Affordable and Accessible Public Housing, and Public Housing Policies

Mr Xie Yao Quan.

Sir, I thank Mr Perera. So, if I hear him correctly, the Workers' Party was suggesting in its manifesto, offering a definition of affordability. That definition is based on median household income applied to all flat types, including 5-room flats, when we know that HDB flats cater to the whole range of Singaporeans up to the 80th income percentile.

So, the Workers' Party's position is basically to peg the definition of affordability to median household income, even for higher-income earners in Singapore.

Mr Xie Yao Quan.

I would like to move on. Mr Murali Pillai, do you have any clarifications? I understand you have some clarifications.

Thank you, Sir. I thought I would be outstaying your welcome by asking.

Both of them have outstayed their welcome, not you. Not yet.

Mr Raj Joshua Thomas.

Sir, with 80% of our population living in public housing, today’s Motions are of paramount importance to Singaporeans, as it affects the majority of us on something so fundamental as the roof above our heads.

I have considered very carefully the motions put up by the hon Members Mr Leong Mun Wai and Ms Hazel Poa, which I will refer to as the “PSP Motion”; and that put up by the hon Minister for National Development, which I will refer to as the “Government’s Motion”.

The points raised in the PSP Motion are, in my view, raising correct objectives for public housing. Affordable and accessible public housing, preserving the owner-occupant nature of it, ensuring that retirees have access to public housing and keeping it inclusive are all ingredients of a successful public housing policy. The PSP Motion calls for a review of policy is also not objectionable – government policies should be reviewed from time to time. And it is precisely the role of Parliament and Parliamentarians to point out areas of public policy that should be revisited and changed if they are not working or not working optimally.

However, I find that I am not able to support the PSP’s Motion because the manner it is worded suggests that the Government public housing policies at this point do not deliver on these objectives or do not even have these as objectives.

The operative two words in the PSM Motion is “in order”. I quote: “That this House calls upon the Government to review its public housing policies in order to deliver affordable and accessible HDB flats”. The use of the words “in order” suggests that existing policies do not deliver the objectives. While I agree that certain aspects of Government policies should be reviewed, I simply cannot agree that current policies do not aim to provide accessible and affordable housing or that they do not look at providing for retirees and so on.

In fact, even a cursory review of public housing policies would show that all of the points raised in the PSP Motion are actually explicitly stated objectives. These rebuttals have been made by the Government and speak for themselves.

I further do not agree with the hon Members Mr Leong’s proposal in his speech, in particular, that buyers be exempted from paying the purported land cost of their flats until they sell their flat. I will elaborate on why I disagree with this.

I will therefore support the Government’s Motion but I would also like to make several observations and suggestions on public housing.

My first point is that affordable public housing should not be seen as cheap public housing and that accessible public housing does not mean that everyone will be able to get a flat in their choice location at the time that that may want it, devoid of other considerations.

As a small country with land scarcity, high level of development and general affluence of our population, we cannot expect that property prices would be anything else than fairly pricey. And this will be so whether it is public housing or private housing. Affordability and accessibility should be created by Government policies like grants, the provision of HDB loans, where possible, waivers of certain requirements and flexibility in imposing eligibility criteria, for example. Accessibility is also created by varying, amongst other things, lease tenure and limiting certain types of flat to only certain categories of buyers, like flats for the elderly.

My second point is that public housing has to go beyond just affordability and accessibility. The PSP Motion mentions retirement and inclusivity. Indeed, public housing policies are not merely about bricks and mortar and the cost of flats, but it is also a set of social policies that aims to achieve various objectives.

If we look at one such policy – the Prime Location Public Housing scheme, which gives higher subsidies for flats in prime locations like the Greater Southern Waterfront, so that they become more accessible to a wider range of Singaporeans. As the hon Minister said when launching the scheme, without Government intention, only the well-to-do would be able to afford housing in attractive locations and that the Government was determined not to let such stratification and segregation happen, as it has successful cities. In this regard, to ensure inclusivity, rental flats would also be built within these prime estates.

My first impression reading about the scheme when it was first mooted was that some buyers would strike a lottery if they win the ballot for these flats, as, after having taken advantage of the higher subsidies, they would be able to get a windfall when they sell the flat after the Minimum Occupation Period. This would be hardly ideal.

However, when the scheme was eventually rolled out, the Government layered a safeguard against precisely this “lottery effect”, including a higher Minimum Occupation Period and a subsidy recovery mechanism even when the flat is sold after a 10-year period. As such, thought had obviously been put in such that while pursuing the objective of inclusivity, other undesirable consequences do not inadvertently arise.

But another aspect that public housing policy as a social policy should take into consideration, is how to give effect to the aspirations of Singaporeans for upgrading. As we all know, Singaporeans have an almost innate desire for upgrading our property as we earn more and as our families grow larger. In this regard, it is also important to create opportunities for upgrading within the public housing milieu, including the possibility of upgrading by getting a bigger flat or a flat in a better location.

This brings me to my third point – that HDB must continue to show value to buyers. Even as I say that prices of public housing will continue to rise due Singapore’s characteristics, HDB should continually look to building and selling flats of a high quality and also of diverse types to cater for all Singaporeans.

The Prime Location Scheme was one such example that I had raised. In Punggol, there are beautiful, new seafront flats, of which I am sure view is absolutely amazing. There is also a need to accommodate the elderly, which includes downgraders – silver Singaporeans who wish to downgrade from their private properties or larger flats, as their children move out or as their mobility is reduced. Singles are another group and many not look not to buying just small two room flats, but larger flats as they may wish to also house their parents or to just have more space for lifestyle.

HDB must look into all of these aspirations – from the practical like ageing and retirement to the aspirational like upgrading and lifestyle; and for some, the desire for a fantastic view. This must be so, because our public housing cannot be, like in other countries, basic. With 80% of our population living in public housing, it is a diverse group with a range of income, priorities and aspirations.

My next point is to caution about generalising about public housing, based on a few cases or news reports. An example is the increasing number of flats being sold above $1 million in the resale market. If we look at these flats, they have a particular nature. They are larger and they are in choice locations. They also make up a very small proportion of the total number of sales – I understand just between 1% and 2%. Their impact on the price of new flats or resale flats that do not have these characteristics, is minimal.

As such, while these make the headlines, they are not indicative of flats, in general, becoming unaffordable.

