7 Uncomfortable Perspectives About Singapore’s Public Housing Situation
Quite a few internet arguments would be enriched by knowing these. DISCLAIMER: THIS IS AN EMAIL NEWSLETTER EXCLUSIVE BROUGHT TO YOU BY THE WOKE SALARYMAN.
EDIT (9 APR 2024): This article was first published in December 2022, has been updated to reflect recent developments in the market.
We seldom write articles like these because it veers a little into the realm of politics.
That said, with many people asking us what we feel about the current housing market, we decided to make an exception.
We’ve published articles with HDB about buying a home within your means in the past. You can read them here:
Resale prices are spiking, BTO flats are delayed. What to do?
Why I won’t buy a million-dollar HDB flat (and why you might)
This article will be slightly different.
We’ll explore some questions and misconceptions about the property market that we’ve observed, and share our perspectives.
Here are the questions that we’ll (attempt to) address in this article:
To what extent is the Singapore government to blame for the rising prices of HDBs?
Why is it so hard to let singles buy HDB flats before 35?
Are Singapore property prices unjustifiably high?
Is it okay for buyers to be picky?
Why can’t we just put a cap on HDB resale prices?
Actually, are HDBs even affordable?
Why is affordable public housing such a big deal?
1. To what extent is the Singapore government to blame for the rising prices of HDBs?
Was the Singapore government to blame for the spike in prices? Yes and no.
Across the world, whether it's New York, Melbourne, or Tokyo, property prices everywhere went up, due to the same reasons.
Historically low interest rates prior to and during the pandemic
Which allowed many people to buy homes easily
Limited new housing supply, because of
Lack of manpower
Increased material costs and supply due to supply chain logistics
In Singapore, we saw both happening. Pre-2022, fixed-rate bank loans went as low as 1.15%. And while BTO delays seem like a uniquely Singaporean problem, it’s effectively the local version of ‘limited new housing supply.’
The result? Without the option to BTO, Singaporeans turned to resale HDB, and prices shot through the roof. Just in January 2024, resale HDB prices went up by 1.5%, the highest since April 2023.
What is also worth saying is that these higher prices might be driven by ex-private home owners who would finally be able to buy HDB resale flats in January 2024 after serving their 15-month wait-out period (a cooling measure rolled out in September 2022).
Our take: While the Singapore government has a big part to play in managing property prices, it is also worth saying that there are things beyond their control.
We think it’s unreasonable to expect the government to have predicted COVID-related delays a couple of years before the pandemic happened.
However, one thing that many people have brought up was that they could have better managed the BTO supply crunch, which happened even pre-COVID. We think this is a valid point.
2. Why is it so hard to let singles buy HDB flats before 35?
In recent years, one big criticism of Singapore’s public housing system is that it excludes non-traditional families, and singles below 35. This is a source of frustration for many (myself included).
However, we have to recognise this discrimination is the reason why HDB prices are significantly cheaper than their private counterparts. Fewer people are eligible, and hence, there is limited demand.
Expand the buyer pool, and prices will inevitably rise — HDB prices might rise even further as a result.
Our take: Both inclusiveness and affordability are laudable goals. But we must recognise the challenges of attaining both simultaneously. Singapore needs to have a national conversation if the needs of singles, childfree individuals, LGBTQ+ households, and other non-traditional families are to be met.
3. Are Singapore property prices unjustifiably high?
Many articles have pointed out that Singapore’s property prices have skyrocketed since the 1980s and 1990s, almost unjustifiably with no inherent increase in value provided.
We think there are two perspectives missing here.
For starters, consider Singapore’s global standing then and now.
The Singapore we’ve inherited today is very different from the Singapore of the 20th century.
Yes, the brick, mortar and fittings of the house haven’t changed. However, what we must consider are the intangibles. Compared to 40 years ago, or even 20 years ago, Singapore offers the people here more economic opportunities.
The result? It attracts more wealth and talent than ever before; a landlord renting out their HDB flat can earn far more today, compared to the past.
From a global perspective, a place in Singapore is worth a lot more today than it was 20 years ago. This is hence reflected in the prices.
The second thing to consider is historical interest rates.
Since the 2008 financial crisis, low interest rates have been the norm. The implication here is that Millennials and Gen Zs cannot recall a time when interest rates exceeded 2%.
But if you look back far enough into Singapore’s past, bank interest rates went as high as 7.81% in 1991, and were around 4–7% during the late-1990s, and 3–4% during the early-2000s.
Our point here? This meant that homes in the past could cost less, but people paid a lot more in interest on their mortgages.
Comparisons with the past aren’t exactly useful or accurate!
4. Is it okay for buyers to be picky?
Here’s a story my friend from Melbourne told me recently.
She wanted to live near her parents in Moonee Ponds (26 minutes from the CBD), but she could not afford it. So, she moved to the considerably cheaper Avondale Heights (56 minutes from the CBD).
