Friday 10 February 2023

Singapore Government is committed to keep HDB flats affordable and accessible for Singaporeans

Singaporeans will not have to worry about having an affordable home to call their own: PM Lee Hsien Loong
By Michelle Ng, Housing Correspondent, The Straits Times, 8 Feb 2023

Singaporeans, now or in generations to come, will not have to worry about having an affordable home to call their own, said Prime Minister Lee Hsien Loong.

Giving this assurance in a Facebook post on Tuesday, PM Lee said the Government is working hard to ramp up the supply of flats, cool the resale market and keep Housing Board flats affordable and accessible to a wide range of Singaporeans.

“We are working hard at the problem, and are confident we will solve it,” he said.

His post comes after Parliament debated two motions on the affordability and accessibility of HDB flats for 12 hours over two days. One was filed by National Development Minister Desmond Lee, and the other by Progress Singapore Party Non-Constituency MP Leong Mun Wai.

Noting that public housing is an issue close to the hearts of most Singaporeans, PM Lee said the Covid-19 pandemic greatly disrupted the supply of flats, and waiting times for Build-To-Order (BTO) flats and resale prices have gone up.

As a result, families have had to adjust their life plans. “They are concerned and often anxious about when they can get their flats, and whether they can afford them,” he added.

Responding to calls from MPs to address the BTO supply crunch during the debate, Mr Desmond Lee said HDB has ramped up its public housing programme to meet the current strong demand, with 150 BTO projects to be concurrently under construction by around 2025, up from the current 100.

He added that the Government is studying how to provide more support for first-timers buying HDB resale flats, as well as reduce the high rejection rate for BTO flat applications.

This is to ensure new flats are prioritised for those with genuine and urgent housing needs.

In his post, PM Lee said MPs had presented a range of ideas on how to deal with the public housing issue during the debate.

“Some are promising and well worth exploring further. Others appear attractive, but upon a closer look, turn out to be unworkable, unfair or unsustainable,” he said.

Mr Leong had proposed a housing scheme that would allow Singaporeans to buy a BTO flat at construction cost, plus a notional location premium. They would pay the land cost, with accrued interest, only when they sell their flats in the resale market.

His proposal drew criticism from political office holders and backbenchers from the People’s Action Party, as well as Nominated MPs, with many saying it would erode the country’s reserves.

Leader of the Opposition Pritam Singh, meanwhile, said the proposal should be studied further.

On Wednesday, PM Lee said Singapore’s public housing system works, with more than eight in 10 Singaporeans owning the HDB flats they live in.

More families are also becoming flat owners as more than 20,000 new flats are completed each year, he added.

HDB plans to launch up to 23,000 BTO flats in 2023, and up to 100,000 new flats in total from 2021 to 2025.

HDB to ramp up BTO projects, with 150 to be built at same time by 2025: National Development Minister Desmond Lee
By Michelle Ng, Housing Correspondent, The Straits Times, 8 Feb 2023

Singapore has ramped up its public housing programme to meet the current strong demand.

About 100 Build-To-Order (BTO) projects are currently under construction, and this will increase to about 150 concurrent BTO projects by around 2025, said National Development Minister Desmond Lee on Tuesday.

Responding to several MPs on why the Housing Board did not build more flats at a faster clip, Mr Lee said HDB is already “building aggressively and at large scale”.

By contract value, this makes the HDB the largest housing developer and it also exceeds all the other private residential housing contracts combined by more than 50 per cent,” he said in a speech to close a 12-hour debate on affordable and accessible public housing that spanned two days, with 26 MPs speaking.

Mr Lee noted that HDB is not the only developer ramping up building and construction to catch up on Covid-19-related delays suffered in existing projects as the pandemic began to subside.

“Fiscal resources, foreign manpower and construction capacity are not without limits,” he said.

Mr Lee noted that some MPs, including Leader of the Opposition Pritam Singh, Workers’ Party (WP) MP Louis Chua and Progress Singapore Party (PSP) Non-Constituency MP Hazel Poa, have suggested that the Government has underestimated demand and under-built the supply of flats.

The Government has models that take into account marriages, births, deaths, income levels, economic conditions and other factors, but it is not a “perfect science”, he said. It also cannot account for sudden shocks and their impact on human psychology and market behaviour.

