SINGAPORE — At the May Day Rally 2023 on Monday (1 May), Deputy Prime Minister Lawrence Wong said that he and his 4G team are fully committed to looking after workers.

“In these dark times, this is my promise to you,” said Mr Wong. “Come what may, we will always be there with you, for you, and we will always have your back.”

At the rally, Mr Wong also addressed the concerns in public housing. He asked Singaporeans not to look just at the headline price of a Build-To-Order (BTO) flat from the Housing Development Board (HDB), but also to consider how prices relate to income and the proportion of income needed to service the housing loan.

The Prime Minister-in-waiting gave an example of a 4-room BTO flat in a new town that cost about $40,000 in 1980.

Median household income then was around $900, and a typical household would use about a quarter of its income to service the loan, he said.

Today, the price of a 4-room BTO flat in a non-mature estate like Bukit Batok costs about $350,000, Mr Wong added. While the price of the flat has risen nearly ten times, so has median household income from $900 to $9,000, he claims.

That is to say, based on Mr Wong’s figures, the price-to-income ratio of a 4-room new flat in a new town was 3.7 (40,000 / (900 x 12)) back in 1980 while it was 3.2 (350,000 (9,000 x 12)) currently in a non-mature estate, implying that new HDB flats are even more affordable now compared to 1980.

However, a quick check on some of the old news articles back in the 1980 days revealed a different story.

For example, in a November 1978 news article, then MP for Serangoon Garden, Dr Lau Teik Soon helped in the balloting of 1,858 new flats in Ang Mo Kio, a newly established estate at the time. Those HDB flats comprised 1,296 3-room and 562 4-room flats. Prices reported in the article were between $15,800 to $24,500.

That is to say, a new 4-room HDB flat at Ang Mo Kio in late 1978 was selling for only $24,500 by HDB.

A guide on buying new HDB/HUDC flats was also published in Jun 1979. It mentioned that HDB would increase its prices by 15 per cent starting 1 Jul 1979.

As can be seen, in those times, a new 4-room HDB flat was sold at $27,100 in a new town ($23,500 before the increase). The household income ceiling to buy a 4-room flat was also raised to $1,500.

Using the $900 median income mentioned by Mr Wong, the affordability of HDB flats in a new town at the time, as measured by the price-to-income ratio, was calculated to be only 2.5. This is much less than the current calculated ratio of 3.2 for the Bukit Batok example.

According to Demographia International Housing Affordability, a house-price-to-income (HPI) ratio of 3 and below would be considered “affordable” while a ratio of 3.1 to 4.0, “moderately unaffordable”. From 4.1 to 5.0, it would be classified as “seriously unaffordable” and, 5.1 and above, “severely unaffordable”.


Hence, one can conclude that a new 4-room HDB flat in the new towns back in the 1980 would be considered “affordable” even at $27,100 while the Bukit Batok example selling at the current $350,000 mentioned by Mr Wong would be considered “moderately unaffordable”.

Median income based on first-time applicants rather than national median: Workers’ Party

During the debate on affordable and accessible public housing in Parliament this February, Mr Leon Perera, Member of Parliament for Aljunied GRC, highlighted the Workers’ Party’s position: targeting a HPI of three, or close to three, for BTO flats in non-mature estates.

This stance was formulated based on updated information provided by Sengkang Member of Parliament Mr Louis Chua, in response to a Parliamentary Question. The data revealed that first-time BTO flat applicants had a median household income of $7,700 per month.

WP contends that it is more pertinent to focus on the median income of first-time buyers, rather than the national median household income. Consequently, the party believes that the HPI target for non-mature BTO flats should be three, or close to three, in accordance with the income of first-time homebuyers.

If a household income of $7,700 per month as in the case for the average first-time BTO applicant, is used in Mr Wong’s example of a $350,000 HDB flat, the HPI would be 3.8 inching nearer to the Seriously Unaffordable mark.

It should also be noted that the 25th percentile of first-time BTO flat applicants in 2022, earn $5,600. This means that the HPI for these applicants in the case of the Bukit Batok example would be 5.2, which classifies as severely unaffordable.

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