Another example is that of the flat being put up for sale without the buyer having ever occupied it. Based on what the Ministry and HDB has said, these are rare cases of abuse and there are penalties that can be applied to such incidences. One swallow does not make it spring and these outliers do not mean the public housing system has failed. There will always be people who will try their luck at these things. What is important is that they are caught and they are brought to task.

Let me now address the hom Member Mr Leong’s proposal that HDB owners pay for the purported land cost of their flats only when they sell their flats – the Affordable Homes Scheme. The idea is that if these buyers occupy the flats for their entire lives, that they would essentially never have to pay for the land cost, and that this would make flats affordable at the outset.

First, let me say that I imagine that this proposal arises from Mr Leong’s fixation with land cost and his fixation with the payment made by the Government to the state as consideration for state land. If we recall Mr Leong’s earlier proposal in December, it was that, and I quote “Land costs should be take out of the picture”. He had also proposed that HDB flat prices should account only for construction costs and price differences between locations. Mr Leong had also separately suggested that land could be sold at historical rates.

The hon Minister had addressed these proposals in Parliament last month and explained how this proposal would amount to a raid on the reserves.

Mr Leong now makes a different proposal – that the land cost be paid only when the flat is sold. So, it appears that he has accepted the Minister’s explanation that land cost should, in fact, be “part of the picture”, as it were, but that payment for it should be kicked down the road, albeit with interest. This proposal fails on several fronts.

First, if it is a matter of the Government purchasing the land first but not charging it when it sells the flat, it means that the Government will become a de facto creditor to all persons living in HDB flats who have not sold their property. And the question arises whether the Government should be essentially lending money to citizens in this way.

Second, it means that when a person sells their flat, they may be left with nothing or even a deficit – because interest continues to run as long as they live in the flat. So, their debt to the Government actually grows larger over time and this could become a disincentive to remain in the flat.

Related to this is what is the rate that interest should be fixed at – because anything lower than the fair market rate would mean that the Government is being deprived of a certain amount of money that could be used for expenditure in other areas that could benefit a larger number of people.

Third, even if a person lives in the flat for his whole life, he is unlikely to live longer than the period of the 99-year lease. What then would happen when he passed away? Is the cost of the land to be borne by the purchaser, the inheritor, or will the land cost merely disappear? None of these options is acceptable.

All these questions arise, of course, in a model where the Government pays the state for the land first, then sells the flats once they are built on the basis of the proposed scheme. However, it appears that Mr Leong is actually suggesting that the state not be paid first but only once the buyer sells his flat. Because Mr Leong mentioned that the payment would be made back into the past reserves.

Sir, this is an even more difficult proposal because it will again result in a raid on the reserves because the value of the land should be determined, to my understanding, at the point that the transaction occurs – not what the historical cost of the land is, even if interest is applied to it. It is simply wrong and it is not the way that the reserves work.

In this regard, although Mr Leong started his speech by saying that he would like to propose a reset of housing policies, in fact, Mr Leong is proposing a reset of much more, including the entire system of how our reserves are maintained and managed. He is proposing to turn the system that has underpinned our financial stability on its head.

But, Sir, arising from these Motions, this debate and the various proposals by Mr Leong, is a larger question of democratic accountability and the nature of politics and political debate in Singapore. Over the Chinese New Year period, while chatting with friends at gatherings, this issue of public housing and land costs came up more than once. I was disappointed when some of my friends and relatives said that, well, paying for state land is simply a matter of left pocket, right pocket; and that Mr Leong’s original proposal of excluding land costs would make sense.

This, Sir, is a sad instance of where something incorrect is repeated oft enough, it becomes to believed to be the truth. In fact, in his speech yesterday, Mr Leong continued to conflate the Government's accounts with the past reserves.

But coming back to these Chinese New Year gatherings, I took pains to explain to them that this is not a matter of left pocket, right pocket. In fact, it is a matter of two completely pairs of trousers worn by two completely different people. The hon Minister had given his explanation on precisely this last month. For me, it is intuitive, because many years ago, I worked in the Singapore Land Authority, in the land sales department. So, to me, I could understand immediately.

But what is the reality of how it will be received by the public?

When faced with a correct but more technical and complex explanation as the Minister had made, which may take some time and thought to understand, as compared to an incorrect but simplistic and far more delicious proposition, I expect that the delicious proposition, the nod to a populist position, will have more traction and agreement amongst the public. But it will create confusion and misunderstanding of Government policies and it will create unreasonable expectations.

This, Sir, of course, is a larger question of how we want our politics to evolve, what is the level of democratic accountability we expect, whether there can be some sharing of the burden of responsibility, to increase accountability and the accessibility to information.

Coming back to these Motions, Sir, many of our policies are finely calibrated and work in tandem with each other. As I had mentioned, our housing policies are also a set of social and economic policies. It is often meaningless to look at just one factor, criticise it and make suggestions on how to change it, without looking at the whole. The PSP Motion and its related proposals does precisely this and I therefore find myself unable to support it. I stand in support of the Government’s Motion. [Applause.]

Mr Gerald Giam.

Dr Shahira Abdullah.

Ms Carrie Tan.

Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 4.35 pm.

Sitting accordingly suspended

at 4.14 pm until 4.35 pm.

Sitting resumed at 4.35 pm.

[Deputy Speaker (Ms Jessica Tan Soon Neo) in the Chair]

(Simultaneous debate on both Motions)

Debate resumed.

Mr Lim Biow Chuan.

Mdm Deputy Speaker, can I make a comment?

Are you doing a clarification, Mr Leong?

Yes, a clarification. Because before the break, two Members made certain allegations about my proposals and all that. So, I think I have to make a clarification.

Please keep it succinct.

Thank you, Madam. Before the break, the Member Ms Carrie Tan made a speech questioning my stance on land cost and public housing policies that I had discussed on social media. I would like to make a clarification to address this issue.

Firstly, Ms Tan has argued, as Minister Desmond Lee did during last month's Sitting, that I had said that HDB prices should be based on the historical cost of land. Member Mr Raj Joshua Thomas also referred to the same.

Minister Desmond Lee referred to the Facebook post that I make on 8 December 2022, where I said "land cost should be taken out of the picture because much of the land used for building HDB flats were surrendered by the Pioneer Generation to the Government for a relatively modest sum under the Land Acquisition Act, between 1970s and 1980s." This is also in the Hansard. It should be quite clear from this, that I have not called for HDB prices to be based on the historical cost of land.