For instance, for many years before the pandemic, application rates for BTO flats were low and resale prices were soft but when Covid-19 hit, housing demand shot up, he said.

Mr Lee cautioned that the housing market is highly sentiment-driven and demand can suddenly appear, or disappear, overnight. He cited how housing demand fell after the Asian financial crisis struck in 1997, and HDB ended up with 31,000 unsold flats, which took more than five years to clear.

While the unintended oversupply meant that home buyers could walk in to buy ready flats in the early 2000s, others who bought flats just before the crisis ended up with negative equity.

“The many unsold flats represented a waste of taxpayers’ money. The holding costs incurred from holding the vacant housing stock are not inconsequential; money that could have been well spent on other uses in healthcare, education and other areas,” said Mr Lee.

He reiterated that public housing has to be kept affordable and accessible, not just for the current generation of Singaporeans but also future generations.

Cautioning against robbing future generations of land or fiscal resources by lowering BTO flat prices now, Mr Lee set out why the Government disagrees with the PSP’s proposals and its motion.

“We believe that we must maintain housing accessibility and affordability while keeping sustainability in mind, and uphold a culture of politics where we discuss hard truths and trade-offs in a transparent manner, even if these may not be popular,” he said.

PSP Non-Constituency MP Leong Mun Wai had proposed that Singaporeans who buy a BTO flat and live in it their entire lives be exempted from paying for land costs. They would pay for land costs with accrued interest only when they sell their flats in the resale market.

Rebutting his proposal, Second Minister for National Development Indranee Rajah said the PSP scheme is effectively a “national prepaid rental with an option to buy” where the “user” pays rental upfront and has the option to own the flat by paying a deferred land cost.

On WP MPs Leon Perera and Gerald Giam’s proposal to peg non-mature estate home prices at three times the median annual household income, Mr Lee said the current ratio stands at around five for non-mature estates and around three or less for lower-income households.

Importantly, the vast majority use their CPF monies to pay their mortgages with little to no cash, which gives a sense that BTO flats are broadly affordable, said Mr Lee.

“While the (WP) proposal sounds attractive, it ignores the trade-off that far lower prices would attract even more flat applicants. It also does not address the windfall gains enjoyed by flat buyers, some of whom may be from the higher-income groups,” he said.

“How do you ensure the affordability of the resale market over time? That dogmatic proposal achieves none of that. And so, we think this is one-dimensional,” added Mr Lee.

Mr Singh, who was the last MP to speak, proposed to amend Mr Lee’s motion to call on the Government to intensify its efforts to keep public housing affordable and accessible.

Concluding his speech, Mr Lee acknowledged that the public housing system is not perfect.

“There are things we need to improve today and tomorrow. But to say it is fundamentally, through and through, unaffordable and inaccessible and needs a radical change of the kind that (Mr Leong) is proposing together with his party, is something we cannot accept.”

Parliament later voted to pass Mr Lee’s motion. It rejected Mr Singh’s amendment and Mr Leong’s motion.

PSP’s housing scheme raids reserves and benefits some at expense of everyone else: Indranee Rajah
By Grace Ho and Tham Yuen-C, The Straits Times, 8 Feb 2023

A housing scheme proposed by the Progress Singapore Party (PSP) to exclude land costs in pricing Housing Board flats would not only erode Singapore’s reserves, but also benefit only a select group of flat buyers at the expense of all Singaporeans, said Minister in the Prime Minister’s Office Indranee Rajah on Tuesday.

It would also exacerbate the very issues of housing affordability and accessibility that PSP Non-Constituency MPs Leong Mun Wai and Hazel Poa said it would solve, she added.

Addressing Singapore’s one million home owners directly in her speech, Ms Indranee warned: “The PSP portrays it as cheap housing with no downsides. This sounds too good to be true.

“And if something sounds too good to be true, it probably is too good to be true. That is to say: There is a catch you haven’t been told about.”

Ms Indranee was among four ministers who spoke in the debate on two motions about public housing – one put forth by National Development Minister Desmond Lee, and the other put forth by Mr Leong and Ms Poa.

