Singapore's Affordable Prime Location Housing Solution

Since its inception, Singapore's Housing Development Board (HDB) has evolved its mission from addressing housing shortages to enhancing the quality of life for its residents. The organization aims to provide affordable and high-quality public housing while creating sustainable living environments equipped with essential facilities.

A morning in Punggol, one of the northeastern waterfront towns of Singapore, illustrates the effectiveness of HDB's initiatives. A mother walks into a community library with her two children, while employees at a nearby hawker center prepare coffee with the help of robots. In a space on the fifth floor, a group of thirty residents participates in a lively aerobics class, and an adjacent terrace is filled with plants and a grill station for barbecuing. This five-story community complex aggregates services, ranging from public service centers, hawker centers, libraries, eldercare facilities, to sports courts, embodying HDB's commitment to fulfilling everyday needs of the Punggol community.

Originally a fishing village where residents cultivated fruits, vegetables, and raised livestock, Punggol has undergone significant transformation since the 1980s. The government acquired private land and initiated various reclamation projects, leading to its development into a modern, green, smart town catering to approximately 170,000 residents living in nearly 60,000 public housing units.

As of February this year, a four-room public housing unit's price in Punggol ranged between SGD 300,000 and SGD 400,000, which converts to about CNY 1.6 million to CNY 2.2 million. Depending on various grants provided by the government, these prices can be further reduced, reflecting Singapore's ongoing efforts to ensure housing affordability.

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The roots of Singapore's public housing scheme trace back to the early 1960s, a period marked by an acute housing crisis following independence from British colonial rule. Then-Prime Minister Lee Kuan Yew emphasized the need for every Singaporean to have a home to call their own, leading to the establishment of HDB and commencing large-scale public housing projects.

Over the past sixty years, HDB has constructed over 1.2 million housing units across 24 towns, solidifying its mission to provide affordable public housing and essential services through urban planning and development. As the agency’s senior planner Chen Mingli explained to a Chinese press delegation, the agency’s current mandate involves creating vibrant, sustainable residential environments supported by government sponsorship, comprehensive planning, and technological innovation.

During discussions with various Cabinet ministers, it became apparent that Singapore's unique approach to public housing, where the government provides the vast majority of its citizens with housing, might be difficult to replicate in other countries. Approximately 80% of Singapore's population resides in public housing, which typically costs only a third of similar private-sector housing in the same area, without compromising on quality or comfort.

The surge in private home prices over the past seven years, particularly following the pandemic, prompted the Singapore government to increase the Additional Buyer's Stamp Duty (ABSD) for foreigners by 30 percentage points to 60% as a cooling measure for the property market. In contrast, HDB prices remain stable, although resale flat prices have seen a steady increase, with an increasing number of units selling for over SGD 1 million in recent years. "While prices have risen, we will ensure that Singaporeans still have affordable purchasing opportunities," stated the director of the Strategy and Communications Division at HDB.

In August, Prime Minister Lawrence Wong announced a new framework for the sale of HDB flats scheduled to begin in October, emphasizing the importance of maintaining reasonable prices. The housing issue is a significant concern for many Singaporeans, particularly young couples looking to settle down and start families. Wong assured all young Singaporeans that affordable public housing would be available in every region as they moved forward.

Following the disruptions caused by the pandemic, the supply of new flats has slowed, resulting in rising prices. Nonetheless, the government has implemented various measures to stabilize the housing market while increasing supply. Prime Minister Wong expects the backlog of HDB projects impacted by the pandemic to be addressed by early next year.

Market trends suggest that the prices of resale flats have significantly outpaced wage growth, raising concerns about affordability. In 2021 and 2022, resale flat prices increased by 12.7% and 10.4% respectively, and a further 4.9% was seen in 2023. For instance, as of recently, the median resale price-to-income ratio for four-room flats exceeded five times the household's annual income post-COVID, growing from less than four in 2019.

Wong highlighted that increasing the supply of housing is crucial in mitigating affordability challenges. Currently, most new flat applicants face a waiting time of about four years, but the authorities are making efforts to reduce this period to under three years.

