Housing accessibility and affordability issues are not unique to Singapore. But the small island nation is especially land scarce, with about 720 square kilometres for its 5.5 million residents.
Housing for over 80 per cent of residents is the ubiquitous high-rise public housing blocks built by the Housing and Development Board (HDB) on leasehold land since 1960. These blocks are clustered into townships with modern amenities such as shopping, public transport, health facilities, playgrounds, parks and schools. Public housing is an integral part of urban planning and sustainability in Singapore.
Remarkably, Singapore has achieved a home ownership rate of over 80 per cent among its citizens. This is through three policy pillars operating since the 1960s. The HDB provides affordable public housing for the masses. The Central Provident Fund, a government-managed self-funded retirement scheme, is also used for home purchases. The Land Acquisition Act enables the government to compulsorily acquire private land for public purposes, including public housing under the HDB.
Affordability and availability of public housing is an interplay of supply and demand. Supply is affected by land availability and cost, construction costs and supply chain disruptions — such as those during the COVID-19 pandemic. Demand is affected by population growth, family formation, and aspirations of households and individuals. Rising income levels lead to aspirations for better quality housing in more desirable locations, as well as separate living in close proximity to parents and grandparents.
Affordability concerns how households can afford to pay for public housing — through Central Provident Fund withdrawals for housing and mortgage loans — without being burdened financially. Public housing availability is also subject to meeting eligibility criteria laid down by the government and getting flats of one’s choice, considering factors such as location, flat size and the length of the waiting queue.
In the public debate on the affordability of HDB flats, the key concern is the price of HDB flats, also known as built-to-order (BTO), for both newly built units and those on the resale market, especially in mature housing estates.
Singapore’s political leadership and policymakers explain that BTO prices are set to ensure most households can afford to pay. Based on a mortgage servicing ratio of 25 per cent, they estimated that 70 per cent of BTO flats launched in 2022 were affordable for households with a median income of S$8400 per month. Affordability for low- and median-income first-time families is further improved with government subsidies and grants.
An indicator of housing affordability is the price-to-income ratio. It shows that between 2001–2021, this ratio edged up from 3.33 to 4.07 in the BTO market and from 3.98 to 4.23 in the resale HDB market, indicating that housing affordability has declined. To offset this, the government offered housing grants and subsidies to make HDB homeownership more affordable for the majority of Singaporeans. In contrast, the price-to-income ratio for private housing, which is unsubsidised, was in the range of 12.74 to 31.07 in 2021.
Reduced accessibility and availability of housing can be due to supply disruptions. This pushes up market prices, causing alarm among would-be buyers. The government is resolving this issue by building more BTO flats for public housing, as well as increasing land sales to private developers for private housing.
Worsening accessibility and availability of public housing can also be due to mismatched expectations — for example, buyers wanting BTO flats only in select mature estates. Households that cannot wait for their desired location and type of flat can resort to the resale market. As a result, HDB resale price indices have been rising, notwithstanding measures introduced in September 2022 to cool demand through 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 covered in the 2023 budget by the finance minister and was actively debated in parliament. New measures were introduced to help further support first home buyers, specifically first-time families with children and young married couples below age 40. Housing grants were also increased to help Singaporeans buy an HDB resale flat as their first home.
Critics have noted that public housing owners in Singapore risk losing their housing when their leases expire. But this also applies to unsubsidised private housing on leasehold land. 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.
There are a range of eligibility criteria and restrictions that govern HDB flat ownership, such as income ceilings, marital status and ethnic quotas. Such issues are still waiting to be resolved.
Chia Siow Yue is a Senior Research Fellow at the Singapore Institute of International Affairs.