Under the PSP’s scheme, an individual buys a new flat at a “user price”, which is set based on “construction cost and a notional location premium”, Ms Indranee said, adding that Mr Leong did not say how this notional location premium would be calculated.

If the individual were to sell his flat in the resale market after the minimum occupation period, he would have to pay the land cost that HDB had recorded at the point of purchase, along with some accrued interest.

This, said Ms Indranee, is essentially a “national prepaid rental scheme with an option to buy”.

“And that’s why Mr Leong uses the phrase ‘user price’, not purchase price. Because he knows it is not ownership, it’s prepaid rental.”

Moving on to the issue of land, she said that under Mr Leong’s proposal, the Build-To-Order user does not have to pay for land value or bear any cost of the land until he chooses to sell it.

And the cost of land for the duration that the user lives there is borne by all other Singaporeans across several generations, she said. They would pay for it in three ways: financially through the erosion of shared reserves, in inequity where some benefit at the expense of others, and in poor policy with implications for the broader housing market.

Eroding shared reserves

On reserves, the state sells land at fair market value. When that happens, the physical asset – land – is converted into sales proceeds. To preserve the value of the reserves, the land sales proceeds go back to Singapore’s reserves, and are reinvested by its investment entities to benefit both current and future generations.

Half of the investment returns supplement the national Budget annually, through the Net Investment Returns Contribution (NIRC), and the other half is reinvested for the benefit of the people and future generations.

But under the PSP’s scheme, users get to enjoy the land without paying for it. So long as they are occupying the flat without paying for the land, that is a draw on the nation’s reserves, she said.

“As a result, we would forgo the monies that we would have invested and the investment returns, under our current system. And that means less NIRC for the Budget every year.“

And to make up for what the NIRC cannot now fund, she said, the Government would have to either raise taxes or cut spending.

Inequitable proposal

Nor is the PSP’s proposal fair to Singaporeans, said Ms Indranee, as those who choose not to sell their flats would enjoy a large subsidy at everyone else’s expense.

Those who choose to sell their flats, on the other hand, would have to pay recorded land cost and accrued interest, but with no subsidies or grants.

“For the one million existing home owners, you should consider what PSP’s proposal means for you. If you are an HDB (flat) owner today, you should think what the PSP’s proposal means for you,” she said.

“Essentially, there will be a new precinct right next to you with flats of similar attributes, but much cheaper. Please consider what this might mean to your property value. Also consider, is it fair that by policy design, somebody else gets the same flat as you but at a much cheaper price?”

Bad housing policy

Ms Indranee added that the PSP’s model of deferring land cost until resale also kicks the can down the road for home buyers, who might be worse off under this model as, when they sell their flat, they have to pay for the recorded land cost without the benefit of grants or subsidies.

This, she said, could affect their net proceeds and even affect their ability to finance another home. It is unlike the current HDB home ownership model, which enables Singaporeans to own their flat at an affordable price, and benefit from overall economic growth when they subsequently monetise it.

Another issue is the lack of clarity as to the legal nature of the PSP’s scheme. Mr Leong, she said, had not clarified what the user gets at the point of disposition – meaning when the user gets the flat from HDB, whether he gets a legal title or just the right to occupy.

“If it is just the right to occupy, then the person is not the owner. You only become an owner when you pay for the land, and that only happens when you sell the land,” said Ms Indranee.

“In short, you only own when you sell! Whereas under our current scheme, you are an owner from the time that you buy the flat.”

She went on to point out that while Mr Leong had promised Singaporeans a future they could look forward to, the irony is that for so long as they are occupying a flat under his proposed scheme, they are not the owner: “You only become the owner, just a short while before you sell it.”

“Mr Leong wants to turn our nation of home owners into a nation of renters. And to become a home owner, you have to sell your property, with no assurance of being able to afford a new one after that.”

Shorter leases, tax on profits among ideas mooted by MPs to lower HDB flat prices
By Ng Wei Kai, The Straits Times, 8 Feb 2023

Fifteen MPs from both the Workers’ Party (WP) and the People’s Action Party (PAP) on Tuesday aired their views on the affordability of public housing in Singapore and offered suggestions to improve the situation.