Secondly, Ms Carrie Tan and Mr Raj Joshua Thomas have tried to imply that I have been flip-flopping on my stance on land cost. What I have just read out is not inconsistent with what I proposed in the Affordable Homes Scheme (AHS). AHS takes land cost out of the picture for people who buy flats for owner-occupation.

I have not pursued the matter up to now because I want to focus on the substance of the debate. But I categorically reject allegations that I have been flip-flopping or made any proposal that HDB flats should be based on the historical cost of land.

Finally, Ms Tan has taken issue with the fact that last night, I wrote on Facebook that Singaporeans are condemned to live in HDB flats. She has taken the quote totally out of context. I was trying to explain to a Facebook comment which said that AHS will condemn Singaporeans to a life in HDB flats – to which I replied that that is not the case because AHS will actually give Singaporeans the opportunity to upgrade, because under AHS, Singaporeans would have more CPF savings in their CPF accounts.

If anyone has taken offence by my choice of language, I retract the use of that word, but the quote that Ms Tan has taken, is out of context.

Ms Carrie Tan.

Thank you, Mdm Deputy Speaker. I thank Mr Leong for the clarification. I am sure it is reassuring for people to know that he does not look down on Singaporeans who live in HDB flats.

But I just want to offer a clarification in response, is that when I read the response and the question posed by the member of public, in the member of public's words, he was concerned about whether the Affordable Homes Scheme (AHS) proposed by Mr Leong would keep citizens stuck in a particular type of housing. And that was the exact word that the citizen said in the Facebook comments. He said "stuck". But it was Mr Leong who responded with the word "condemned", so that is all I wanted to clarify.

Ms Hazel Poa, are you making a clarification?

Mr Lim Biow Chuan.

Mdm Deputy Speaker, I rise in support of the Motion by the Minister for National Development. I believe all Singaporeans want housing to be affordable. That has always been the commitment of the People's Action Party (PAP) Government. The PAP Government has committed that they will price new flats at affordable prices, so that Singaporeans are able to provide for a roof over their heads when they want to start a family. The way that they have done so is through the sale of Build-To-Order (BTO) flats.

If we look at the prices of BTO flats in the non-mature estates, many of the flats sold are indeed affordable. Minister Desmond Lee has shown that the median prices in his charts yesterday, the average price of a 4-room BTO flat in a non-mature estate is kept at $342,000. For those who are lower-income, they can opt for a smaller 3-room flat, and in addition, obtain even more generous housing grants. And I have seen many such cases when I refer my residents to HDB during the Meet-the-People Sessions (MPS). These are actual figures; these are actual facts.

And these prices that Minister Desmond Lee had quoted are before the Government grants. When you factor in all the Government grants, then it is within the range of most home buyers. That is the reason why the majority of Singaporeans live in HDB flats which they have bought and which they have lived in. If HDB flats are not affordable, then simple put, Singaporeans will not be buying these flats as they will be priced out of their budget.

There are a few recent developments in my constituency – Dakota Breeze, Dakota One, Dakota Crest and Pine Vista. Every one of these BTO launches were over-subscribed, even though the prices of the flats in mature estates were priced slightly higher. In fact, I received many, many appeals from residents asking whether they can get priority for these BTO flats.

I believe the reason why these flats are in high demand is because they represent good value-for-money for that location and they are affordable to the applicants. One would not apply for a BTO flat if they feel that they cannot afford it.

In December last year, HDB released a press release to explain that HDB flats are priced with affordability in mind. HDB does not apply a profit margin on costs. They look at household incomes, they look at the selling prices of flats on offer.

Despite the media release, there are still people who may not be aware of the way HDB flats are priced. Hence, it is important that HDB conveys the relevant information to members of the public, so that the public knows that the Government prices the flats so that they are affordable to residents.

I heard Mr Leong Mun Wai's speech yesterday and his proposed Affordable Homes Scheme (AHS) model. Mr Leong's proposal to charge for land upon sale simply does not make sense to me. He proposes that when the flat owner sells, the owner would be charged for the land costs, presumably at full cost calculated at the time of buying the flat. If HDB is not fully pricing for land when selling the flats, then surely, Mr Leong's proposal will result in a much higher charge to the owner when he sells the flat. How is the owner supposed to cough up the land costs when he sells the flat? Surely, he must pass on the costs to the next buyer.

But then, why would anyone wish to buy the resale flat if they can get a much cheaper flat from HDB, which according to Mr Leong, is construction costs plus a notional location premium? He did not give any information about how he would price the location premium and whether this would make the flat even more expensive. No information. But it also begs the question, why does PSP want to charge a flat owner for land cost when HDB currently prices its BTO flats based on affordability and they apply significant grants on top of this? How does that make the flat more affordable for the flat purchaser under the PSP scheme?

Today, the amount buyers pay HDB is much less than land cost plus construction cost. The deficit is made up under the MND budget.

Under PSP's proposal, land cost and construction cost are borne entirely by the buyer when he resells – plus interest accrued. If the buyer's children inherit the flat, if they were to decide many years later to sell the flat, they must pay the land cost plus interest charged over many years and perhaps even decades later. His children will be inheriting a huge debt as they cannot sell the flat without having to pay the land cost plus accrued interest. It thus will become a huge liability to the children of the flat owner and no longer an asset.

Even charging construction cost plus, to the first buyer is problematic. Construction cost shot up 30% during the pandemic. This means that prices of flats may fluctuate wildly, depending on the market conditions for construction.

Thus, while it may seem affordable to the first buyer, it may be even more expensive on the resale market than today. Because Mr Leong Mun Wai says that his scheme is designed to reduce resale supply and keep resale prices high. The resale price demanded by the seller will be higher because resale buyers will have to pay construction costs plus land cost, now payable by the flat buyer, plus interest and the profit the home owner wants.

On the Millennial Apartment Scheme – what makes this scheme different from the private sector renting out flats at market rental? There are already such flats located at various parts of the Central Business District (CBD) like the The Sail at Shenton Way. These are currently being rented out by private developers at market cost. Why does HDB want to be involved in the private market sector if it is not to provide home ownership to Singaporeans?

