When left solely to market forces, prime areas would likely be used for exclusive, high-end housing developments that the rich can afford.

This is why the government needs to take bold and decisive action to ensure Singaporeans from various backgrounds can live and interact in prime areas of Singapore, Minister for National Development Desmond Lee said during his ministry's Committee of Supply debate on Mar. 4, 2021.

Lee cited New York City and Hong Kong as examples of how housing is much more expensive in some neighbourhoods and average families have to pay for very high rents or move further out of the city or to less desirable parts of the innercity.

"There are very powerful social and economic forces at work, that drive stratification and gentrification of cities, that can divide communities," Lee said.

"But we are determined to do our best to resist them, so that our society does not become fragmented over time."

New housing model for prime locations

Singapore will continue to build public rental housing in prime areas so that the lower-income households can also live in these estates.

The ministry will also design and introduce a new housing model to keep new HDB flats in prime areas affordable for Singaporeans of different backgrounds.

Additional subsidies

As part of this new housing model being worked out, additional subsidies on top of the existing subsidies for BTO flats buyers could be put in place.

However, the ministry will have to consider how these additional subsidies lead to more capital gains for owners when they sell their flats on the open market, as compared to other HDB flat owners, Lee said.

For fairness, the government may need to find a way to recover some of the extra subsidies provided to future HDB flat owners in very prime areas.

Prime areas must remain affordable and inclusive over time

Lee also said that the ministry must ensure HDB flats in prime locations must be affordable and inclusive not just at the point when the Housing Development Board sells it to the first buyer.

Otherwise, they may transact at extremely high prices in the resale market and only the better-off can afford these flats over time.

Many ideas have surfaced during the engagements that MND conducted and in commentaries shared in the media and in professional groups.

Among these ideas include imposing a longer minimum occupation period, or restrictions on renting out these flats or ringfencing the pool of subsequent buyers, Lee shared in his speech.

However, these suggestions may create complexities too, such as exacerbating the burden on homeowners who may run into unforeseen circumstances.

There is also no certainty that some of the measures are effective at ensuring affordability over time.

"So it is a balancing act, and we are still carefully studying the possibilities. We will continue to engage Singaporeans to find the right balance, before announcing more details," Lee explained.

Public housing is an integral part of social fabric

In his COS speech, Lee also addressed Non-constituency Member of Parliament (NCMP) Leong Mun Wai's concerns about possible shortages in housing supply.

Lee assured that the ministry is closely monitoring housing demand and calibrating supply accordingly, to meet Singaporeans’ housing needs.

For public housing, Lee said that HDB adopts a "comprehensive approach" in planning new flat supply, taking into account demographic and socio-economic trends, prevailing market conditions, and the supply of resale flats on the open market.

"But our approach to public housing goes beyond matching supply to demand, and putting a physical roof over people’s heads. Public housing is also an integral part of the social fabric that keeps our nation together. It serves important social objectives that are fundamental to the idea of Singapore," Lee added.

Top image via CNA video screengrab and Unsplash