Desmond Lee defends HDB affordability amid record-breaking million-dollar flat sales

SINGAPORE: On 6 August, National Development Minister Desmond Lee addressed concerns about the affordability of public housing, stating that the majority of Housing Board resale flats remain within reach for Singaporeans.

In response to a parliamentary question filed by Mr Saktiandi Supaat, Member of Parliament for Bishan-Toa Payoh GRC, Mr Lee highlighted that around eight in ten first-timer families who received their resale flat keys in 2023 could service their monthly loan instalments using their Central Provident Fund, with minimal or no cash outlay.

Mr Lee noted that high-priced transactions constitute a small minority of total resale transactions.

He explained that a third of these high-priced transactions involve maisonettes and jumbo flats, which are in limited supply and significantly larger than most other flats.

Furthermore, over 70 per cent of the remaining high-priced units are five-room flats, often located in prime areas, on high floors, or with long remaining leases.

He also mentioned that four-room and smaller flats sold at higher prices represent just 0.5 per cent of all such flats sold in the past two years.

More than half of these high-priced flats boast attractive attributes, such as being in or near the city centre, on high floors, or offering good views.

Mr Saktiandi had asked the minister whether the Government was addressing concerns about housing affordability after HDB resale price records were broken three times in the past three months.

He also inquired if the Prime Location Public Housing (PLH) model was driving up the resale prices of non-PLH flats in more desirable locations and whether the Government was considering imposing a cap on HDB transaction prices.

Desmond Lee: Increase in resale flat prices due to the Covid-19 pandemic

Mr Lee responded that since the PLH model was launched in 2021, there has been no conclusive evidence indicating that it has driven up HDB resale prices in those towns.

However, he noted that it had been less than three years since the model’s introduction, and it would take several more years before the first PLH flats entered the resale market. The Government will continue to monitor the situation closely.

Flats under the PLH model come with stricter conditions, including an 8 per cent subsidy clawback upon resale and a 10-year minimum occupation period.

“Housing policy is complex, and any change in one area may have wide-ranging implications in other areas. Our approach to tackling this has been to address the supply and demand imbalances,” he said.

He added that while these measures will take time to take effect, the Government has increased the CPF Housing Grant to provide quick and targeted support to first-time buyers.

Mr Lee explained that the increase in resale flat prices was due to the COVID-19 pandemic, which disrupted the Build-To-Order (BTO) building programme and significantly impacted supply.

Concurrently, demand increased as more Singaporeans sought to move out and live independently, a trend accentuated by the pandemic, leading to an imbalance in supply and demand.

“We should not expect housing prices to go up indefinitely”

He assured that the Government has significantly ramped up BTO flat supply, including offering more flats with shorter waiting times.

In 2023, HDB completed about 21,400 flats across 23 housing projects, the highest number of projects and flats completed annually in the last six years, and it is on track to complete another 18,000 flats in 2024.

Mr Lee also mentioned that three rounds of cooling measures have been implemented since December 2021 to temper housing demand in the resale market and encourage greater financial prudence among home buyers.

“While the resale market has risen in the last few years, we should not expect housing prices to go up indefinitely. History has taught us that the property market moves in cycles,” he said.

“In a time of market exuberance, prospective buyers should be extra careful, because those who buy high will also be harder hit when the market eventually comes down.”

July sets new record with 120 million-dollar HDB flats sold

Recent months have seen a significant increase in the number of million-dollar HDB resale flats, raising concerns about housing affordability, especially for Singaporeans facing a high cost of living.

According to data from the government website data.gov.sg, July saw a record-setting 120 million-dollar HDB flats sold, surpassing the previous record of 96 million-dollar HDB resale transactions set in June 2024.

In the first seven months of this year, 539 HDB flats sold for at least S$1 million, compared to 470 such sales in 2023 and 369 in 2022.

In July, a five-room unit in Margaret Drive, Queenstown, sold for approximately S$1.73 million, setting a new record for the most expensive HDB resale flat in Singapore.

This sale exceeded earlier records, including a five-room unit in Boon Tiong Road that sold for S$1.59 million in April and another unit at City Vue @ Henderson, which also sold for S$1.59 million in June.