Mdm Deputy Speaker, I have visited many HDB flats in my estate. I also visit many friends who live in HDB flats. Recently, I went to Punggol. I paid a visit there and I walked down the river towards Coney Island. I posted on my Facebook that the flats look absolutely beautiful. In fact, I thought they were condominiums.

My view, Mdm Deputy Speaker, is that many of these flats are really world-class and well built. Eighty percent of Singaporeans live in these HDB flats. Like Ms Carrie Tan who spoke before me, I was aghast to read that in a reply to a comment by someone on Facebook querying PSP's scheme, Mr Leong Mun Wai said that PSP's scheme was needed so that Singaporeans are not condemned to living in HDB flats.

I am certainly glad that Mr Leong Mun Wai made a correction earlier on but I just want to say 80% of Singaporeans live in HDB flats. We should not – never – say that Singaporeans who live in HDB flats are condemned. It is a disappointing statement.

While Mr Leong Mun Wai may or may not be living in a HDB flat, he should not say that people living in HDB flats are condemned. I appreciate that Mr Leong Mun Wai made that correction and I want to say that those who live in HDB flats ought to be proud of the flat that they live in because these are really world-class flats.

Mr Leon Perera.

Mr Leon Perera, I think you have asked your clarification. I will let Mr Lim Biow Chuan answer.

Ms Carrie Tan.

Mr Leong, are you seeking a clarification?

No, I am going to reply to Member Ms Tan.

(In Mandarin): [Please refer to Vernacular Speech.] I Thank Ms Carrie Tan for her query.

Our scheme is called 安居乐, not 安乐居. I would like to clarify this first. In my speech yesterday, I was not able to explain in details the contents of this scheme, so thank you for giving me a chance to clarify this —

Mr Leong Mun Wai, if I could just say, clarify and not make another speech, please.

She is asking for me to clarify —

So, just clarify. Please do not make another speech.

Ms Nadia Ahmad Samdin.

Mr Raj Thomas.

Thank you, Mdm Deputy Speaker, I thought I will just respond and clarify with Mr Leong why I said his previous proposals as regarding "taking out the cost of land from the pricing of HDB" and why his current proposals are different. Just to give the background as how I came to that conclusion and to clarify.

On a 8 December Facebook post, Mr Leong said, "in my opinion, the pricing of HDB flats should only account for construction costs and price differences between locations." He then said, "land cost should be taken out of the picture because much of the land use for building HDB flats were surrendered by the Pioneer Generation to the Government etc." On the 20 January, Mr Leong wrote again on Facebook, "it should be quite evident to Singaporeans that I am arguing for land cost to be taken out of the pricing of HDB flats", but in the current Affordable Homes Scheme that Mr Leong is proposing, the cost of land would be recorded and interests applied. And, that it would eventually have to be paid back to the past reserves. Whether it is now or whether it is later, it is still part. The land cost is still now part of the pricing of the HDB flat. And when a person purchases flat, surely, they will look at what this land cost is and consider it because it is a future liability.

So, the cost of the land is in fact, not out of the picture in this new proposal. It is, in fact, now in the picture, squarely in the picture, although it maybe in the background. So, this is the reason why I came to the conclusion that there were actually differences in what he had proposed earlier and what he is proposing now because it has quite obviously changed.

Mr Leong Mun Wai.

Thank you, Madam. If I am a military strategist, obviously, I have just executed a very brilliant strategy. If you try to second-guess what my policy is and you fail to second-guess my policy, it is your problem. I am not flip-flopping, right? So, when I say the land cost should be taken out of the picture, I mean, it should be taken out of the picture for owner-occupation. And you did not guess that I actually have a second part to it. So, there is no conflict in my first idea that I put up on Facebook and what I actually proposed in my speech yesterday.

Mdm Deputy Speaker, please allow me to begin my speech in Malay.

(In Malay): [Please refer to Vernacular Speech.] Since the earliest days of nation-building, home ownership has been a key cornerstone of our public housing policy and a key pillar of Singapore's social compact.

As a young nation, we want to support all Singaporeans to own their own homes, so that they can have stability to build their families and raise their children, have a sense of rootedness in Singapore, and have a stake in our country's progress.

We have delivered on this commitment. We have one of the highest home ownership rates in the world, at close to 90%. Many Singaporeans have also benefited from the growth in the value of their HDB flats and upgraded to new homes at different stages of their lives.

The Government's commitment to help Singaporeans own their own homes remain firm. Despite the disruptions caused by COVID-19, HDB has been catching up on its building programme. We will launch up to 100,000 flats between 2021 to 2025, if required. The Government has also kept BTO prices almost flat, despite escalating construction costs, in order to ensure that flats remain affordable.

Virtually all first-time buyers of subsidized flats get to select a flat within three tries if they apply for BTO flats in non-mature estates. Overall, almost nine in 10 first-time BTO buyers in non-mature estates can finance their monthly HDB housing loan fully with CPF, without any cash.

The facts speak for themselves. HDB flats remain accessible and affordable.

Moving forward, like what we have done before, we will continue to ensure that public housing is accessible and affordable for Singaporeans. We will also take care of the housing needs of those who are more vulnerable and lower-income families.

(In English): Madam, I will continue my speech in English, please. As Minister Desmond Lee said in his speech, one of the Government's key objectives is to create an inclusive society, through public housing.

This is why our housing grants are tiered to provide more support for lower-income families, on top of the significant subsidies provided for BTO flats. As a result, about 85% of our low-income households own their homes. This is something not commonly seen in other countries.

Take for example, a lower-income family with household income of $2,500, which is below the second decile of resident household income. They can enjoy $70,000 in grants. If they were to buy a 3-room flat in Vanda Breeze @ Yishun in the November 2022 BTO exercise, where the typical selling price was $200,000, the housing grant would reduce the selling price to $130,000, or about 4.3 times of their annual income. This family would only need to use about 16% of their household income for their monthly mortgage instalments. This means they can service their mortgage entirely using their monthly CPF contributions, without any cash outlay.

Or if you look at a household combined income of $5,000, which is below the third decile of resident household income, they can receive $45,000 in housing grants. Based on a typical selling price of $350,000 for a 4-room flat in West Glade @ Bukit Batok in the November 2022 BTO exercise, the housing grant can reduce the selling price to $305,000. This family would only need to use about 21% of their household income to pay for their monthly mortgage instalments. Again, they can service their mortgages entirely from their monthly CPF contributions, with no cash outlay.

