From million-dollar flats to 99-year leases: PM Lawrence Wong answers questions on Singapore housing

SINGAPORE: Is Singapore's public housing model fair? Are flats still affordable? Such questions have arisen in recent years as the property market evolves, with resale prices jumping nearly 10 per cent in 2024 and million-dollar flats making headlines.

Prime Minister Lawrence Wong sat down for an interview with CNA to address these issues, as part of a new seven-episode series titled Singapore's Public Housing Revealed.

In the series, CNA got unprecedented access to the inner workings of the public housing system to find out how it works and how it is trying to balance Singapore's housing needs and wants.

Are BTOs still affordable?

Q: Factoring in inflation, the price of a three-room flat in Marine Parade in 1974 would be S$37,000 (US$28,000). The cheapest Build-to-Order (BTO) flat in Bayshore today costs S$369,000. Many Singaporeans would therefore complain that BTOs are now more expensive.

It’s important when we look at these comparisons to do a proper like-for-like comparison.

In those days, Marine Parade was a non-mature estate. It was built on reclaimed land. In fact, people were reluctant to buy, as I recall from recollections from my parents, because they were worried that the land would sink.

So first of all, I think we should compare non-mature estate to non-mature estate. A three-room flat in a non-mature estate will go for something like over S$200,000, with grants.

That’s the BTO price but the government gives additional grants; with grants it could be less than S$100,000. So yes, there has been an increase but not as much as what you have seen in the charts.

But aside from the house price, we should also look at incomes. Because Singaporeans' incomes have also risen faster than the headline inflation rate. A teacher in the 1970s had a monthly salary in the several hundred dollars. A teacher now, in an MOE (Ministry of Education) school, could be earning a starting salary S$4,000.

The vast majority of Singaporeans, something like 80 per cent of Singaporeans who are first-timers buying BTO flats, are able to do so and service their (Housing and Development Board) loans with little or zero cash outlays.

Most of it comes through their (Central Provident Fund savings). And that never used to be the case in the past. If you talk to people who purchased flats in the '70s, in fact, a large proportion of their take-home pay was used to service the home mortgage, which meant that they had very little left after servicing the loan and they had to tighten their belts in order to afford their flats.

That’s very unique because all over the world in the major cities, young people have to pay a lot from take-home pay in order to buy a home, whereas in Singapore we can assure young Singaporeans that is not the case. We can keep BTO flats affordable.

Q: Some would then say you are using your retirement savings to pay for the flat.

Yes, but then ... the flat is not just a home, it’s also a nest egg for retirement. And the flat later on can be monetised, or you can unlock the value of the flat for retirement. And we have schemes for that like the lease buyback scheme if individuals so wished to do so.

99-year leases

Q: The 99-year lease has been a hot button issue for a while. Why is it such a sensitive or difficult issue for the government to navigate?

Our policy is home ownership on the basis of 99 years. (It) ... has always been the case.

When I was at MND (the Ministry of National Development), I had to go and engage Singaporeans quite widely to explain to them ... I would ask them: "Look, you have your name on your HDB flat. Can you sell the flat if you wish to, after the (minimum occupancy period) of course?" They all say "yes, we can sell the flat".

"Can you sublet a room or rent out the flat?" And they say "yes, we can". Can you do all that if you were simply a tenant? You can’t. These are exclusive ownership rights.

The 99-year lease is not unique to HDB. The government has been selling land for a long time on the 99-year basis.

There are many 99-year condominiums out there and no one in these private condominiums will say that "my 99 years is freehold". And neither will they say "the 99-year ... ownership of a private condo means that I’m a tenant and not an owner". They don’t say that.

There is a good reason why we have to do this and not have freehold land. Because if all land in Singapore becomes freehold, I think in the end, down the road, it will be very hard to assure future generations about keeping housing affordable.

The ones who will benefit will be today’s landowners and their children. But new generations who don’t have housing bequeathed to them will find it very, very hard to have access to affordable housing.

And the government will find it very difficult to redevelop and rejuvenate older areas, given our limited land size.

Q: When your house nears its lease term, the value of your flat starts to fall. How do you address that?

(At) the end of the 99-year lease, whether it’s a private condo or whether it’s a HDB flat, yes, they have to be returned to the state.

Ninety-nine years is in fact a very long time. It’s more than enough for any individual. If you buy a flat as a young couple or as a young single, you will have more than enough value in the flat through the 99 years.

And because Singapore’s population is getting older, we have developed new policies to enable Singaporeans to do so, through the lease buyback scheme. We started out lease buyback only for smaller flats. Over time, we have allowed lease buyback for all HDB flat types.

If you are living in a private condo ... you don’t even have access to such monetisation or scheme to unlock value. You can only rely on en bloc, and it’s not assured ... in fact not very many get en bloc.

