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Near the end of the marathon Parliamentary debate on public housing, it was the turn of the Leader of the Opposition, Pritam Singh of the Workers' Party (WP), to speak.

Over the two days (Feb.7 - Feb.8), the House had heard many speeches on the motions put forth by National Development Minister Desmond Lee and Progress Singapore Party's Leong Mun Wai and Hazel Poa.

Lee's motion read: "Affordable and accessible public housing: That this House affirms the importance of keeping public housing affordable and accessible while protecting the interests of current and future generations of Singaporeans, and endorses the commitment of the Government to these twin goals."

The votes, which came after two days of debate that ended past 11pm on Tuesday (Feb. 8), saw 82 Members of Parliament (MPs) supporting the motion by the Government that Housing and Development Board (HDB) flats remain affordable and accessible, with 11 MPs voting against it.

Singh took his audience on a journey back through Singapore's history of housing policy, and asked several questions, mainly about the subsidies given to home buyers.

History of Singapore's public housing

Singh looked back at past public housing policy. In 1964, the government introduced the Home Ownership for People scheme so that Singaporeans would feel they had a stake in Singapore, as opposed to renters.

In 1971, the government allowed people to sell their HDB flats for a profit, although not for investment, creating the resale market. In 1973, the Land Acquisition Act was amended, allowing the government to purchase land from owners, at prices independent of purchase price or market rates.

Singh said this allowed the government to purchase lots of land at low prices, and led to the view held by some that since the land was bought cheaply, there is "scope for the State" to take a different view about land costs to make public housing more affordable.

Would housing prices keep appreciating?

In the 1970s, 1980s and 1990s, property prices rose steadily, with few people concerned about lease decay. Housing prices were hit hard in the 1997 Asian Financial Crisis, and in 2001 then-Prime Minister Goh Chok Tong announced a review of costs. But Singh noted that the Land Working Group did not recommend significant changes.

When the Global Financial Crisis hit in late 2008, then-National Development Minister Khaw Boon Wan announced the delinking of HDB prices from resale prices. Singh then said:

"However, much less was broadcasted about the fact that the increased subsidies to make flats affordable would be paid by taxpayers. This is significant.

Because a large part of the government solution whenever HDB prices went out of hand would be to resort to deploying more taxpayer’s monies, ostensibly in greater quantum, to make up the difference.

A significant overlay to the property cycles over the last few decades has been the public expectation that HDB flats would be ever-appreciating assets. This incorrect expectation was created, perpetuated, and not corrected by previous PAP governments."

He said that the government should have made clear that public housing on a 99-year lease cannot be expected to keep appreciating in value.

Singh subsequently referred to a speech by then-National Development Minister Lawrence Wong in 2017, who "finally spoke the unvarnished truth about 99-year leases".

Singh noted that Wong said that flats will be returned to the HDB and only a small percentage would undergo the selective en bloc redevelopment scheme (SERS).

Current state of affairs

Singh said that property prices in Singapore have "soared" in the past couple of years. However, Singapore is unique as compared to other countries, as prices are rising even though interest rates have risen too. Prices have only recently come down due to cooling measures.

He added that the government has other levers than cooling measures to lower prices, such as building ahead of demand.

Singh turned to the debate, and said, "The government’s motion implies that HDB flats have been kept affordable and accessible while the PSP’s motion seems to suggest that flats are now not affordable and accessible."

Affordability

He suggested that this could be down to a different understanding of what each word means and represents. To his mind, "affordable" means flat prices are not out of sync with salaries.

While the House Price to Annual Income (HPI) gauge is common in measuring affordability, Singh said that prices have been kept in check through government subsidies, which come from taxpayers. In all likelihood, either subsidies will have to grow larger, or more subsidies have to be recouped at the point of sale, similar to the Prime Location Public Housing (PLH) flats.

Singh said the government regularly refers to the excess supply of flats after the Asian Financial Crisis as a reason not to build too quickly.

"However, this sacred cow is one that needs to be slaughtered, particularly because of the serious implications an overheated housing market has on public housing prices for the common man and woman," he added. If the government does not release parcels of land fast enough, a bubble can quickly form.

Accessibility

"Accessibility includes not just being able to apply for and book a flat. It also means securing a flat in a timely way," Singh said, pointing out that BTO waiting times can be up to four or five years. This impacts couples' decisions to have children, and Singapore's Total Fertility Rate.

The downside of the pre-BTO system is that it can lead to an oversupply of flats, but Singh said even in that worst-case scenario, new options can be considered. The extra flats could go towards the Parenthood Provisional Housing Scheme, or expanding rental options for low-income households.

Pritam's questions

Singh said that any major reset of housing policy may upset either buyers or sellers, or both.