As these examples show, HDB flats continue to remain affordable, even for families on the lower end of the income range.

Beyond delivering our commitment to affordable and accessible public housing, we have been going all out to take care of those who are more vulnerable. We recognise that some families may not be ready for home ownership yet as they need to build up their finances.

To ensure that these families and their children have a stable home as they work on their life challenges, we provide highly subsidised public rental housing as a social safety net. We have been making improvements to our rental flats over the years to provide a better living environment for our tenants and we will continue to do more.

For example, we improved the design so newer rental blocks have better lighting and ventilation. And going forward, we will be building rental blocks in the same projects as sold blocks and where possible, in the same block. Doing so also helps to ensure that our HDB estates remain inclusive.

For low-income singles in public rental flats who are under the Joint Single Scheme, or JSS, we know that some of them have difficulties finding a flatmate or getting along with them. A few years back, we started building partitioned 1-room flats for the JSS, to provide more privacy.

More recently, we started piloting an operator-run model for the JSS, where we appoint an operator to help manage the flat-sharing arrangements, and individuals can apply without having to find a flat-mate first. These efforts have been well received so far.

For our rental tenants, our approach goes beyond providing rental flats for shelter. We want to ensure that their children have a stable home environment to grow up in.

Ultimately, our goal is to help these families achieve stability, self-reliance and eventually, social mobility. This is why we have gone further upstream to pair rental housing with ComLink to provide holistic social support for families entering rental housing,

With the ComLink Rental Scheme we launched in November 2022, eligible families with young children will be automatically enrolled in ComLink when they apply to HDB for a public rental flat, even before they move in.

ComLink officers will work with the families to understand their needs and aspirations, then develop customised goals and an action plan. Depending on their needs, we bring in the relevant support schemes and programmes across the various agencies. For example, ComCare financial assistance, employment support for the parents, and KidSTART for the children.

For rental families who have achieved stability and have potential for home ownership, we set up the Home ownership Support Team, or HST in short, in HDB to journey with them through their flat-buying process.

The HST provides one-to-one guidance to help families work out their budget, make sense of the housing grants and schemes available, all the way until they move into their new flats. I work with them very closely and we engage rental tenants, as well as those who have moved into their new flats.

Since it was set up in end 2019, the HST has reached out to about 1,400 rental households. I have met some families who have benefited from HST's guidance and they are always very appreciative of the effort that our HST officers put in to help them.

For example, I met a young couple last September, Nizam and Nabilah, who had just moved into their new home. Before that, they had lived in a public rental flat for some years with their three young children. From the outset, they were determined to work towards home ownership to provide a better home environment for their children. Knowing that steady income with CPF contribution is crucial, both of them persevered in their jobs. Nabilah shared with me that their journey was not without challenges, but they were determined and worked hard to save up for their own flat.

As they were not sure about their housing budget, they sought help from the HST. The HST worked with the family to plan their housing budget and options. They also benefited from an Enhanced CPF Housing Grant of $60,000. Their determination and hard work paid off. They are now the proud owners of a beautiful 4-room flat in Punggol. In fact, I visited them at their home.

Some of our rental families are those who had to move into public rental housing after losing their flat due to financial difficulties. To help these second-timer families with children own a home again, we introduced the Fresh Start Housing Scheme (Fresh Start).

Under Fresh Start, they can buy a shorter-lease 2-room Flexi flat with a grant and receive support from a Social Service Agency (SSA) to help them stay on track in their journey towards home ownership. This was also shared by Member of Parliament Nadia earlier.

We have just enhanced the scheme last year by increasing the grant amount from $35,000 to $50,000. Starting from the February 2023 BTO exercise, Fresh Start families can also buy a 3-room flat on a shorter lease.

One of our Fresh Start families is Mdm Zaidah and her son. Mdm Zaidah is the sole breadwinner of the family and has worked as a security officer, massage therapist and several other jobs, while saving up to buy a home. After eight years in public rental housing, she bought a Fresh Start flat three years ago. When she was interviewed recently, Mdm Zaidah said, "My son and I are so happy to have our very own home."

Simple words, but there is so much behind it. She has brought up three children, gone through divorce, and battled cancer. Now, she has her own flat – a home for life, paid for in full with her CPF savings. In guiding her towards home ownership, we have been very inspired by her and we are so happy for her too.

I was very happy to read Mdm Zaidah's interview. It touched me. In fact, I cried. I could resonate with her happiness, particularly that of her son, as that was how my family, particularly my siblings and I, felt in 1979 when we moved from a rental flat in Marine Terrace to our 3-room flat in Bedok South. I sat down reflecting and appreciating what we have here in Singapore. I told myself I knew how she felt. We must do more to help fellow Singaporeans, especially those who live in rental flats to have a home of their own.

Madam, over the past decade, 7,800 rental households have benefited from HDB’s various housing schemes and grants, and moved into their own homes. Another 2,300 rental households have booked a sold flat and are now waiting to collect their keys. We are very encouraged by this, as it shows that home ownership is achievable for our rental families, with hard work and commitment on their part, coupled with strong support from the Government and the community.

As part of building an inclusive society, we have also adjusted our policies to take care of those who may be facing housing challenges due to unexpected life events. Especially when children are involved, we want to ensure that they can have a stable home to grow up in.

For those going through divorce, we understand that the housing transition is a stressful period. For divorced parents with children, I would like to assure them that they can qualify for the same housing schemes and grants as other families. They can buy a subsidised flat from HDB or a resale flat on the open market, and qualify for housing grants and priority schemes for families, such as the Multi-Generation Priority Scheme and the Third Child Priority Scheme, if they meet the prevailing eligibility conditions.

To further improve their chances of getting a subsidised flat, those who are buying a flat as second-timers can receive priority under the ASSIST scheme when they apply for a 2-room Flexi or 3-room BTO flat in non-mature estates.

For those who are undergoing divorce and want to better understand their post-divorce housing options, they can approach HDB for housing counselling.

For single unwed parents, if they are in stable employment and can afford to buy a flat, we will allow them to buy up to a 3-room new flat in a non-mature estate, or any resale flat. If they cannot afford to buy a flat and need a place to stay, we will consider them for public rental if it is in the best interest of their child, in consultation with social workers if necessary.

