SINGAPORE: Academic Chia Siow Yue has suggested that the Government’s effort to cool the skyrocketing prices in the property market may not have as much of an impact due to mismatched expectations by some buyers in an analysis released on Saturday (15 Apr).
She also noted that the authorities have yet to resolve the issues surrounding various eligibility criteria and restrictions governing HDB flat ownership, including income ceilings, marital status, and ethnic quotas, even as the hot-button topic of worsening housing accessibility and affordability continues to dominate national discourse.
Prof Chia, a Senior Research Fellow at the Singapore Institute of International Affairs, made these observations as she examined the key factors affecting the longstanding housing issues in Singapore in a paper published by the East Asia Forum.
Identifying supply and demand dynamics, affordability concerns, and eligibility criteria as the key drivers of the ongoing debate on housing affordability, Prof Chia indicated that public housing is a vital issue as over 80 per cent of Singapore residents occupy public housing blocks built by the Housing and Development Board (HDB) on leasehold land.
One of the pillars of Singapore’s housing policy is the HDB, which provides affordable public housing for the masses. The Central Provident Fund, a government-managed self-funded retirement scheme, is also utilized for home purchases. Additionally, the Land Acquisition Act empowers the government to compulsorily acquire private land for public purposes, including public housing, under the HDB.
However, concerns about affordability have been raised, particularly about the prices of built-to-order (BTO) and resale HDB flats, especially in mature housing estates.
Prof Chia noted that the government has explained that BTO prices are set to ensure most households can afford to pay, with estimates that 70 per cent of BTO flats launched in 2022 were affordable for households with a median income of S$8400 per month, based on a mortgage servicing ratio of 25 per cent. Government subsidies and grants are also provided to improve affordability for low- and median-income first-time families.
Although the Government provided subsidies and grants, Prof Chia noted that the price-to-income ratio – which indicates housing affordability – has declined from 2001 to 2021 in the BTO and resale HDB markets.
She added that another challenge to housing accessibility and availability is supply disruptions, which can lead to increased market prices and reduced accessibility. The government has responded by increasing the supply of BTO flats for public housing and land sales to private developers for private housing.
Mismatched expectations of buyers, such as the preference for BTO flats in select mature estates, can also affect housing availability, according to the academic. She pointed out that this may have led to rising HDB resale prices, despite measures introduced to cool demand, such as tighter loan criteria and longer wait-out periods for private homeowners wanting to buy HDB resale flats.
In February 2023, the issue of housing affordability and availability was addressed in the 2023 budget by the finance minister and actively debated in parliament. New measures were introduced to further support first-home buyers, specifically first-time families with children and young married couples below age 40. Housing grants were also increased to assist Singaporeans in buying an HDB resale flat as their first home.
Noting criticism that public housing owners in Singapore face the risk of losing their housing when their leases expire, Prof Chia said that this also applies to unsubsidized private housing on leasehold land.
She said, “Land ownership in Singapore is mainly vested in the government, which is also empowered to acquire land for public purposes from both public and private homeowners. These regulations have enabled the government to undertake urban renewal, rejuvenate ghost townships with population migrations, upgrade public housing blocks and improve amenities and infrastructure.”
Read Prof Chia’s analysis in full here.