The revamped classification framework categorizes HDB flats into standard, preferred, and prime locations. The existing division into mature and non-mature estates, which has been the norm for over three decades, will be phased out. Flats in matured areas tend to be in superior locations with better amenities but also come at a higher price than those located in non-mature districts.

In 2023, the government announced a reform of the HDB framework, with the then-Prime Minister Lee Hsien Loong reinforcing the need for reforms that meet three primary objectives: ensuring affordability across income groups, maintaining social integration across towns, and fairness across the entire system.

In the new classification, standard location flats will continue to be the primary source of flats in Singapore, distinguished by their location and the corresponding affordability. Furthermore, flats in preferred and prime locations will carry higher subsidies to enable low-income groups to access these better-located housing options.

However, these higher subsidies come with stricter conditions; for instance, flats in the prime and preferred segments must be occupied for at least ten years before resale, rentals are restricted, and additional subsidies must be returned upon resale. Thus, buyers wishing to purchase resale flats must also meet eligibility criteria, including income ceilings which are capped at SGD 14,000 for families.

In a case study presented at the National Day Rally, Wong illustrated how the new framework would operate for two hypothetical couples, representing varying income brackets. The couple earning SGD 7,000 a month could consider purchasing a preferred location flat at Bayshore Vista, priced at SGD 580,000. Benefitting from an additional residence grant of SGD 25,000, they will secure a loan from HDB for 25 years, primarily paid through their Central Provident Fund (CPF) savings, necessitating just minimal out-of-pocket expenses.

Conversely, a couple earning SGD 4,000 is looking at a standard location project, such as Fernvale Sails. Their three-room unit priced at SGD 300,000 would grant them access to higher subsidies, equating to SGD 55,000. They would also qualify for HDB financing, allowing them to fully pay off the loan using CPF contributions without any additional financial burden.

Wong reiterated the government’s commitment to further increasing housing grants, especially for low-income households, reinforcing that HDB flats will remain accessible to Singaporeans.

Currently, Singapore’s total population stands at approximately 5.92 million, including around 4.15 million citizens and permanent residents. With a geographical expanse of only 735 square kilometers, Singapore’s density ranks among the highest globally, leading to over 8,000 residents per square kilometer.

The public housing system has not only resolved Singapore’s housing shortages but has also made the nation one of the highest homeownership rates worldwide, with over 90% of Singaporeans owning private property. Lee Hsien Loong has remarked, “Housing represents more than just a roof over one’s head; it embodies a vital asset and serves as a powerful motivator for Singaporeans to strive for our nation and future.”

Singapore’s public housing, which is heavily subsidized, is only accessible to citizens and permanent residents with specific eligibility criteria, including being over 21 years of age and household incomes not exceeding SGD 14,000.

Due to the overwhelming demand for HDB flats, prospective buyers enter a ballot system for purchase rights. The sales of new flats have transitioned from four annual rounds to three, occurring in February, June, and October, with completion typically requiring three to four years. Buyers have the flexibility to choose flats that fit their budget and requirements, subsequently receiving corresponding grants and loans. Statistics suggest that on average, families can allocate less than a quarter of their income towards housing loans, minimizing additional financial strains.

Eligible first-time home buyers can access three primary types of subsidies: the additional residence grant, CPF housing grants, and proximity housing grants.

In 2019, the Singaporean government merged the additional residence grant, previously separate subsidies into a streamlined support system available for first-time buyers of new or resale flats. Under current policy, families with monthly incomes below SGD 9,000 stand to gain up to SGD 120,000, while single individuals earning SGD 4,500 or less can receive grants up to SGD 60,000.

With an aim to encourage living arrangements with parents or married children, the government also provides a SGD 30,000 grant for proximity housing, positioning those who reside within 4 kilometers of family members eligible for SGD 20,000.

However, Singaporean housing policy has historically posed restrictions for single citizens, barring those under 35 years from purchasing flats—an issue that has grown into a cultural phenomenon where propositions of marriage might twist into discussions about co-applying for housing. Currently, even those aged over 35 may only purchase two-room flats within non-mature estates. Yet, with the new classification, first-time single buyers will have broader options for selecting two-room flats in any of the new categories.

Married children applying for flats nearby their parents will likewise enjoy priority. Recognizing the same intention amongst single children, the government has declared plans to expand the priority system to include all eligible individuals, regardless of marital status, by mid-next year.