The debate in Parliament, which continued for eight hours on its second and final day, was triggered by two motions on public housing affordability filed by Progress Singapore Party (PSP) Non-Constituency MP Leong Mun Wai and National Development Minister Desmond Lee.

Do ideas about public housing need a reboot?

The time has come for Singaporeans to reboot their ideas about Housing Board flats and see them as affordable places to live in rather than assets which continue to rise in value like equities, said WP MP Leon Perera (Aljunied GRC).

HDB flats are not like stocks and shares, and expectations that the price of a flat is going to go up and up and never come down are not sustainable, he told Parliament.

Mr Perera added that the need to reassess the role of public housing is necessary now in the face of lease decay and the need to keep housing affordable for young people who are starting families.

There are and will be many people who will not benefit from an ecosystem of policies centred on people monetising their HDB flat for retirement, he said.

“If we frame our policies to prompt rising HDB resale values in the belief that monetising that resale value should be one of the main ways we provide for retirement, where does that leave those who do not want to sell and move out?” he asked.

“Many elderly Singaporeans are living in flats worth a considerable sum. But they do not want to downgrade.”

His views were echoed by his WP colleague Gerald Giam (Aljunied GRC), who said that for the first two decades of the Government’s asset enhancement policy, the property asset-driven mindset “worked like a charm”.

He said HDB resale flat prices increased 382 per cent in value from 1990 to 2010. Many HDB leases saw eye-watering increases in their property wealth, he added.

Mr Giam said: “However, this pathway to wealth requires ever-increasing property prices to sustain it. Every property bought would need to be sold for significantly more than the purchase price.”

BTOs affordable, but their shortage and high resale prices of concern

Ms Mariam Jaafar (Sembawang GRC) said rising resale prices and rents have sparked debate about whether public housing is still affordable.

She said housing-related appeals make up a third of the caseload at Meet-the-People Sessions for her and many of her parliamentary colleagues.

“There is genuine concern among some young Singaporeans, and their parents, whether they will be able to afford a flat,” she said.

She added that the core problem is not the affordability of Build-To-Order (BTO) flats, but a shortage of such flats and waiting times as high as seven years, driven by Covid-19 related disruptions as well as a shifting mix of such flats with a higher proportion of BTOs in mature estates.

Adding to this are high resale prices. Taken together, these three issues mean some people find they cannot get a flat they want, BTO or otherwise, she said.

Shorter leases of 50 years or 70 years

Ms Mariam said that while the current BTO market is not flawed, one way forward would be to introduce shorter-tenure flats with leases of 50 years.

This will allow for cheaper flats while shifting the market further away from speculation, and helping to set price levels for flats of different tenures, she said.

Mr Perera also proposed the addition of BTO flats with alternative lease lengths – namely 70-year leases with the option of a 29-year top-up.

He said: “This will allow BTO flats to be sold at a lower price. Such flats may also better suit the life plans of many buyers.”

He also proposed that some BTO flats be built ahead of demand, a suggestion also brought up by Mr Xie Yao Quan (Jurong GRC) and Ms Denise Phua (Jalan Besar GRC).

Make those who buy private property sell HDB flat

Nominated MP Shahira Abdullah suggested that the Government require owners to sell their flats when they purchase a private property to free up more HDB flats.

Ms Mariam also proposed a similar move, urging the Government to move quickly to send a strong signal that public housing is not an investment.

Mr Gan Thiam Poh (Ang Mo Kio GRC) suggested that the Government review the tax on profits made by the sellers of property, including HDB flats, and increase grants to first-time HDB flat buyers on top of increasing supply, in order to check runaway prices and support first-time home owners.

Singaporeans could also get help to acquire new BTOs close to family members in mature estates, said Mr Henry Kwek (Kebun Baru).

He added: “HDB can extend the housing proximity grant beyond those living within 4km of family members to include those within a 30-minute off-peak journey by public transport.”

The Housing Board can also consider reserving 30 per cent of new BTOs in mature estates to those who qualify for such a grant, he said.

First-timers buying HDB resale flats could get more support; more BTO flats with shorter wait from 2024
By Michelle Ng, Housing Correspondent, The Straits Times, 7 Feb 2023

First-timers buying Housing Board resale flats could get more help, as the Government mulls over additional support for those who are looking to buy their first home.