Some Members in this House claimed that seniors will have a lot to worry, when their leases diminish.

We take care of our seniors and we have been doing so all along. For seniors who want to monetise their flats to support their retirement needs, we have various options available, such as the Lease Buyback Scheme and the Silver Housing Bonus.

In addition, we have planned ahead and introduced measures to help seniors age in place independently and confidently. For example, we introduced the Enhancement for Active Seniors (EASE) Programme in 2012, more than 10 years ago. So far, about 280,000 households have benefited from HDB’s Home Improvement Programme (HIP) and EASE Programme, to make their homes more senior-friendly. As part of our neighbourhood upgrading programmes, we have also been adding senior-friendly features to our HDB estates.

Most recently, we introduced the Community Care Apartments, or CCAs in short, a new type of HDB flats that pairs senior-friendly housing with care services which can be personalised to seniors’ needs as they age.

We have launched two CCA pilot projects so far. The public response has been positive, and we are studying the feedback received as we develop our longer-term plans. The CCAs, along with 2-room Flexi flats on shorter leases, also provide right-sizing options for seniors who wish to right-size to a smaller flat after their children move out.

Mr Gerald Giam will be glad to know that we have been significantly ramping up the supply of 2-room Flexi flats from about 1,500 2-room Flexi flats launched in 2013 to around 4,000 such flats launched every year since 2014. We will continue taking care of our seniors’ housing needs, as we have always done.

So, Madam, to sum up, the Government has delivered on its commitment to affordable and accessible public housing for all Singaporeans. To ensure that no one falls through the cracks, we have also gone all out to help those who are more vulnerable and partner them as they work towards a brighter future for themselves and their children.

We will continue striving to do better as we work with Singaporeans to build an endearing, inclusive home for us and our future generations. [Applause.]

Mr Chong Kee Hiong.

Madam Deputy Speaker, I declare my interests as my family has interest in private real estate development.

Singapore has one of the highest rates of home ownership in the world, proving that HDB policies have been working well over the generations. Of course, these housing measures have to evolve to adapt to changing needs. We have done so before and must continue with our efforts to adjust our housing policies to suit new population requirements and social norms.

It is important for our HDB flats to be more accessible to all Singaporeans. First and foremost, we need to shorten the waiting times for BTO Flats. HDB should continue to work with the construction sector on new and faster building techniques such as Prefabricated Prefinished Volumetric Construction, or PPVC method, to reduce time for completion of projects. This will naturally increase the supply of flats in the market to alleviate supply and demand pressures,

First and foremost, it will moderate price increases as the competition for resale flats is lowered. Second, it will allow better family planning for couples who prefer to have their own homes before starting a family. Existing priority schemes should be regularly reviewed and calibrated to suit prevailing demand requirements, giving consideration to demographics and existing supply conditions. And I appeal to the Ministry to provide further priority for first timers who need their flats more urgently. These include married couples trying for a child and those with young children. HDB may need to look into their family situation, such as proximity to the parents' home, the couple's age, number of unsuccessful HDB applications and allocate higher priority.

Supposing we are able to improve the supply situation, the question of affordability is also top on the minds of flat buyers. HDB has done well over the years to ensure availability of a good mix of different flat types in a wide range of prices. Together with the relevance of subsidies and assistance schemes, home ownership is within reach for a broad spectrum of budgets.

However, there will be a group of applicants who need or want to stay close to the parents but are worried about whether the prices of BTO flats in these areas are within their budget, especially if their parents are residing in matured states, which command level of pricing that is on the higher range due to their prime or central location. How do we create a situation where we can achieve a good outcome for this group of applicants?

To maintain a fair market, HDB would have to differentiate pricing of flats according to their location in line with how real estate is priced. While bridging the aspirations of multi-generational families who want to stay in close proximity, we also need to be cognizant of market forces at play as HDB flats are also bought and sold on the secondary market. Increasing supply of BTO flats indiscriminately and skewing pricing to the low end would create downward pressure under the resale HDB flat market and impact existing home owners.

Aside from the forces of supply and demand and location, the lease tenure of a property would also be a factor in his pricing or value. Perhaps HDB can review the suitability of assigning leases of varying durations and pricing to augment the affordability to first-timers who really need to or want to stay close to their parents in mature estate BTO flats that are in central locations. I would like to conclude with my support for the MND Motion.

Professor Hoon Hian Teck.

Mdm Deputy Speaker. A debate on the Motion on providing affordable and accessible public housing for Singaporeans must look at the past, the present and the future, keeping in focus members of the older generation, current generation and future generations. The provision of public housing has to be seen in the historical context of both tackling the challenges of providing good jobs for a newly independent country suffering high unemployment as well as forming a nation.

Having a place called home produces a sense of belonging. The setting up of HDB in February 1960 was an expression of a commitment to provide affordable housing to the citizen population. What has been the record of the Government in achieving this goal over the past few decades? As the standard of living has risen and citizens' aspirations have evolved, what are the challenges to the Government commitment to provide affordable and accessible housing to the cross section of the current generation? If we attach a positive weight to the social welfare of future generations, how should we view and seek to meet the housing needs?

First, the past. In the report of Singapore Housing Committee 1947, it was noted that the lack of proper housing posed a serious problem. I quote: "These people live in huts made of atap, old boxes, rusty corrugated iron, etc., with no sanitation, water or any of the elementary health requirements. It is a literal and physical impossibility to eject these people as they have at present nowhere else to go and cannot be cramped back into the slums from which they have escaped." The report expressed an aspiration to build permanent housing over a period of 25 years.

While the Singapore Improvement Trust established by the colonial administration started to build houses to meet the challenges described in the 1947 report, the take-off began only with the establishment of the HDB after Singapore achieved self-government in 1959.

In the book titled "First decade in public housing, 1960 to 1969", the then-Minister for Law and National Development, EW Barker, said in his foreword, and I quote: "One of the more glaring problems that the government inherited when it was elected to office in 1959 was the acute shortage of housing. A large proportion of the population was then living in squalid dwellings, concentrated mainly in the city. Whatever little accommodation that was available on the market with a modicum of comfort and modern conveniences was beyond the reach of the majority of the people. Within five years of its establishment, the Housing Development Board was able to relieve the acute housing shortage in Singapore. Now, 10 years after its formation is completed, more than 100,000 units of flats which provide homes for about 30% of the population, indeed a record of which Singapore can be proud."

