On 14 February, during the delivery of the Singapore Budget 2023, Mr Lawrence Wong announced that the government will increase support for young couples by providing more grants to help them with the cost of buying flats.
Specifically, the Enhanced CPF Housing Grant will be increased by S$30,000 for eligible First-Timer families purchasing 4-room or smaller resale flats and by S$10,000 for those purchasing 5-room or larger flats.
This increase will take effect immediately, and the additional grant amount will be credited into their CPF account from April 2023 onwards. With the Enhanced CPF Housing Grant and the Proximity Housing Grant, eligible families can receive up to S$190,000 in grants when buying a resale flat.
Mr Wong suggested that increasing grants for young couples can help them better afford the cost of buying a flat, which can be a significant expense for many young families in Singapore. This increase in funding may allow a significant portion of First-Timer families to purchase the home of their dreams, which would help to bridge the financial gap in the short term.
However, during the recent Parliamentary Debate on public housing in Singapore, Members of Parliament from the opposition camp, including those from the Progress Singapore Party (PSP) and Workers’ Party, voiced concerns over how HDB flats have been priced out of reach for many Singaporeans, and how retirement funds of Singaporeans are depreciated as a result of having to pay for the flats and the depreciating value of their flat due to the declining lease.
Through the motion put forth by Minister of National Development, Desmond Lee, the People’s Action Party (PAP) essentially takes the position that nothing is wrong with the public housing policy, and the status quo should remain. This has reinforced the idea that any problems faced by Singaporeans regarding public housing can be solved by throwing more money at it.
However, the answer to the ever-increasing prices for HDB flats is nowhere to be found in the replies of the Ministers and PAP MPs in their speeches, and neither is it found in Mr Wong’s budget. After all, it denies that affordability and accessibility of public housing are issues faced by Singaporeans.
It is also a near certainty that Singaporeans will not see prices drop for BTO flats, as Indranee Rajah’s response to this issue – which has been criticized by many Singaporeans – is to ask if it is fair for existing flat owners that new Built-To-Order (BTO) flats are offered at a cheaper price.
During the recent parliamentary debate on 7 February, PAP MP Xie Yao Quan had no answer to the escalating price of HDB flats when questioned by Workers’ Party MP Leon Perera. This exchange demonstrated that PAP has no clear answer to this issue.
Mr Perera asked Mr Xie, “I have another question for Mr Xie as well. Does Mr Xie acknowledge that if we have a mental model of ever appreciating house prices, and then we have a model of valuing land based on comparables and historical, the tail wagging the dog, you have got escalation of prices going on for a long, long time.”
“That would mean if we want to keep BTO price stable, we have to increase subsidies more and more and more, ” he asked Mr Xie how to fund those subsidies if he believed in this model.
After Mr Xie replied with a non-answer and a question, Mr Perera pressed harder by asking, “You didn’t answer my other question, which is if we have an ever-appreciating cycle of property prices that lead to higher BTO prices because the land valuation goes up and we still want to keep BTOs affordable, that needs bigger and bigger subsidies on the budget from, I think, S$1.5 billion. It’s going up to close to S$4 billion. It’s going to go up even more. So where does Mr Xie think the money is going to come from?”
Mr Xie did not reply as Mr Tan Chuan Jin had asked the two MPs to move on from the exchange.
While the PAP government’s recent grants of up to S$40,000 for those purchasing 5-room or larger flats is a short-term solution that helps bridge the financial gap for Singaporeans, it will do little to address the fundamental issues highlighted by MPs from the opposition camp and the general public.
In the long run, sellers and buyers will take into account this increase in grants when determining their selling and buying prices, further escalating the already sky-high resale prices of HDB flats. Resulting in the need for higher grant amounts in the future for Singaporeans to afford resale flats or even BTO flats.
The fact remains that on the issue of affordable and accessible public housing, PAP is just kicking the can down the road for Singaporeans and their future generations.