National Development Minister Desmond Lee said on Monday that measures to reduce the high rejection rate for Build-To-Order (BTO) flat applications are also being studied to ensure new flats are prioritised for those with genuine and urgent housing needs. HDB data shows that 40 per cent of applicants invited to book a BTO flat over the past five years ended up not selecting their flat.

In his speech on his motion on affordable and accessible public housing, Mr Lee reiterated that the Government is studying how to provide even more support for those looking to buy their first homes, and will announce these new measures when ready. “We are doing our utmost to improve the accessibility and affordability of HDB flats,” he said. “We know that policies cannot remain static as the aspirations and needs of our people change.”

Mr Lee had filed his motion in response to a separate one by Progress Singapore Party (PSP) Non-Constituency MPs Leong Mun Wai and Hazel Poa.

Acknowledging that Singaporeans are unhappy about the long waiting times and delays of BTO flats in recent years due to the Covid-19 pandemic, Mr Lee said HDB has been catching up on delayed projects.

Outlining the Government’s plans to meet the supply crunch, he noted that more than 23,000 flats were completed in 2022, with another 23,000 flats slated to be handed over to buyers in 2023.

More BTO flats with shorter waiting times of under three years will also be launched from 2024 onwards, he said, adding that the Government aims to roll out around 2,000 to 3,000 of such flats each year by 2025, similar to pre-Covid-19 levels. “After that, over a period of time, we will recalibrate our building programme so that shorter waiting time flats form a larger proportion of our supply of new flats,” said Mr Lee.

HDB has ramped up the supply of BTO flats, and pledged to launch up to 100,000 new flats between 2021 and 2025 if needed to meet demand.

Mr Lee cited several factors that led to the tight housing supply and rising resale prices in the last three years, including the Covid-19 pandemic delaying the construction and completion of BTO flats.

The disrupted supply of BTO flats led some buyers to turn to the HDB resale market, pushing up demand for resale flats, he said.

Demand for new flats also went up as some joined the BTO flat queue earlier to try and secure a flat, causing further anxiety, Mr Lee noted.

In the last three years, the number of first-time BTO applicants rose by 80 per cent, and second-timers by 140 per cent, compared with the period from 2017 to 2019.

Shifts in social norms, such as younger Singaporeans who wish to move out earlier to live on their own, also pushed up housing demand, he said.

Besides ramping up the supply of flats, the Government has also kept BTO prices “almost flat” despite strong demand and construction costs rising by almost 30 per cent in the past two years, said Mr Lee. For instance, a four-room BTO flat in a non-mature estate was priced, on average, at $341,000 in 2019 and $342,000 in 2022, he said.

Mr Lee added that close to 70 per cent of the BTO flats launched in 2022 can be purchased by a household with a median income of $8,400. These households would use a quarter or less of their household income to pay their mortgage instalment, he said.

The home price to income ratio for a four-room flat in a non-mature estate has also dropped from six in 2012 to below five by 2018, he said. This means households use five years or less of their total household income to pay for a home. “This is because the annual increase of BTO flat prices in non-mature estates is less than 1 per cent, lower than the 3 per cent annual increase in incomes.”

In comparison, the same ratio in London, Los Angeles and Sydney is eight to 15, and more than 20 in Hong Kong, he noted.

While Singapore’s public housing system is “far from perfect”, it has made housing accessible and affordable for Singaporeans, and the Government must always keep improving it, said Mr Lee. “Ninety per cent home ownership in a cosmopolitan city is not something that many other major cities have been able to achieve,” he said.

A total of 11 MPs, including Mr Leong and Ms Poa, spoke on Monday. The debate resumes on Tuesday.

Demand for HDB flats can change quickly and unpredictably

In the recent Parliament debate on public housing, Workers’ Party (WP) chief Pritam Singh castigated the Government for the long waiting times for Build-To-Order (BTO) flats. The “sacred cow” of not building flats ahead of demand, he said, “needs to be slaughtered”. He added that, notwithstanding the Covid-19 pandemic, the Government should have anticipated demand.

In other words, if only the Government had been as far-sighted as the Workers’ Party, young couples would not be waiting for their BTO flats now.

