeans as the land cost is factored into the price of HDB flats, and is an example of the PAP Government’s propensity to prioritise economic considerations over social ones, she said.
Rebutting this characterisation, PM Wong said the Government’s approach is to do things the right way and to get the policies right.
Not pricing land properly would be akin to giving a hidden subsidy that will eventually end up being paid by taxpayers, he said.
“If it’s not paid today, it will have to be paid tomorrow, because at the end of the day, there is no free lunch,” he added.
The first order is to get the price right, then decide how much to subsidise, he said.
HDB does not recover the full cost of flats from buyers, as flats are priced on the basis of affordability, he noted.
PM Wong cited the example of a four-room resale flat in Sengkang that cost around S$545,000, nearly S$200,000 more than the initial price of about S$360,000 five years ago.
In comparison, a four-room Build-To-Order (BTO) flat in the same area launched in October 2024 was sold for about $370,000.
The increase in BTO price has stayed in line with median incomes due to subsidies provided by the Government, he said.
These subsidies, together with the higher cost of construction, are key reasons for the sharp increase in HDB’s deficit, which rose from $2 billion in the 2018 financial year to $6.8 billion in the 2023 financial year, he added.
He acknowledged that it would not be sustainable for the Government to cover this deficit if overall property prices keep rising faster than income growth, and the financing gap increases year after year.
But this will not happen as the Government keeps a close watch on the property market and has introduced cooling measures when necessary, he said, like increasing the additional buyer’s stamp duty.
The significant increase in BTO supply, along with Government Land Sales exercises, has made up for the disruption caused by the Covid-19 pandemic and will eventually stabilise the market, he said.
PM Wong said the “sustained and robust” supply of new flats has helped stabilise the application rate for first-time flat buyers. The rate has come down from 3.7 times in 2019 to 2.1 times in 2024 – below pre-Covid-19 levels.
PSP NCMP Leong Mun Wai asked how the Government would ensure BTO flat prices remain below $1 million amid rising land costs.
Responding, PM Wong said BTO flats must be priced in line with median incomes to keep them affordable.
Leong then asked if BTO flat prices would have exceeded $1 million without the new classification framework that designates flats in the Standard, Plus and Prime categories.
The classification is based on factors such as proximity to the city centre and amenities like MRT stations.
Those who buy flats in popular locations are subjected to more stringent rules, such as a 10-year minimum occupation period and having to return subsidies when they sell the flat.
PM Wong declined to delve into hypotheticals.
But he said the classification allows the Government to provide more subsidies for flats in popular areas to keep them affordable, while removing the lottery effect of people benefiting disproportionately when they sell the flats. This is fairer and more equitable, he said.
Leong also raised the spectre of a “collapse” of resale flat prices due to the ramping up of BTO supply in recent years, asking if there are safeguards in place to prevent this.
PM Wong expressed puzzlement at the question, noting that the PSP had previously raised concerns about insufficient flat supply.
“So are we concerned about the high prices, or are we concerned about the opposite?” he said.
He added that the ramping up was necessary as the flat supply had been disrupted during the pandemic, causing an imbalance in the market.
Leong also pressed PM Wong on the Voluntary Early Redevelopment Scheme (Vers), which the Government had proposed to address redevelopment of older HDB flats nearing the end of their 99-year lease.
Replying, PM Wong said more details will be released closer to when the first flats are due for redevelopment under Vers, though he noted it was not any time soon.
Ultimately, flat prices have risen because incomes and standards of living have gone up, benefiting every home owner in Singapore, he said.
“That’s what home ownership provides, a concrete stake in our nation’s progress, and not just that, but eventually a home and a nest egg, which you can tap on for retirement,” he added.
“It’s a sound and a key pillar of our social compact which we will continue to improve and enhance and build upon.” - The Straits Times/ANN
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