This is somehow harder to grasp when the same places are replaced by Singaporean locations like Ang Mo Kio, Bishan, or Toa Payoh.
These mature estates are most in demand and have experienced the highest price growth, as compared to the broader HDB market.
As much as we hate to say it: While it would be awesome to live near our parents and our childhood neighbourhood; we’re not entitled to a place just because we desire it.
Young people all over the world commonly move into less affluent, less desirable neighbourhoods, only to rejuvenate and increase their desirability over the course of time.
This is known as Youthification or Gentrification, depending on how cynical you are.
Our take: The question you should ask yourself is this: Is your insistence on a neighbourhood beyond your means affecting your ability to buy a home?
5. Why can’t we just put a cap on HDB resale prices?
It's important to realise that there are many competing interests that HDB has to manage. As the saying goes: Every decision for something is a decision against something else.
Some examples:
First-time homebuyers want prices to be low and affordable.
Current property owners wish for HDB resale prices to rise; there are many older folks who rely on high HDB values to have a secure retirement.
Others want to preserve historic neighbourhoods, or natural areas to protect biodiversity.
Limiting HDB resale prices during the pandemic would have been great for affordability, but sellers would have had their net worth affected during a period of financial uncertainty.
Likewise, building more HDB flats involves tearing down old ones, or clearing land to build new ones. This will impact whatever little heritage/identity or green spaces are left in Singapore.
There are tough, tough, choices involved.
Our take: While we recognise that there are many different needs, we hope that the present or even future governments will be willing to sacrifice popularity to keep public housing affordable, as we think it’s a big part of Singapore’s success. We’ll explain this later in the article.
6. Actually, are HDBs even affordable?
Source: Urban Living Institute: Home Attainability Index 2023
According to the ULI Asia Pacific Home Attainability Index in 2023, when using the median income as a benchmark, HDB prices are affordable, compared to other residential properties in any major financial centres overseas such as Hong Kong, London or even New York.
Some things to think about, though:
We’re using the median income, so that means at least half of the population may find buying a HDB flat a challenge. We’re guessing a large part of this population is young folks who’ve just started on their financial journey.
Growth has been unequal. While incomes in Singapore have indeed risen over the past decade to keep up with housing prices, not everyone has seen their incomes rise at the same rate. Like many places, inequality is on the rise.
7. Why is affordable public housing such a big deal?
Many people have texted us to say that Singapore is becoming like Hong Kong. We think that’s a bit of a stretch, and we’re still a long, long way from that.
However, if HDB resale prices continue their upward trend à la the pandemic, then it would be a big cause for concern.
Why? We think there are two additional reasons, besides the oft-cited Total Fertility Rate.
Competitiveness as a country to both businesses and talent
The more expensive a city’s housing costs, the more companies must fork out to pay their workers.
The larger the percentage of salary that goes into housing costs, the less attractive a place becomes to both local and global talent.
Both of these affect Singapore’s competitiveness as a global hub for business.
Increasingly, our neighbours are improving their skills to effectively compete with us. The pandemic has also made the possibility of cheaper, remote workers taking opportunities away for Singaporeans more feasible.
As a country where people are its only resource, affordable public housing can be seen as an investment in our people.
The need for an innovative Singapore
We believe high HDB resale prices are a distraction from innovation and productivity. Both are essential to Singapore.
Let us explain:
The first is that people try to ‘game the system’ and make as much money as possible from reselling subsidised government housing in prime areas. After all, why learn valuable skills or take risks when you have a reliable way to earn easy money?
The second is that people tend to stick to more tried-and-tested paths in terms of careers. When you have to worry about your monthly mortgage, why take on the risk of starting a business?
Our take: The future of work will put Singaporeans in direct competition with the rest of the world. This will demand the people here to be more innovative, creative and entrepreneurial.
A parting word
For decades, we’ve harped about Singapore being a tiny country with no natural resources, except for its people. That’s because it’s true. Whether or not Singapore fades into oblivion depends entirely on the quality of its people.
To be precise, young people and their ability to take risks, being creative, start businesses and compete in the global economy.
Public housing? It shouldn’t be a commodity.
It should be an investment in our people.
Stay woke, salaryman.
More interesting stuff to read/listen to:
Triumph of the City: Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier
Urban Living Institute: Home Attainability Index 2023
Heart of the Matter: Removing Parks for Homes: Is Land Use in Singapore a case of competing needs
Johnny Harris: Liberal Hypocrisy is Fueling American Inequality
Bloomberg: Is Your Neighborhood Changing? It Might Be Youthification, Not Gentrification
Academia.SG: Systemic contradictions in Singapore’s approach to public housing (Chua Beng Huat)
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Great food for thought, appreciate you all for taking time and effort to help collect all the data and present it to us in an easy and digestible format 💯