Mr Singh did not explain how we could have continued to build flats at a brisk pace, notwithstanding Covid-19. He also did not mention that, before Covid-19, the WP itself had published a paper in 2019 urging the Government not to build more BTO flats.

In 2019, the HDB resale market was soft. The HDB Resale Price Index had fallen by about 12 per cent from 2013 to 2019. The Government was building 15,000 to 17,000 flats annually. The WP paper said that no more than 9,000 flats were needed. Luckily, the Government did not take the WP’s advice.

The lesson is not that the Government is more clairvoyant than the WP, but that the demand for HDB flats can change quickly and unpredictably. We have to acknowledge this, while doing our best to anticipate demand in working out our building plans.

A second, even more important, lesson is the need for politicians to be upfront and candid about the difficulties of governing a country. When MPs grandstand, take populist lines that ignore hard realities, and conveniently forget their own previous statements, they damage the standing of Parliament and diminish trust in themselves.

Henry Kwek
Member of Parliament
Kebun Baru SMC

*  Parliament: Changing land pricing to cut cost of HDB flats risks destabilising entire property market: DPM Lawrence Wong
By Michelle Ng, Housing Correspondent, The Straits Times, 25 Feb 2023

Changing the way that land is priced to lower the cost of Housing Board flats will risk destabilising the entire property market, said Deputy Prime Minister Lawrence Wong.

He cautioned against artificially resetting the housing market in this manner.

Mr Wong was responding on Friday to proposals and concerns raised by MPs over housing during the Budget debate.

Some MPs had flagged that the Government’s policy on land value appears to be driving up HDB flat prices, leading to increases in subsidies for Build-To-Order (BTO) flats that may not be sustainable.

“The concern arises because of the current cyclical tightness in the public housing market. The situation will be different once the market stabilises or if you have a down market. So, rather than look at the ups and downs cyclically, the fact is, the land value will ultimately be based on economic fundamentals,” said Mr Wong, who is also Finance Minister.

He noted that there was “a great anxiety that there would be a huge overhang of flats” and Singapore would end up with a price meltdown when HDB resale prices fell for six consecutive years from 2013 to 2019.

But the Covid-19 pandemic disrupted BTO construction, which prompted more people to start applying for flats earlier. Others decided to get a resale flat instead due to the longer waiting time, which drove resale demand, he noted. “So, we had a confluence of both delayed project delivery and increased demand, contributing to the situation that we are in now.”

Adding that there are “no magic solutions” to solve the current housing issues, he said the Government’s approach is to tackle the root cause of the problem by ramping up BTO supply to catch up with the delays that had arisen during the pandemic.

The Workers’ Party (WP), he said, has eschewed increasing subsidies and making the taxpayer cough out more, and chosen instead to “dip into the reserves by selling state land to HDB at a lower cost”.

But land used for public housing is sold directly to HDB at a fair market value determined by the Chief Valuer using established and accepted valuation principles, unlike the Government Land Sales (GLS) programme, where private developers bid for state land, he said.

Noting that Leader of the Opposition Pritam Singh (Aljunied GRC) had alluded during the debate to a discrepancy that state land under the GLS programme can potentially enjoy a 15 per cent discount and the same could be done for public housing land, Mr Wong said that was a “red herring”.

What the Government does is set a reserve price pegged at 85 per cent of an estimated market value as determined by the Chief Valuer, which serves as a guide post to assess the bids received before awarding the tender, and is not a discount, he added.

Mr Wong also noted that WP MP Jamus Lim (Sengkang GRC) had, in a Facebook post two days ago, recognised that a lower land valuation will mean those who bought their HDB flats under the current terms “may go underwater” or “have to stomach a loss” if they wish to sell for various reasons.

“Is this what the WP wants to do – to arbitrarily wipe out a significant chunk of the value of Singaporeans’ hard-earned properties?” he said.

On Progress Singapore Party Non-Constituency MP Leong Mun Wai’s claim that his proposal to reduce BTO flat prices has no impact on the resale market, Mr Wong said: “Cheap BTO prices, high resale prices, home buyers still enjoying enormous capital gains and the Government doesn’t have to do anything. It seems like magic, but it is really a raid on the reserves.”

