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/

Singapore - Article from Citizen Journalist

TOC Blog Feature: Heart of the housing issue – cost of land

Posted by theonlinecitizen on April 17, 2011

To watch Minister Tharman say that Singaporeans have it good, homes are easily affordable….better than all other developed countries just add to the frustration of Singaporeans coping with the high cost of housing. I’m sure regular readers of this blog can pick out the flaws in Tharman’s argument easily but for those are having trouble figuring it out here is the explanation.

When Tharman talks about the relatively constant average quantum (23%) that 1st time buyers use to service loans, it counts only people who can afford a home – many can’t afford homes give up looking for one. Also, they keep the quantum constant by buying homes smaller than what they want or need at less desirable locations and the tenure for loans has increased – in the past people finish paying their loans in 10 years or less now the tenture can be as long as 3 decades….there is a big difference between paying 23% of your income for 10 years vs 30 years.

He then goes on to say we are better off  than Hong Kong which is no consolation given the housing misery there (unhappy Hong Kongers come out in force to protest every weekend for a good reason). He then goes on to make a very strange and really hard to believe assertion that the housing situation in Singapore is better than all other developed countries. Singapore has the 2nd highest population densities[Link] in the world and many cities in develop countries have suburban areas where housing is very cheap.

Singapore is the 11th most expensive city in the world but is 43th and 49th in domestic wages and purchasing power respectively, along the likes of developing countries like Turkey, Slovakia and Qatar and far below the capitals of other Asian Tigers – Seoul, Taipei and Hong Kong[UBS Report, Temasek Review on the report]. Singapore has the highest income in equality among developed countries which means that the lower rungs of our society are more adversely affected by high housing costs than else where in the world. Tharman’s denial that there is a problem with high housing costs shows that there is no interest in govt to solve what many Singaporeans think is serious problem.

The undisputable truth is housing is far less affordable that it was 20 years ago. The median income rose 111% (not inflation adjusted) while the price of housing as measured by the RPI rose 342%. That is the source of unhappiness among Singaporeans and it is a very real problem:

Reference: http://theonlinecitizen.com/2011/04/toc-blog-feature-heart-of-the-housing-issue-cost-of-land/

Singapore - Article from Professional Media

We're not in happy part of housing cycle, Tharman admits

By Phua Mei Pin

Property prices have risen faster than incomes in recent years because demand shot up even as housing supply lagged behind.

'We're not in a very happy part of the cycle,' said Deputy Prime Minister Tharman Shanmugaratnam on Wednesday night at the Kent Ridge Ministerial Forum.

Engineering doctoral student Yvonne Ho, 33, had asked him about the impact of high property prices on middle- and low-income Singaporeans.

Mr Tharman assured her that, despite earlier being 'behind the curve in the supply of housing', the Government was now taking active measures to cool the property market through a significant increase of units in the public Build-To-Order and private markets.

Reference: http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_785470.html