He referred to Leong Mun Wai's proposal, which is similar to one previously put forth by a researcher from the Institute of Policy Studies. It addresses land costs in a different manner, which Singh said had been echoed by other calls from the public and mainstream media.

He had some questions for Minister Lee, mainly on what circumstances can land for flats be sold to HDB at a price lower than market value. He also asked how the government decided on accepting tenders for land for private housing and industry at 15 per cent below the market value, and whether this constituted a draw on the country's reserves.

Questions on subsidies

Singh's next set of questions addressed subsidies under the Home Ownership scheme, which he again referred to as taxpayer-funded.

He referred to a Parliamentary question he asked in Jan. 2023, and got the reply that subsidies are not the same across all BTO developments. Singh pointed out that this raises questions of fairness and equality.

"Based on the Minister’s reply, it would appear that an applicant who succeeds in applying for a BTO flat in a mature estate where flats can be significantly more expensive, benefits from more taxpayer subsidies than one who secures a BTO flat in a non-mature estate.

With respect to these taxpayer subsidies, a distinction between mature and non-mature BTO flats is important because any deployment and subsequent recovery of subsidies for the Home Ownership Programme ought to be equitable and progressive."

You can watch Singh's speech in full here.

Proposed amendment

Singh also proposed an amendment to Lee's Parliamentary motion, to delete the words "endorses the commitment of the Government to" and insert the words “calls on the Government to intensify its efforts to meet”.

Voting for Lee's motion as it stood, Singh said, would mean that Singaporeans are "satisfied with waiting up to four to five years" for a HDB BTO flat, and they are not "seeking better outcomes" from public housing policies, which he said was not the case.

"In the circumstances, it would be throughly underwhelming and missing the point for this House to carry a motion which endorses the commitment of the government’s efforts on affordability and accessibility thus far," Singh said.

The proposed amendment was later voted down in the House.

PSP's motion

Singh said that the WP had "no fundamental objection" to PSP's motion, which read:

"Public Housing Policies: That this House calls upon the Government to review its public housing policies in order to deliver affordable and accessible HDB flats to all Singaporeans, strengthen the owner-occupation intent of public housing, protect retirement adequacy and keep public housing inclusive for every Singaporean of each generation."

Singh added, "We do not read any implication into it but as a call on the government to review its public housing policies with a view towards greater affordability and accessibility. This is something the government does regularly in response to feedback."

WP Members of Parliament later voted for PSP's motion, which failed in the House.

Minister Desmond Lee's reply

In his closing speech (which you can read here in full), Minister Lee addressed Singh's queries on the extent of subsidies given to buyers, describing it as "repeated" questions about transparency. He said he and Minister Indranee Rajah have both explained and broken down how HDB flats are priced.

"When we build HDB flats, we look at the market comparable for HDB because it is public housing. Then we determine the affordability indicators for different income levels, the mortgage servicing rations.

We then know that we need to price it at a certain level so that they can be able to afford at the indicators that are in the report card, in what we say each time we announce on affordability. And these prices are significantly below what the resale market can bear."

Lee said HDB is the "most transparent" on pricing cost than any other property developer, and information is put up at every project launch, such as the range of subsidised BTO prices and the comparable resale prices used, with adjustments made according to factors like amenities and level.

Once someone has seen the available information made available, they can see this difference "broadly" reflects the extent of the market discount, which buyers can realise after the minimum occupation period (MOP) when they sell, as it is significantly below the market.

It is also necessary to recognise that for each flat type, there are different floors and the government indicates the range to be transparent.

Good point on equity

Lee said Singh had made a "good point" on whether there is equity, and whether certain buyers benefit from more subsidies.

"But the broad market discounts, across all projects, barring PLH (Prime Location Public Housing), in the same launch, is broadly in the same parameter to ensure there’s equity, but later on when they sell, it depends on the condition of the flat," Lee said.

PLH flats are given more subsidies to ensure they are within the reach of the average Singaporean. And that is why BTO flats in mature estates are generally priced higher.

"Generally in NME (non-mature estates), because it accounts, for the difference in location, the valuations, the amenities, the distance to the city. So a number of factors, but also because you try to apply an even-handed extend of market subsidies, you can see the information on brochures," Lee added.

Construction costs are published on HDB's website and GeBiz, and the costs of building flats and the revenue from sale of flats can be found in HDB's financial statements, which is more transparent than what private developers offer, the minister reiterated.

"Look at your cost of development, costs of marketing, recover that cost and price for profit and return. But HDB is pursuing a social objective. Deficits are a function of achieving those goals of affordability and accessibility," Lee said.

You can watch his full closing speech here.

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Top image from CNA.