SINGAPORE — Red Dot United published a public housing policy paper on Sunday (12 Feb), putting forth recommendations which sought to ensure that public housing remains affordable and accessible for all Singaporeans while protecting the interests of current flat owners.
Following closely behind the motion recently tabled in Parliament by the Progress Singapore Party (PSP), RDU prepared this report as it acknowledges the anxiety felt by many Singaporeans over the affordability and accessibility of public housing in the country, recognizing that affordability is a key concern for many people when it comes to public housing.
The political party, helmed by its Secretary General Ravi Philemon, states that traditional measures of affordability, such as the housing price to median income ratio and the 30 per cent rule, are deemed inadequate to measure affordability in a cosmopolitan city-state like Singapore.
For example, the party notes that such measures do not consider factors that influence affordability, such as the cost of living, interest rates, and availability of credit. It also doesn’t reflect the diversity of housing needs and preferences, as some people may be willing to pay a higher ratio to live in certain neighbourhoods or have access to certain amenities.
Additionally, it may not be a suitable measure in Singapore as it has high-income inequality, where the median income may not be representative of the population.
Therefore, RDU believes that homeownership rates may be a more accurate tool to measure affordability. With the expected homeownership rate of 91.7 per cent in 2022, it indicates that public housing is generally affordable for most people in Singapore.
RDU believes that a moderate price appreciation of about 3-5 per cent per year is sustainable and healthy for the public housing market. This rate allows homeowners to build wealth through the appreciation of their home value, while also maintaining affordability for potential buyers.
The average selling price per square feet (psf) for Build-To-Order (BTO) HDB flats in mature estates rose by 21.9 per cent to $584 in the first nine months of 2022, and the average selling price psf for BTO flats in non-mature estates increased by 16.4 per cent to $362 in 2022. RDU calls on the government to enforce policy measures to moderate housing prices to appreciate no more than 3-5 per cent per year.
In its housing policy paper, RDU put forth four policy recommendations that may help the government to moderate housing prices:
- Study the possibility of a new formula for fair land valuation for BTO flats, delinked from resale flat prices.
- Price new flats based on a multiple of median income and location factors.
- Cap HDB loan tenure to between 15-20 years.
- Restrict new citizens and permanent residents from purchasing resale flats with less than 79 years in land tenure.
RDU also calls for accountability and transparency in the HDB flat pricing mechanism. Each HDB flat buyer must be given a breakdown of the actual cost of the flat, including land cost, construction cost, grants and subsidies offered, and selling price.
The party also proposes that the En-bloc Redevelopment Programme be made mandatory to address the lease decay problem and ease the concerns of Singaporeans about the value of their HDB flats. It suggests that the inflation-indexed balance of the land cost is refunded to every citizen-buyer at the point of mandatory en-bloc redevelopment and that they be offered priority when booking for a new replacement flat.
RDU expressed its concern about the environmental impact caused by the increasing supply of BTO flats and urges the government to take a more balanced approach that considers both the need for housing and the conservation of the environment. It proposes the use of brownfield sites for HDB development and the compulsory conduct of environmental impact assessments.
As for housing for young people, RDU proposes that unused buildings, such as former school sites, be repurposed as homes for young people and that singles be allowed to buy bigger 3-room or smaller BTO flats. It also proposes lowering the minimum age for the Single Singapore Citizen Scheme and the Joint Singles Scheme to 30.