Today, as Members have cited, about 80% of Singapore's resident population live in public housing, of which about 90% own their flats. A key pillar of the Government's record in providing affordable public housing to its citizens is the Central Provident Fund (CPF). This makes keeping a job that pays reasonably well a prerequisite to owning a home. The unemployment rate steadily declined, from close to 9% while real income saw a steady rise after Singapore became independent in 1965. Members of the Pioneer Generation made difficult adjustments as they transited from living in attap huts to living in HDB flats.

Founding Prime Minister Lee Kuan Yew in his memoir entitled "From Third World to First: The Singapore Story: 1965-2000" told of a family – a couple of 12 children – moving from a hut to a new HDB flat at Old Airport Road, they brought a dozen chickens and ducks to rear in the kitchen. What a transformation.

Members of the Pioneer Generation and their children, including members of the Merdeka Generation, also benefited, looking at the past generation, from the appreciation of the value of their flats as real income rose steadily during the period of what I like to call catch-up growth.

It is very likely that economic growth itself, particularly equitable growth that distributed benefits to different segments of the resident population, which Singapore experienced, served to enhance the value of a home. In other words, the rise in the value of a home in general, broadly speaking, on average, occurred because of the great transition from a third world to a first, signifying a closing of the income gap between Singapore in 1965 to the world economic leader of the 20th century.

In addition, the constant effort to refresh HDB estates, including mature estates, also helps in asset enhancement.

Take the example of a member of the Pioneer Generation whose age was in the early forties during the late 1970s. That would have been about the time when the Pioneer Generation moved from the attap huts to their first HDB flats. When such a member in their early forties, during the late 1970s, purchased a HDB flat, he did that with a 99-year lease.

In his eighties today, he can, through joint ownership, leave his HDB flat with a remaining lease of still over 50 years as a bequest to one of his children. Those with children, some of whom might be members of the Merdeka Generation who choose to purchase their own BTO or resale flat, have, as Members have noted, the following options.

They can downsize to a smaller HDB flat as they age. They can move to a 2-room flexi flat or community care apartment with a shorter lease or join the Lease Buyback Scheme. These are means to monetise their housing asset and boost retirement adequacy.

Second, the present. What are the challenges to providing affordable housing to the cross-section of the current generation?

As has been noted, the Government has made clear that keeping public housing affordable to help Singaporeans own their homes is a key national priority. In that regard, two measures are regularly used in international studies.

To determine housing affordability, the HDB looks at buyers' household incomes and selling prices on Built-To-Order (BTO) flats. The BTO flats are priced to maintain a certain price-to-income ratio (PIR), taking into account the different locational and individual attributes of BTO flats. Housing subsidies given to Singaporeans purchasing their first flat bring down the PIR compared to the higher PIR for resale flats in the same locality.

Another measure of housing affordability is the mortgage servicing ratio (MSR), which is the ratio of monthly mortgage payment to gross monthly household income expressed in percentage. The MSR, as has been noted, has remained below 25% and has been lower than 25%, particularly for purchases of smaller flats with lower median household incomes. This makes it possible for most flat buyers, in the example just given, to service their loan without further cash outlays. They can simply draw down their CPF contributions.

The supply of BTO flats has been disrupted due to COVID-19. I think many Members have recognised that among different factors, this was probably a major shock, increasing the waiting time to get one's first BTO flat. But the pace of construction has resumed and some time will be taken before the market adjusts to an equilibrium to match supply to demand.

However, I think it is important to understand the nature of the market equilibrium under a BTO system.

When demand is high relative to supply, as we are facing now, an unfettered price mechanism would allocate goods to final users basically by driving up the price. Since the Government seeks to make public housing affordable by achieving a certain price-to-income ratio, the allocation therefore is achieved through balloting.

There are consequences to this. For example, this means that individual preferences for certain flat types might not be met, especially when there is a desire to have a BTO flat in a mature estate, say, for reasons of closer proximity to parents who can help to provide childcare for working couples.

Since the physical capacity to build BTO flats in mature estates is much more limited, the Government might have to consider more childcare facilities in non-mature estates to shift housing preferences.

Despite broadly equitable growth that very much characterised the Singapore experience through the second half of the 1960s, 1970s, 1980s, 1990s, from around the year 2000, while the real wage of high-skilled workers continued to rise, that of low-skilled workers remained fairly stagnant. In fact, it slightly declined from about year 2000.

In response, in the 2000s, the Government made the Workfare Income Supplement scheme a permanent fixture of Singapore's social safety net. As a portion of the Workfare payments is given in the form of CPF top ups, this helps to build up retirement adequacy.

In other words, there are national policies other than monetising assets, as long-term structural policies that boost retirement adequacy, almost surely, this will have to be a major form as we proceed in the decades ahead because the experience from developed countries has shown that in more recent decades, wage inequality has indeed widened.

As has been noted, households at the lower end of the income distribution receive additional grants to purchase their HDB flats, enabling them to have access to public housing and thus become owners also of an important asset. The size of their enhanced CPF housing grant is graduated to give a higher amount to lower-income earners. This strengthens social equity.

So, I think I have now made broadly two points.

I think that it is fairly undeniable that if you look at a country like Singapore, certainly, its prospects and its independence, few would have figured that it could transit from about 20% of the US standard of living to having caught up. I think that a central part of that growth is associated with the increase in the value of housing.

But to have a house, you have got to have a job, which makes CPF and employability, a point that I will conclude with, very crucial.

It is Singapore's ability to generate both the jobs and, of course, along with that, reasonably good pay that force us now to widen the income inequality gap. I think the social consensus is to have special policies, especially to uplift the earnings of low-wage workers, and to have a policy where we have tiered external grants that are in their favour. That is point number one.

I think point number two is that the success of meeting current aspirations, in part, will involve refinements – not a total change.

My last point, looking at the future.

I want to address here the issue of the value of land and placing it into the reserves and give a perspective on that.

The proceeds, as is the current practice, from land purchases by HDB are ploughed back into the past reserves. Valuing land and market rates and paying into the past reserves generate resources to tackle negative external shocks and boost employment for current and future generations.

