Desmond Lee rebuts Leong Mun Wai's claim that graduates are 'worse off' today in housing affordability

SINGAPORE: Minister for National Development Desmond Lee on Friday (Mar 7) rebutted claims made by Non-Constituency Member of Parliament (NCMP) Leong Mun Wai that graduates today are financially worse off when it comes to housing affordability.

Speaking during a debate on the Manpower Ministry's budget, Mr Leong said that graduates face greater challenges in buying housing compared with previous generations. In his speech delivered on Thursday, he compared the median starting salary of graduates with housing prices in 1979 and 2025 to support his claim.

In response, Mr Lee countered that Mr Leong's argument was based on a "selective" use of data, overlooking changing education levels, shifts in the resale market and improvements in housing quality over the decades.

STARTING SALARIES VS FLAT PRICES

Mr Leong said the median starting salary of a university graduate in 1979 was S$957 a month, while an NTC-3 graduate from the Vocational and Industrial Training Board (VITB), the predecessor of the Institute of Technical Education (ITE), earned S$633.

The Progress Singapore Party (PSP) NCMP then compared these starting salaries against the price of a new four-room flat located in new towns – one of three flat categories used by HDB back in the 1970s – which had a selling price of S$27,100 in July 1979.

The price of the four-room flat was equivalent to about 28 times the median starting salary of a university graduate or 43 times the median starting salary of a VITB graduate, Mr Leong said.

In contrast, by 2024, the median starting salary of a university graduate had risen to S$4,500 a month but the cheapest four-room flat on offer in the Build-to-Order (BTO) sales exercise last October was S$290,000, excluding grants.

This was equivalent to 64 times the median starting salary of a university graduate, he said.

The cheapest five-room flat on offer, at S$427,000, was 95 times the median starting salary of a graduate, he added.

“Based on housing affordability, the median university graduate today is worse off than the median ITE graduate in the late 1970s and early 1980s,” said Mr Leong.

Despite an “education arms race”, university graduates today can only afford “smaller and more expensive flats than what an ITE graduate could have bought 45 years ago”. The “prospects are even dimmer” for those without a degree, he added.

HOUSING IN 1979 "VERY DIFFERENT" FROM 2025: DESMOND LEE

In response, Mr Lee said Singapore in 1979 was “very different” from Singapore today.

First, only 4 per cent of each cohort in 1979 went to university, compared to more than 40 per cent today.

Likewise, only 9 per cent of each cohort went to VITB then, versus around 60 per cent who go to polytechnics and ITEs now.

“The vast majority of each cohort today go to university, poly and ITE, compared to only around 13 per cent going to university and VITB back in 1979,” said the minister.

“Mr Leong was comparing housing affordability for a small group in 1979 with housing affordability for the vast majority of Singaporeans today,” he added.

“He also did not present the affordability picture for the majority of Singaporeans back in 1979 who were less well educated, less skilled and earned much less in those early days of Singapore.”

In 1979, only 68 per cent of the population lived in HDBs, with 62 per cent owning their flats. Now, more than 80 per cent of Singaporeans live in HDBs, and more than 90 per cent are homeowners.

Last year, more than eight in 10 first-timer households who collected the keys to their BTO flats and resale flats “used little to no cash” to service their monthly mortgage instalments, said Mr Lee.

Second, the type of flats built in 1979 were “simple, functional homes in estates with few amenities and very limited transport links”.

Flats today come with “modern amenities and far better transport connectivity” that offer residents a higher standard of living, the minister said.

Third, Mr Lee said the housing market in 1979 was “very different” as there was “almost no resale market to speak of”.

In the '60s, buyers had to “return the flat to HDB at a sum that was less than what they initially paid for”. A “very rudimentary resale market with strict conditions and limited financing” emerged in the 1970s, but there was “limited potential for appreciation”, said the minister.

The resale market only started to mature in the '80s and '90s after changes in the resale and mortgage financing policies.

“Today, our HDB flats are both a home and also a store of value for Singaporeans, which they can monetise in their older years for retirement by selling on the open market, renting out a room or a flat, or through our lease buyback scheme, and so on,” Mr Lee said.

"SELECTIVE" USE OF DATA FROM 1979: DESMOND LEE

The minister then pointed to Mr Leong’s “selective” use of data from 1979. 

“From 1968 to 1987, in the early years of HDB, we sold flats to Singaporeans and the flat price was fixed to recover costs. So, this most resembles PSP’s Affordable Housing Scheme (AHS),” he said.

The opposition party’s proposed scheme defers land costs from BTO purchases, with such costs to be paid only if the flat is sold on the resale market. 

It was raised previously as part of the PSP’s motion on Public Housing Policies in 2023, but the parliamentary motion was rejected by MPs from the ruling People’s Action Party. 

Mr Lee noted that HDB flats were priced based on construction costs back in the '60s and '70s due to such costs being relatively low then.

But a turning point came around 1979 and 1980 when construction costs went up by 30 per cent due to a construction boom, as well as severe labor and material shortages.

This is why HDB announced a 15 per cent increase in its selling prices in 1979, followed by another 20 per cent in 1980 and another 38 per cent in 1981, said the minister.

“Mr Leong presents selectively the 1979 data but doesn't mention what happens the next one, two years ... In fact, the challenge of sharply fluctuating construction and therefore HDB prices … applies equally to the PSP’s Affordable Housing Scheme,” he told the House.

Mr Lee said Singapore has “long since moved away” from pricing flats based on construction costs. 

“In fact, we do not price flats to recover land and construction costs,” he said.

“We look at the market value of the flat, apply significant market discounts to bring the price down, so that there are flats affordable to Singaporeans of different income levels, and then we do means testing for explicit grants on top of the market discounts,” he added.

“This ensures HDB flats remain affordable to a wide range of incomes.”