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The Ministry of National Development's Senior Minister of State Sim Ann and Minister of State Faishal Ibrahim spoke in Parliament to address the Progress Singapore Party's (PSP) Leong Mun Wai's critiques about housing adequacy.

Both rebutted Leong's claims that housing policy in Singapore needed a reset, while raising their own concerns with his proposal.

Laying out the various schemes and programs that the government had developed to help a diverse range of Singaporeans, such as seniors and the vulnerable; they also defended the government's record on housing affordability and housing's role in retirement adequacy.

Sim Ann: Housing policy does not need a "reset"

Sim Ann said that while it was natural to periodically adjust public housing policy, it did not require the reset that Leong claimed it did.

She reiterated the points that Minister for National Development Desmond Lee had previously made, that houses were still affordable and that the government had built an adequate supply of BTO flats. You can read her full speech here.

Sim Ann addresses PSP's Affordability Housing Scheme

Sim said the PSP's "Affordability Housing Scheme" proposal did not solve any problems. She agreed that there were “short term imbalances in supply and the spike in resale price levels, as HDB's building program fell behind due to the Covid-19 pandemic.

But she said that Leong’s proposal also had different problems depending on whether it ultimately proved popular or not. It risked causing excess demand if too popular.

The proposed land cost clawback would have to paid back all at once,  presenting a major financial hurdle to sellers.

And if the scheme proved too popular, it would also cause upheaval in the resale market, and worry amongst current homeowners about their assets being negatively impacted.

Questions on fiscal sustainability

On the other hand, if the scheme's problems were recognised by prospective buyers, it might deter young buyers from public housing.

Sim asked then how would Leong’s scheme be “better for Singapore on the whole?” She also said PSP's proposal had fiscal sustainability issues, adding that it would not meet the test of sustainability.

Likening the proposal to a "prepaid rental scheme leveraged on past reserves", as a buyer would not be able to realise any gains or value to the flat. Sim also disputed the link between public housing and public infrastructure. While an individual could sell their public housing flat and keep the proceeds, public infrastructure could not be broken up and profited from in the same way.

She also addressed PSP's Millennial Apartment Scheme, which proposed having rental housing in desirable areas for young singles and families, and said that Forward SG discussion had raised similar concerns.

However, Sim said that while the government is sympathetic to the aspirations and diverse needs of young people, home ownership brought more benefits than renting, and the government would do its best to ensure BTOs remain accessible and affordable.

Resale and retirement

Sim also addressed concerns about resale prices, making a distinction between long term price trends and short term spikes that occurred during the pandemic. The government had enacted policy to benefit both sellers and buyers of resale flats over the years.

It had changed the basis of HDB loan calculations in a way that allowed sellers to realise more of their flat’s value, but had also helped first time buyers by offering grants to eligible buyers.

Sim then brought up the PSP claim that, as she put it, "As the value of a homeowner’s flat falls as the lease diminishes, and since much of his CPF savings had been used towards the flat’s purchase, retirement adequacy is at risk”

She said this claim was flawed and had to be clarified.

Home ownership important part of retirement adequacy

There were close linkages between CPF and HDB policies, with the government seeing home ownership as an important plank in retirement adequacy.

Retirees would not have to worry about rent and could potentially supplement expenses by themselves renting out rooms or accessing the Lease Buyback scheme.

That is why CPF Ordinary Account monies were allowed to go towards housing purchases, but the Special Account was safeguarded to cover retirement needs not covered by housing.

As one grew older, more money was channelled towards the SA than the OA, prioritising CPF Life payouts.

Sim also said that 80 per cent of active CPF members turning 55 by 2027 would be able to meet the basic retirement sum without having to right size or monetise their flat.

Leong trying to make Singaporeans 'unhappy' over 99-year lease: Sim

She also criticised Leong’s characterisation of SERs and VERs, and how he was “trying to make Singaporeans unhappy” about HDB’s 99-year lease.

On the lease, Sim said the government had been upfront with Singaporeans, and that Leong was creating “ungrounded expectations” by saying that lease lengths should be extended for little or no cost.

Leong was trying to deliver a windfall outcome, but not acknowledging that it was a cost to taxpayers and was encouraging Singaporeans to expect an unfair benefit.

Sim concluded by saying that the PSP had failed to show the need for a reset in Singapore’s housing policy, and their proposal failed to address “real issues”.

Faishal Ibrahim: Continue striving to do better

Minister of State Faishal for National Development Faishal Ibrahim also spoke on the housing needs of low-income families, supporting diverse housing needs, and senior housing. You can read his full speech here.

Faishal said that the government offered tiered housing grants to provide more support for lower income families, and thus 85 per cent of low-income households own their homes.

Rental flats were available for families who needed a stable home, but needed to build up finances before they were ready for home ownership. Rental flats were being improved to provide a better living environment, and efforts were being made to make HDB estates inclusive by adding more rental blocks amidst sold blocks.

The government’s goal was beyond providing a rental flat for shelter, with various assistance schemes such as ComLink and Home Owners Support Team to encourage stability, self-reliance, and social mobility.

Diverse needs

Faishal said assistance and grants were also available for families with diverse needs, with divorced parents also able to access the same housing schemes and grants as other families.

Single unwed parents were also eligible to buy up to new 3-room flats in a non-mature estate or resale flats. If not able to buy such flats, they could also be considered for public rental.

Regarding concerns for seniors, especially those on diminishing housing leases, there were schemes such as the Lease Buyback scheme or the Silver Housing Bonus, to help monetise their flats to support retirement.

280,000 households had benefited from schemes that made homes more senior friendly, and more senior friendly features were being added to HDB estates, as well as expanding more senior friendly designs of flats, such as Community Care Apartments.

Faishal concluded by saying the government had delivered on its commitment to provide affordable and accessible public housing.

It had “gone all out” to help the more vulnerable, and would strive to do better for present and future generations.

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Top image via MCI/YouTube