Building affordable homes for Singaporeans

By Janice Heng, The Straits Times, 31 Mar 2014

AT THE turn of the last decade, there were fears that the Housing Board flat was becoming out of reach for many families.

Young couples bemoaned the fierce competition to buy subsidised Build-To-Order (BTO) flats from the HDB, while soaring prices meant that buying a resale flat was a costly proposition.

At the end of 2010, the median price of a four-room flat was $385,000.

Five-room ones were going for more than half a million dollars in many mature estates.

It led to heated tempers, with citizens and opposition parties urging the Government to care more about families and less about keeping property values high.

But to see Singapore's housing policy as hostile to families would be a mistake.

Granted, there is a tension between keeping flats affordable for buyers and keeping property values up for home owners.

The latter was a particular focus in the 1990s.

Then prime minister Goh Chok Tong, in a 1992 speech to grassroots leaders, said HDB flats were the most valuable asset for most Singaporeans, adding: "It is in your interest to ensure that the value of your flats continues to rise."

Nowadays, the need to maintain property values is taken as given.

In his Budget speech this year, National Development Minister Khaw Boon Wan said: "If Singapore's economy were to decline permanently, all properties would drop in value.

"That is why it is important to ensure that our economy remains dynamic and vibrant."

In the light of this, it is not hard to see why some might accuse the Government of being more interested in property than people.

Yet, such an accusation would be misguided.

Even as it aims to maintain property values, the Government has not neglected the needs of those seeking to buy a home.

Instead, it has moved to make sure that public housing is affordable and available.

When Mr Khaw took over the housing portfolio in 2011, he unlinked BTO prices from resale ones.

Previously, BTO prices were pegged to those of resale flats in the same area, and rose when resale prices rose.

Removing this peg meant the Government could keep new flats affordable even in a strong resale market.

In addition, the HDB had already begun launching more BTO flats, with 16,000 in 2010 compared to under 8,000 in 2008.

Mr Khaw ramped this up to more than 25,000 new BTO units each year, which allowed more young families to get a new flat sooner.

The income ceiling for HDB flats was also lowered, making affordable public housing available to more Singaporeans.

Cooling measures such as tighter home loan curbs reined in resale price increases.

Family first

IF ANYTHING, the family is central to housing policy.

Until last year, only families could buy subsidised flats directly from the HDB. Families also receive higher housing grants to subsidise their purchase of public flats than singles.

Housing policies even encourage larger family units.

For instance, 30 per cent of BTO flats are set aside for married couples with children who are buying their first public flat.

Priority is also given to extended families who live close to each other. The Multi-Generation Priority Scheme sets aside 15 per cent of units for parents who are applying with their married child for flats in the same development.

Larger "3-Generation" flats were introduced last year for multi-generational families.

As Mr Khaw put it in 2011, shortly after taking over, promoting marriage and births "is a national priority... and MND (Ministry of National Development) must facilitate it to its best ability".

There have even been arguments that the family has been too central to housing policy.

Over the years, there have been demands for more to be done for those who fall outside the usual definition of a family unit.

Single Singaporeans were initially shut out from the public housing market.

Then-national development minister S. Dhanabalan said in 1988 that land-scarce Singapore could not afford to let every single person have a flat of his or her own. Letting them live alone would also conflict with the Government's focus on the family unit, he added.

For decades, singles could not buy resale HDB flats on their own, but had to apply jointly with another single.

But things have gradually changed. In 1991, singles aged 35 and older were allowed to buy one- to three-room resale flats in all but some urban estates.

In 2001, that geographical restriction was lifted and three years later they were allowed to buy resale flats of any size.

Last year, they were finally allowed to buy new two-room flats in non-mature estates directly from the HDB.

Mr Khaw is unlikely to move any further on this issue for now.

When Member of Parliament Penny Low suggested in the Budget debate that singles be allowed to buy larger BTO flats, he insisted that families still come first. "I have no plan for such a change immediately. Given our limited resources, let me prioritise - and, I think, give greater priority to the married couples first."

