SINGAPORE: Prime Minister Lee Hsien Loong reportedly said today (26 Mar) that housing prices in the country will continue to reflect the notion that Singaporeans will have a good place to live.
Speaking at the ground-breaking ceremony of the Chong Pang City integrated development project in Yishun, PM Lee said that his party is committed to ensuring that HDB flats remain a safe haven for the family as well as an important source of retirement savings, for Singaporeans to enjoy their old age comfortably.
According to Channel 8 News, he added that the government is committed to building the latest facilities in public housing estates across the island while gradually redeveloping older estates.
Asserting that Singaporeans can enjoy good facilities, such as schools, hawker centres, and leisure & sports facilities, no matter which neighbourhood they live in, the head of Government said that the authorities will also build a comprehensive transportation network to facilitate convenient travel.
Housing remains a hot-button topic in space-limited Singapore, with the COVID-19 pandemic causing resale prices to skyrocket as work on built-to-order developments came to a standstill.
But while rising property prices seem to bode well for the value of public housing flats in the future, it has also led to concerns that housing will become more and more unaffordable for the middle class, despite Government subsidies.
When he received criticism over the high prices of housing in 2010, PM Lee responded that HDB flats are an appreciating asset as he said: “The HDB flat is not just a shelter but also a key investment asset… over the long term, the value of HDB flats depends on the strength of the Singapore economy.”
He added, “Provided Singapore continues to do well, our flats will maintain their value, and Singaporeans can enjoy an appreciating asset.”
That same year, PM Lee’s father and Singapore’s founding Prime Minister Lee Kuan Yew warned Singaporeans not to cast a protest vote against the PAP over the affordability of HDB flats and scolded that Singaporeans must be “daft” if they find fault with the housing policy.
The late elder statesman said, “We give our buyer an asset which is below market price the moment he buys it. So there is no profit, it’s a loss, but there’s a strategy behind that loss,” he said. “That loss is to give the man an asset which he will value, which will grow in price as the country develops, as his surroundings become better.
“This is a social responsibility which we have undertaken and that’s the reason why we are re-elected… No country in the world has given its citizens an asset as valuable as what we’ve given every family here. And if you say that policy is at fault, you must be daft.”
Just before the General Election in 2011, then-National Development Minister Mah Bow Tan told Singaporeans: “We’re proud of the asset enhancement policy. (It) has given almost all Singaporeans a home of their own… that grows in value over time.”
In 2013, Mr Lee Kuan Yew promised again, “We intend to keep the value of these homes up, it will never go down. Because it will be renewed, the surroundings will improve, and as Singapore prospers, GDP goes up, the value of homes will go up.”
In 2017 however, prominent Minister Lawrence Wong confirmed that the vast majority of flats will be returned to HDB, without any compensation for homeowners, when the 99-year lease runs out.
The PM-designate warned that not all old flats will be automatically eligible for the Selective En bloc Redevelopment Scheme (Sers) and that only 4 per cent of HDB flats have been identified for Sers since it was launched in 1995.
The Minister’s warning was followed by HDB chief executive Dr Cheong Koon Hean’s comments in April 2018 that the value of ageing HDB flats will indeed decline over time.
Then, in his National Day Rally speech this year, PM said that he is introducing the new Voluntary Early Redevelopment Scheme (Vers), which allows homeowners of flats which are 70 years old to opt to sell the remaining lease back to the government through a collective sale.
Compensation under Vers will be less generous than that under Sers since there is less financial upside for the Government to buy back 70-year-old flats. It also remains unclear at this point how much homeowners will receive if they opt for Vers and whether the compensation will be sufficient for homeowners to purchase another flat that affords them the same standard of living.
In October 2018, Mr Lee asserted that it is fair that Housing Board Development (HDB) flats will decline to zero value at the end of their 99-year lease, at a closed-door People’s Association talk.
During the Q&A segment, the head of Government was asked: “Generally people agree that we need to recycle land, so that the future generation have equal opportunity to buy flats. But people are also upset that HDB flats have zero value at the end of the 99-year lease – meaning that the CPF used to pay off the flat also disappears and they have little left for retirement. Your comments please.”
In a lengthy response, PM Lee indicated that it would be “unfair” for the Government to pay for flats that have reached the 99-year lease since the homeowner has had use of the flat for that many years.
He said, “Thiru asked me why at 99 years the house has no more value. I think the answer is: because when we sold you the flat, we sold you a 99-year lease – which means you pay a certain amount of money, the flat is yours for 99 years, at the end of 99 years you give the flat back to the Government. That’s what a 99-year lease means.”
The PM added, “But is it fair? I think it’s fair! You buy a property, we give you a price – in fact, we give you a subsidised price – the property is worth a lot of money. You can live in it, after five years you can sell it, after a certain time you can also rent it out and even do lease buyback with the Government.”
Asserting that a new 99-year flat will be “enough for you to live in for free for the rest of your life. Plus extra!” he added:
“So actually we’ve given you a house, paid for by the time you retire, and it has enough value – it’s got enough life – for you to live in it for the rest of your own retirement, and furthermore, at the end it still has maybe – if you live till 90 – maybe its got 30-40 years beyond that.
“So it has value! Value which you can use, value which you can give to you children. Your children may not want to live in it, they can sell it, they can give it back to HDB.”
The PM said that at the end of the lease, the house must come back to the Government: “But at 99 years, it comes back to the Government. You have got 99 years of use out of it while the Government gets back the land, recycle and can redevelop for somebody else. I think that is fair.
“I think that is the fundamental point which we have to understand, because if we made it forever – or if we said at the end of 99 years, you give me back the house, I give you back your dollars – well, then what about the years when you have been living in the house? You must pay rent right? Which I don’t think is the deal. So I think that we have to understand this – at the end of 99 years, the house must come back to the Government.
“In between, what can I do to help the house keep its value? Well, I’ve got HIP, I’ve got HIP II, and at the end – to make it more convenient to people, to give you choices – I offer you Vers. You don’t have to take. It’s up to you. But I think it’s a good arrangement and I hope that we will be able to make the term so that some people will take.”
PM Lee did not give an answer to Thiru’s point about how “the CPF used to pay off the flat also disappears and they have little left for retirement”.
PM Lee asserts “it’s fair!” that HDB flats will plummet to zero value