Though expansion of purchasing freedoms for singles has gradually gained traction, current policies still predominantly favor households. Singapore’s housing framework not only promotes family formation but also plays a pivotal role in fostering ethnic integration.

Being a multicultural state with a mix of Chinese, Malay, Indian, and Eurasians, Singapore strives for community cohesion and interaction amongst different groups. Notably, the Little India, Kampong Glam, and Chinatown districts have historically attracted tourists; however, the government is keen to avoid segregated neighborhoods and desires harmonious coexistence.

To craft a national identity among the ethnic groups, Singapore has adopted various policies, including housing measures. A quota system was established in 1989 to ensure a diverse mix of ethnicities in each community, preventing the formation of enclaves dominated by a single group. Implementation of the ethnic quota means that the racial composition within public housing neighborhoods reflects the broader national demographics. The latest updates to the quota system occurred in 2010, with restrictions on ethnic group proportions set at 84% for Chinese, 22% for Malays, and 12% for Indians and others.

To support these multicultural initiatives, leaders like Minister of State for National Development, Wu Shuhua, remarked that interaction amongst racial communities should begin right from schools and hawker centers, which serve diverse culinary offerings. At Punggol's hawker center, diverse cuisine choices include Hokkien fried noodles, glutinous rice balls, bak kut teh, as well as traditional Malay nasi lemak and Indian prata.

Similarly, the hawker stalls themselves are reserved for Singaporean citizens and permanent residents only to ensure sustained affordability and accessibility across different socioeconomic backgrounds. With more than 100 hawker centers across the country, they serve as essential venues for meals and social gatherings, integrating various income tiers. In 2020, this cherished hawker culture was recognized as Singapore's first entry on UNESCO's list of intangible cultural heritage.

As Singapore faces the imminent challenge of an aging population, the government has been proactive in developing age-sensitive policies and programs for senior citizens. As Singapore gears up to declare itself an "ultra-aging society" by 2026, greater awareness around the well-being of seniors is urgent. Chief among the plans promoted by Deputy Prime Minister Lawrence Wong is the Forward SG initiative, engaging over 200,000 Singaporeans in dialogues about their aspirations about building a common future together.

The impending demographic shift calls for comprehensive measures to engage the senior demographic. With nearly one in five individuals projected to be over 65 by 2026, the initiatives aim to elevate the quality of life for elderly citizens by facilitating better connections within communities and offering ample activities to maintain active lifestyles.

As announced during a National Day rally, Lawrence Wong reiterated the commitment to roll out the "Active SG nationwide plan" aimed at further integrating seniors into community life. The initiative extends to a spectrum of housing options inclusive of community care apartments that merge residential services, caregiving, and social support, providing senior citizens a manageable living environment.

For seniors wary of relocating but wishing to remain in their current homes, plans are under consideration to adapt existing housing infrastructures, transforming them into age-friendly environments. "We will care for Singapore's elderly, ensuring that everyone can age with dignity, security, and stability," Wong promised.

Health Minister Janil Puthucheary highlighted the emphasis on developing facilities conducive for older citizens within community settings. In Punggol, for instance, the integrated community center houses a senior activity center devoted to various engagement programs and activities tailored for older adults as well as an elderly care center providing day services catering to the needs of senior residents.

Ensuring accessibility to government services remains critical; hence the community service center offers a plethora of governmental functions catering to both traditional and contemporary methods of engagement. Out of concern that some elderly residents may lack familiarity with technology systems, physical service counters are set up to assist residents in completing necessary processes.

In August this year, the Minister of National Development announced that the HDB would implement renovations specifically targeted at areas with higher senior populations, constructing wellness gardens, providing easy walking paths, erecting accessible ramps, and installing signage with distinct patterns and colors to enhance navigability. Intergenerational parks suitable for all ages will also be developed to encourage shared use amongst children, adults, and the elderly.

“By allocating funds and constructing facilities, we strive to fulfill our strategies addressing the elderly demographic,” Dr. Puthucheary remarked. The overarching message is clear: Singapore is committed to fostering an inclusive society that anticipates the needs of each demographic, ensuring that all groups find a fitting place within the ever-evolving urban landscape.