Whether the WP had proposed cutting BTO supply

Mr Wong also crossed swords with WP MPs over two paragraphs in a 2019 WP working paper on HDB resale prices, with the Deputy Prime Minister saying there is “no shame” in the opposition party admitting that its call to reduce BTO flat supply then was a mistake.

Mr Singh said the People’s Action Party (PAP) had raised this point as a “convenient distraction” during the debate over housing affordability, and omitted the broader context in which the paper was written.

In a protracted back-and-forth at the close of the debate, Mr Wong said there would be a “much bigger supply-demand imbalance” today if the Government had heeded WP’s 2019 proposal to cut back the annual BTO flat supply to just 9,000 flats at a time when HDB was building between 16,000 and 17,000 BTO flats.

The WP working paper was titled Counting Down To Zero: Are There Alternatives To Vers?.

Responding, Mr Singh said the WP paper looked at a “longer-range forecast of the housing sector”, as it was put out in response to the Voluntary Early Redevelopment Scheme (Vers), where owners of flats aged 70 years and older can vote for the Government to buy back their homes before their leases run out.

Mr Wong and PAP MPs did not mention the context of the paper when referencing it, Mr Singh noted. “I have to then come to the irresistible conclusion that it is a convenient distraction because if indeed the point that was raised in the housing paper was critical, then the People’s Action Party would have raised it last year, when the WP called for more HDB housing for singles,” he said.

In response, Mr Wong said the context then was concern over lease decay and the declining values of flats, amid consecutive years of falling HDB resale prices.

“And the WP is not alone in highlighting that under such an environment, we better consider how many new flats we are putting out. Many experts shared similar concerns. I was under tremendous pressure to cut back BTO flats,” said Mr Wong, who was the national development minister from 2015 to 2020. “There is no shame in acknowledging that you got that wrong because many people did... And we are not here to pass judgment because, with the benefit of hindsight, it is of course very easy to say no one would have predicted that you would have a Covid-19 crisis and what has happened in the last three years.”

Mr Leon Perera (Aljunied GRC) then rose to say that the figure of 9,000 flats in the paper did not amount to a call to action to stop or slow down the pace of the construction of BTO flats.

“The first paragraph makes observations about the risk of vacancies in the context of a paper on longer-term housing dynamics that resale prices will inevitably come under pressure at some point... But the call to action comes in the second paragraph, which says, BTO projects should continue,” he said.

Replying, Mr Wong said many PAP MPs had also suggested that the Government should calibrate its BTO programme. “To me, as somebody who was looking at the working paper then, on the receiving end in MND (Ministry of National Development), I think it was clear as daylight what the WP wanted to do. You were not the only one; there were similar concerns expressed by others,” he said.

Mr Perera subsequently stressed that the WP paper focused on longer-term housing trends and was not a call to cut down on BTO projects.

“So, I really hope the PAP will stop propagating this falsehood that our 2019 paper called for a cutback to BTO supply in 2019. And if it does not do that, I would really question if the PAP has become a party that propagates falsehoods to gain political mileage,” he said.

Mr Wong said in response: “We can just put out what the Workers’ Party said, and everyone can be the judge of it.”

Concerns over the revised CPF Housing Grant

He noted that the Government had increased the Central Provident Fund (CPF) housing grant for resale flats and given greater priority to families with children and married couples aged 40 and below who apply for flats, as it will take time for the BTO supply to go up.

Addressing concerns that the increased grant will prompt sellers to ask for higher resale prices, he said that is why the measure is targeted at first-timers rather than a broad-based policy move.

“There will always be such a risk when grants are increased. And that is why we considered it very carefully, and we took into account the property cooling measures we had implemented and HDB’s progress in ramping up BTO supply before we decided on this move,” he said.

Only about one-third of HDB resale flat buyers received the CPF Housing Grant in the last two years, he added.

“So, while the enhanced grant may have some impact on resale prices, overall, first-timers should benefit from the grant and pay less when they buy a resale flat. That is the intent,” he said.

“We are confident that it will help first-timer families and singles buying in the resale market, and indirectly also reduce some of the demand for BTO flats.”


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