But in focusing on families, Mr Khaw is also willing to pay more attention to less traditional ones.

"Now that we have cleared the backlog for newlyweds, we have begun to focus on helping the vulnerable groups, especially divorcees with children," he said.

In September last year, for instance, a temporary housing scheme was extended to divorced and widowed parents with children. Previously, this Parenthood Provisional Housing Scheme was open only to married couples who were first-time buyers.

Five per cent of two- and three-room BTO flats in non-mature estates are also set aside for divorcees with children below 16.

This approach looks set to be expanded in future. Mr Khaw asked: "Even as we continue to support marriages and families... how can we, in housing, build a social compact that is more inclusive and provide greater support to divorcees and unmarried parents with kids?"

The traditional family unit remains at the heart of housing policy. But perhaps the next step is to accommodate other sorts of families too.

THE SINGAPORE PERSPECTIVE
The rise of the public flat as an asset
By Janice Heng, The Straits Times, 31 Mar 2014

PUBLIC housing in some countries often takes the form of rental homes for the less well-off, such as Britain's council estates or "the projects" in the United States.

Although owning such property is an option, it is not seen as the default there - unlike in Singapore.

Singapore's model of home ownership allows people to buy such property as an investment which they can sell or let out.

As well as being an option for those on low incomes, the public flat here is also seen as a source of income too.

Yet it was not always thus. The public flat's role as an asset is one that emerged gradually.

When the Housing and Development Board (HDB) was set up in 1960, its role was to provide basic permanent housing for people previously living in slums and squatter settlements.

Initially, rental housing was provided but within half a decade, the HDB moved to encourage home ownership instead.

Having a nation of home owners, rather than tenants, opened up more possibilities.

In 1971, public flats were allowed to be resold for the first time. Previously, they could only be sold back to the HDB at fixed prices.

A resale market was created and, as property prices rose, selling one's HDB flat at a profit became a possibility.

Another avenue for income opened up in 2003, when HDB home owners were allowed to sublet their whole flat. Residents could upgrade to private property while letting out their HDB flat for additional income.

Previously, subletting was allowed only under special circumstances, or for those aged at least 65 who had lived in three-room or smaller flats for at least 25 years.

Schemes have also been set up to let elderly flat owners tap the value of their homes for retirement income.

Introduced in 2009, the Lease Buyback Scheme allows people over 63 to sell part of their flat's lease back to the HDB.

The proceeds go towards topping up the owners' Central Provident Fund Retirement Accounts, with any excess up to $100,000 being paid to them in cash.

The Government has made it clear that its top priority is providing homes. But the role of the public flat as an asset is inescapable.

As Prime Minister Lee Hsien Loong put it in last year's National Day Rally speech: "The HDB programme is not just about the roof over our heads. It is also a valuable nest egg."

This is the second of 12 primers on various current affairs issues, published in the run-up to The Straits Times-Ministry of Education National Current Affairs Quiz.

3-room BTO flats for singles - not now, but not never
The needs of other groups arguably come first, but situation can change
By Janice Heng, The Straits Times, 10 Apr 2014

ONCE, single Singaporeans could not buy a Housing Board flat. Not a new, subsidised one. Not one on the resale market.

Then, in 1991, the rules changed. Those aged at least 35 could buy three-room or smaller resale flats. In 2004, resale flats of any size were open to them.

However, the biggest shift came last July, when the Government allowed singles to buy new, subsidised two-room flats as solo purchasers.

And now, in no time at all, the bar of public expectations has been raised further. Singles are now asking, as two did in letters to The Straits Times Forum page: "When can we buy three-room subsidised flats?"

Two things have changed to nudge the HDB to provide for singles.

One is the recent move to make public housing more inclusive. The Government has long maintained a pro-family policy in public housing, which is implemented by the HDB.