Million-dollar flats 

Q: The percentage of million-dollar flat transactions has increased. How do you assure younger Singaporeans who are worried when they read about such transactions?

There will be a range of prices in the HDB resale market because there are a range of different HDB archetypes and typologies. And because we have done so well in building very attractive HDB flats, some of them are in good locations and they are, you know, highly valued.

We have to look at it in totality. These flats are still the minority. There’s a wide range of HDB flats out there with different prices.

Number two, we have to look at prices always in relation to incomes. If you look at the HDB resale market ... because of supply disruptions earlier, prices are on the high side - but overall prices have been moving in line with incomes.

For first-timers who are buying HDB flats, if they don’t go for BTO, some of them do want resale flats because they want the flats quickly. We do provide grants (here) as well.

And with the grants that the government provides, a large proportion of first-timers who buy HDB resale flats are able to do so and service their loans with very little or zero cash outlays as well, in the same way as they do for BTO flats.

Improving access 

Q: Birth and marriage rates are falling, and people are getting married later. Should we make public housing more accessible to other groups like singles?

If you look at falling marriage rates, falling fertility rates, you would think, well, it would (suggest) that we would have more than enough flats. But yet we seem to be facing issues on the supply side. Why is that so?

Number one, it’s because of COVID-19 (causing) huge disruptions to our building programme - not just HDB, but private residential as well, and that’s why we are in a catch-up phase and we will catch up in due course. We are already well on the way.

So much supply is in the market - I am sure they will make a difference and they will help stabilise the market.

But there is another reason, which is that we have seen over the years - and in some ways perhaps accentuated by COVID - that household sizes are becoming smaller. Family members who used to live together, families with their parents, singles with their parents, started to split up.

I think (this trend has) continued to accelerate, which means when households split up into smaller households, we have more demand for housing to accommodate.

Having supply impacted, having demand continue, we have to catch up even more and that’s where we are now in the catch-up phase.

In time to come, when we have stabilised the demand-supply equation and the market, and if we have enough flats, yes, certainly, we will consider how we can open up and allow more access for other segments, especially for singles.

Q: Once we have caught up, how will you try to balance availability and inclusivity?

We already do that today. For example, we do allow singles to buy two-room flexi units. We do allow singles to buy resale flats, for example, and then we opened up to allow them to buy resale flats across different estates, not just Standard, but also Plus and Prime.

But it’s a balancing act all the time to make sure that we want to have young families who want to settle down, have access to homes. That’s very important for us.

We want Singaporeans to be able to sink roots here, set up families and have a sense of community.

But there are other archetypes; single seniors looking to right size who ... also want homes, and then we will have to increasingly provide for these groups as well.

At the same time, land is limited in Singapore. So we will always have to do that balancing act of looking at how much land we have, all the different demands and needs that are evolving in society, and how best to accommodate these different groups.

On home ownership

Q: What was it like when you were the Minister for National Development from 2015 to 2020?

People do want to own their own homes. Not just having a home, but having a sense of community, building that shared experience, having people of all different backgrounds, rich or poor, different races and religions living together is so precious. And it's invaluable to our social compact.

And then having a nest egg for retirement.

These basics and these fundamentals are very sound. But in MND I found that sometimes the fundamentals are there but the actual experiences and the ... practices and the perceptions may swing in different directions that you may not have anticipated.

For example, you may end up with a situation sometimes where housing becomes not just home ownership but becomes a speculative investment. And then you have a situation where people get worried.

People get FOMO - the fear of missing out - people jump into the market, or worse, people overconsume housing and they buy not just one but two, three, four, multiple properties. All their life savings go into housing or property.

These are things that you have to find ways to manage, and policies have to adjust to them. That’s why over the years we have put in new measures, for example Singaporeans buying multiple properties have to pay higher ABSD.

That’s why we have also adjusted CPF policies so that we ensure there is no overusage of CPF for housing. We have set withdrawal limits for housing. We have set tighter loan-to-valuation limits on CPF where it comes to housing loans.

We also (require) that when you use your CPF for housing, you make sure that the lease lasts you for life, so that you’re not just buying a property for speculative purposes - you are buying a home that will last you for life.

We also introduced new incentives for seniors to right-size, including from private property. Because if you have children growing up and then eventually you become an empty nester, there are seniors who may not want to do lease buyback because then it’s a big flat. They may say "look, I prefer to have a smaller unit, you know, less to upkeep".

These are things where we have had to do, to adapt to changing circumstances and changing societal needs.

Watch Mr Wong's interview on CNA's YouTube channel as part of a seven-episode series on public housing, also featuring Minister of National Development Desmond Lee and the Housing and Development Board’s valuation and pricing teams.

The series will also be telecast on CNA in the form of two one-hour episodes on April 1 and 2 at 9pm.