Singapore Housing

Written by: Inez Lau Kuan Ling

Overview

In the recent, Singapore is facing the problem of housing shortage as well as high housing prices. Due to the limited land supply in Singapore, the demand for public housing has been increasing at a faster rate than the supply of public housing, resulting in sky high prices for public housing. It has been said by some that Singapore is following Hong Kong's footsteps.

Reasons for High Housing Prices & Shortage

1) Ethnic Integration Policy (EIP)

The EIP limits the number of Chinese, Malay and Indian people living within a neighbourhood and within a HDB block of flats. This policy was made initially with the aim to promote racial cohesiveness in the multi-racial society of Singapore.

Source: The Online Citizen, 2011

However, this policy has restricted the type of buyers for the resale flats. It has a part to play in causing the housing prices to increase too.

• Malays were usually selling at valuation price because they can only sell to fellow Malays
• However, the Chinese sellers who are freeing up the Chinese quota, are free to set a higher price.
• Chinese-owned flats (some) were sold at $80,000 above valuation. 

More information can be found at: http://theonlinecitizen.com/2011/02/race-issues-in-singapore-is-the-hdb-ethnic-quota-becoming-a-farce/

2) Loopholes in Old Housing Policies

There are 2 types of public housing in Singapore. Resale flats and Built to Order (BTO) flats.

BTO flats are generally new flats and are supposed to be of a lower price due to the high number of eligibility conditions that need to be fulfilled before you can apply for a BTO flat and the long waiting time. The following are examples of the eligibility conditions for BTO flats in Singapore:

• Have to be married
• Income ceiling for the different house sizes.
• Long waiting time: average waiting time is 3.5 years 
• More information: http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatEligibilitytobuynewHDBflat?OpenDocument

Resale flats are generally more expensive as the prices tend to change with the market conditions. 

• Resale prices for 2011. 

• Source: http://www.hdb.gov.sg/fi10/fi10297p.nsf/ImageView/RPIchart4Q11/$file/RPIChart4Q11.pdf

However, the problem is that the BTO flats are pegged to market property prices around it, instead of at cost price. This leads to further inflation of property prices when BTO flats are meant to help the lower income (as inferred from the income ceiling as one of the eligibility conditions). 

3) Monopoly by Housing Development Board of Singapore (HDB)

HDB caters to 80% of the housing needs in Singapore. While HDB often blames the market forces for pushing up the housing prices, it omit the fact that no one is allowed to build public housing without their approval. 

Furthermore, many empty plots of land are allocated for agencies for development purposes, which do not even have a draft plan. This greatly reduces the amount of land to build houses. 

Reference: http://kirstenhan.me/2011/02/20/a-short-guide-to-public-housing-in-singapore/

Housing Policies in Singapore now

1) Raise the income ceiling of BTO flats

• From $8,000 to $10,000
• Executive condomiums: $10,000 to $12,000

2) BTO flats changed to "Just build" flats

• In the past, HDB used to only launch construction tender for flats when at least 70% of the units have been sold.
• Now: calls for tenders as soon as architecture drawings are ready
• Helps to increase the supply of housing
• 25,200 flats to be launched in 2012 http://blog.iproperty.com.sg/4200-more-hdb-bto-flats-for-2011/

3) HDB will look into building more flats in the mature estates

• Previous policy only focused on offering new flats in new towns.
• This means that there will be a greater supply of flats if they realise the plans

Reference: http://blog.iproperty.com.sg/public-housing-policy-shakeups-in-2011/