Those who want to buy a new, subsidised HDB flat usually need to form a "family nucleus" - they can be a married couple, with or without children; a divorcee, widow or widower with children; or a single with one or more parents.

In 1988, then National Development Minister S. Dhanabalan had explained why singles would not be allowed to buy HDB flats: "While we cannot force people to stay with their families, public housing policy should not be such as to encourage them to move out of the family home."

But over the years, changing expectations caused the Government to relent. In 1998, the Government even gave singles aged above 35 a housing grant of $15,000 to buy resale HDB flats.

Seen in this context, letting singles buy new two-room flats is just the latest move in a two-decade-long journey towards making public housing more inclusive.

One consequence of letting singles buy subsidised flats is that an unmarried mother with a child will now qualify. Unwed parents with children were previously barred under HDB's pro-marriage policy.

The second thing that has changed since 1988 is land use. Back then, Mr Dhanabalan had argued that land-strapped Singapore could not afford to let every single have a place of his own.

But the country has apparently coped with its land shortage well enough to let singles buy resale flats, and now subsidised flats. Singapore has found many ways to improve land use since 1988 - not least in the form of taller HDB blocks - and might well find more in the decades to come.

So, in these changing times, should singles be allowed to buy larger subsidised flats?

The move is not, strictly speaking, necessary - certainly not in the way that, say, helping lower-income families get a home is necessary. Yet there are sound reasons to consider it.

First, some singles can do with more space. Forum page writer Justin Cheng notes that an elderly single who is ill may need caregivers who need their own living space and "should not be sleeping in the living room".

There is also a pro-family angle: Having a small flat could get in the way of getting hitched, as Forum page letter-writer Edwin Lim pointed out. A single with a new two-room flat must live there for five years before he can sell it. A small flat might hinder plans to start a family, should he get married within that period.

Second, singles should not be shut out of housing subsidies that their married friends get.

PropNex Realty chief executive Mohamed Ismail Gafoor voices a common concern - or objection - when he asks: "How much should the taxpayer subsidise singles?"

To that argument, singles have replied that they are taxpayers too, yet do not enjoy the various tax reliefs or government subsidies in areas such as education that couples with children do.

But the third, most compelling reason why singles could be allowed to buy three-room flats is demand. If demand for three-roomers tails off from families, why not let singles have them instead? This need not happen now, but in time to come.

In last year's Budget debate, National Development Minister Khaw Boon Wan noted that some singles had e-mailed him to ask even for five-room flats.

Instead of dismissing this, he said: "One step at a time. Let us do the two-room flats because let us assess the demand. Then we slowly liberalise from there."

This year, he said he had no immediate plan to let singles buy larger flats. He phrased it thus: "Given our limited resources, let me prioritise and give greater priority to the married couples first."

Framing the issue as one of priority suggests that once certain needs are met, others - including those of singles seeking larger flats - can be considered.

When might this be possible?

Last August, after the first Build-To-Order (BTO) exercise open to singles, Mr Khaw noted that the new policy had not affected first-timer families applying for two-room flats. There were fewer such applicants than units available to them.

If the minister's eye is on competition between singles and families, singles' three-room dream might become more feasible if families lose interest in such flats.

That trend seems likely.

The general preference today is already for four-room flats, and five-roomers if the family can afford it, says R'ST Research director Ong Kah Seng.

Of course, if demand for three-roomers falls, the HDB could simply build fewer such units rather than open them to singles, notes Mr Ismail.

Furthermore, there are various other groups whose needs arguably come first, from single-parent families to lower-income singles themselves, who may be happy with a two-room flat.

Says Mr Ong: "The current government focus is to help singles who find resale flats too costly, unaffordable. So a two-room BTO flat will match their requirements and affordability."

So for now, a three-room BTO unit remains an unattainable dream. But this may not be the case forever, not least given how far the Government has moved already.

After all, as Mr Ismail points out: "In the past, no one could even imagine that singles would get a chance to get a BTO flat."