SINGAPORE: Deputy Prime Minister and Finance Minister Lawrence Wong tackled Singapore’s property prices in a speech earlier this week, saying, perhaps only partially in jest, that “in Singapore, the Prime Minister has to be a real estate agent.”
Mr Wong has been touted to be the successor to Prime Minister Lee Hsien Loong since last year, after having co-led the ministerial task force assigned to the Covid-19 pandemic
“We’ve created the world’s best public housing. You go anywhere in the world: name me any country that has the same quality of public housing that we do – there is none,” he said in his May Day speech, pledging to continue “to provide affordable and quality public housing to Singaporeans.”
Property prices in Singapore have gone up for twelve straight quarters, in contrast with the rest of the world, which has seen a housing slowdown.
The affordability of public housing has become an important issue in Singapore, one that was discussed at length in Parliament last January.
The DPM acknowledged that housing is a specific concern to Singaporeans today due to an insufficient supply of Built-to-Order flats because of delays stemming from the Covid-19 pandemic.
He added that the Government is catching up on the backlog and will complete 20,000 units by this year.
Mr Wong also said that a union leader had reminded him that in the 1980s, a four-room flat had only cost $40,000 compared to much higher prices today. The leader asked him how his children could afford their flats in the future.
“I explained to him why he doesn’t have to worry, so let me do so here again with all of you. In Singapore the Prime Minister has to be a real estate agent, so I’m learning and brushing up my skills and I will use this occasion to practise,” said Mr Wong.
He then went on to say that people need to consider not only the headline price of the BTO flat but also how this price relates to income and the proportion of income that’s needed to service the housing loan to have a complete picture of affordability.
When four-room BTOs cost $40,000 four decades ago, the median household income was around $900, and a family would use about 25 per cent of their income to service the loan.
But today, median household incomes have increased ten times, from $900 to $9,000.
“So BTO flat prices have in fact moved in tandem with incomes,” he said, adding, “So if we do a proper comparison, a fair comparison, BTO flats remain affordable. The typical household now continues to use less than 25 per cent of their income to service the loan, like in 1980.”
“So, brothers and sisters, affordable and accessible public housing – like access to first rate education and healthcare – will always be a key part of our social compact in Singapore,” Mr Wong said.
DPM Wong’s speech may be found in full here. /TISG