Jamus Lim: Singapore's public housing increasingly unaffordable and impacts youths

SINGAPORE: Associate Professor Jamus Lim, Workers' Party Member of Parliament (MP) for Sengkang GRC, has again voiced apprehension regarding the escalating prices of public housing in Singapore.

He has reiterated the Workers' Party's stance that the affordability of public housing is progressively deteriorating, which could potentially result in young Singaporeans being unable to secure adequate shelter.

In a recent Facebook post on Tuesday (21 May), Assoc Prof Lim drew attention to the soaring costs of HDB flats in Sengkang GRC, citing reports of million-dollar units.

While acknowledging that million-dollar flats are "undeniably outliers", Assoc Prof Lim contends that they signify more than just an anomaly but rather reflect underlying concerns about the increasing cost of living.

He emphasized that these exceptional cases are not isolated incidents but rather symptomatic of broader affordability issues facing Singaporeans.

This issue has been deliberated in Parliament on multiple occasions in recent years.

While the government maintains that incomes have kept pace with home prices, particularly with the inclusion of grants for Built-To-Order (BTO) flats, Assoc Prof Lim reaffirmed the WP's viewpoint that public housing is becoming less affordable, potentially leaving young Singaporeans with inadequate housing options.

He pointed out that despite Singapore's house price-to-household income (HPIR) ratio hovering around 4, it is classified as "severely unaffordable" by neutral observers such as the Demographia Index of Housing Affordability.

He argued that while first-timer grants may slightly mitigate this classification, they only move the situation from "severely unaffordable" to "seriously unaffordable."

"It’s hard to shake the reality that homes here are unaffordable; putzing around with subsidies only makes things less bad," Assoc Prof Lim added.

He further discussed the challenges faced by households in Singapore, particularly regarding the necessity of having a two-income household due to high living expenses.

Highlighting Singapore's high female labour force participation rates, he noted the resulting need for both partners to work full-time to make ends meet.

"So, while families in other countries are able to make ends meet with one breadwinner (or two, but with one working part-time or taking time off for maternity or care for kids or parents), that’s almost impossible here. "

He also pointed out that unlike in other places where people can opt for lower housing costs in less convenient areas, Singapore lacks such options due to its limited land size.

Even what may be considered remote or less desirable neighbourhoods in Singapore now have HDB resale prices that are high by global standards, providing little relief for those seeking more affordable housing options within the country.

He also highlighted that while some may perceive HDB flats as interchangeable with real estate assets, the reality is that they depreciate over time and expire worthless at the end of the lease period.

"So while a house in other expensive global cities may even appreciate in the long run and become an asset that can be passed down to future generations, this is not the case with our HDB units."

Therefore, he asserted that Singapore's HPIR should trend towards 3, as defined by the index as "affordable," which would significantly alleviate the challenges of homeownership.

He underscored, "This is especially so for many young Singaporeans, who often feel priced out of the market, right at the point of graduation. "

He emphasized that this situation not only impacts their cost of living but also leads to undesirable outcomes, such as delaying the age at which they establish families or weakening their ties to their homeland.

PM Wong once defended affordability for four-room BTO flat prices in non-mature estates has improved

In his Budget 2024 wrap-up speech on 28 February, then-Deputy Prime Minister and Finance Minister Lawrence Wong, now newly sworn-in as PM, addressed concerns about the affordability of public housing, particularly among the younger generation.

He specifically defended the accessibility of owning a house, highlighting a notable trend in affordability.

He said over the last 10 years, the average price of a four-room BTO flat in non-mature estates has remained relatively stable, even with rising median household incomes

He emphasized that, in real terms, the affordability of these flats has improved.

“The challenge we faced was with the prices of BTO flats in choicer locations, which are more expensive, ” he explained.

The government introduced a new Standard, Plus and Prime framework to address the issue. The framework aims to keep the BTO flats in these better locations affordable through more upfront subsidies.

“but it will be a fair system because the additional subsidies will be clawed back when the first owners sell the flats, ” added Mr Wong.

WP MP raises alarming concerns on housing affordability

Mr Muhamad Faisal Bin Abdul Manap, WP MP for Aljunied GRC had earlier highlighted two primary concerns, particularly for young Singaporeans from low-income households: affordability and availability.

He pointed out that the support of underemployment and savings packages is capped at S$30,000, resulting in challenges for households trying to purchase their own homes.

“If we assume a 50/50 split in the amounts a household receives for each section, the maximum amount a household receives for purchasing their own home is $15,000. ”

“After including the grants, the price of a three-room flat in the February 2024 launch of BTO projects ranges between $127,000 and $172,000. Assuming the household successfully applies for a housing loan, the downpayment involved would range between $25,400 and $34,400. ”

Mr Manap highlighted that this insufficient support makes it challenging for families, especially those with children, to save for their homes due to immediate daily needs.

Furthermore, he addressed the extended wait times for BTO units, affecting both middle-income and lower-income families.

For lower-income families with children, the living environments in rental flats may not be conducive for young children, impacting their development.

Mr Manap suggested a more proactive approach, such as prioritizing households ready to purchase their own homes in Sales of Balance Flats exercises or providing assistance in purchasing resale flats at subsidized prices.