Having stable employment is a pertinent precondition for achieving the Government's goal of keeping public housing affordable and accessible for future generations of Singaporeans because history matters and our achieving the high ownership of housing came along with a CPF system, which we pretty much also inherited from the colonial administration. This is because studies of how Singapore has managed to achieve such high rates of ownership of public housing by Singaporeans point to September 1968, when an amendment to the CPF Act introduced the public housing scheme to allow members' CPF savings to be used to purchase public housing.

Yet, as we have seen recently from the COVID-19 pandemic shock as well as earlier episodes of recessionary shock such as the Global Financial Crisis, keeping a job is not guaranteed as a matter of course. Drawing down on our past reserves to fund the enhanced Jobs Support Scheme enabled the Singapore economy to avoid a massive loss of jobs to retrenchment during the pandemic.

Avoiding long periods of unemployment enabled Singaporeans to continue contributing to their CPF accounts to finance their mortgages. So, augmenting our past reserves by channelling proceeds from land sales by HDB at market rates therefore serves to increase the country's resources for use during stormy days.

In the Motion standing in the name of Mr Leong Mun Wai, a proposed scheme dubbed the Affordable Homes Scheme, if I understand it correctly, has the feature that have purchasers of BTO flats who subsequently live in their units until the end of their lease pay a price that does not factor in the land cost.

In the absence of any housing grants that are financed through current tax revenues, HDB would not have the proceeds to plough back to past reserves as it currently does. Past reserves would therefore not accumulate at the same rate as under the current system.

Under the proposed scheme, the purchasers of BTO flats who, for various reasons, choose to sell in the resale market would have to pay the apportioned land cost with accrued interest that will be added to past reserves. This, I think as noted by some Members as well already, may involve a huge financial outlay for the individual seller, especially if the recovery of total land cost is applied only to sellers after the minimum occupation period, which would deter resale.

So, in sum total, under the proposed scheme, the size of past reserves that can be drawn upon during big storms that hit the Singapore economy will be smaller compared to the current system.

Mdm Deputy Speaker, it is very moving to browse through the photos in the book "First Decade in Public Housing, 1960-69", still available if you hunt for it in the library. It details the before and the after of a typical living room and a kitchen.

I am old enough to have seen how an attap hut looks like – a kitchen in the attap hut looks very different from a kitchen in the HDB flat —

Prof Hoon Hian Teck, I am sorry to interrupt you, but you have a minute and a half to close.

Thank you. Living through the rapid economic transformation of Singapore leaves one with a deep sense of gratitude. The journey ahead, however, is likely to be more challenging as citizens' aspirations are now higher and the room for growth spurts diminishes in a mature economy.

Nevertheless, keeping a focus on achieving economic inclusion through providing affordable and accessible housing while continuing to grow the economic pie through innovation and productivity increases to raise tax revenues to fund housing grants provides hope that the well-being of the current and future generations of Singaporeans can be further improved. I support the Motion standing in the name of the Minister for National Development. Thank you. [Applause]

Mr Gerald Giam.

Minister of State Faishal.

Senior Minister of State Sim Ann.

[Mr Speaker in the Chair]

Members would recall the points that Minister Desmond Lee has made yesterday. In his opening speech, he has given us some handouts, which I trust that Members have saved because they are very useful, but if not, we have made extra copies available.

In his speech, he showed that we have been building HDB flats faster than the HDB residential population growth – and that is in Annex 1. Median household income growth grew faster than the increase in average 4-room BTO prices. And this, Members can see from Annex 7.

HDB has also kept to our affordability targets. Annex 2 shows how the House Price to Income ratio (HPI) for 2-room, 3-room and 4-room BTO flats in non-mature estates have remained below five since 2015. More than eight in 10 buyers who collected their keys to BTO flats or bought resale flats in 2022, can service their monthly mortgage fully from CPF contributions, with little to no cash outlay.

Close to 70% of the BTO flats launched in 2022 across all estates, can be affordably purchased with a household income of $8,400 at a Mortgage Servicing Ratio of 25% or less, meaning that these households use a quarter or less of their household income to pay for the mortgage instalments.

For first-timers who apply for BTO flats in non-mature estates, virtually everyone gets a chance to select a flat within three tries. Minister Desmond Lee's presentation has shown how, over the long term, we have not underbuilt BTOs nor have we lost sight of affordability, especially for non-mature estate BTOs.

We agree with Members' observations about short-term imbalances in supply and the spike in resale price levels. Not only did Minister Desmond Lee lay out the causes, he also explained what we are doing about these imbalances.

Our building programme fell behind in the last three years due to COVID-19, we are catching up and are committed to launch up to 100,000 new flats between 2021 and 2025, if needed. The median waiting time is now four to four and a half years, and we are working to bring this down to three to four years from 2024. This is the median, but even if we look at the range, it is not the five to seven years that Mr Leong mentioned. It is more like two to six years and the BTO project with the longest waiting time today is an almost 50-storey development at just under six years.

Resale prices have, indeed, grown more sharply recently, due to buyers turning to resale when BTO construction was delayed due to COVID-19, and shifts in social norms exacerbated by the experience of the pandemic, contributing to overall increase in housing demand. Cooling measures have been introduced, which are starting to take effect.

Mature estate BTOs present a specific set of concerns which Minister Desmond has also addressed. These mature estate BTOs are in desirable locations and cannot possibly be priced the same as other locations. As Nominated Member Cheng Hsing Yao has alluded to, mature estate BTOs are really more than basic. Although some prospective buyers find them pricey, there are still many buyers within the eligible income range who are able and willing to pay the posted price, as can be seen by the high application rates.

The issue is how to price mature estate BTOs, so that they do not become out of reach for most buyers, and also not in a way that induces its own demand. Minister Desmond Lee has also indicated new measures we are considering to manage demand. So he has laid out the long-term picture and he has also addressed the short-term imbalances and what we are going to do.

And in the speeches that have followed, I was very glad to see considerable common ground.

For instance, Members like Mr Gerald Giam and Mr Leon Perera have also agreed that building more flats with short waiting times and also efforts to manage demand are important – and this is what we are doing or considering. Nominated Member Dr Shahira Abdullah has also raised suggestions for managing demand amongst BTO buyers. We thank her also for agreeing with us that these are important issues to consider.

Members have also made suggestions that affirm the need to make sure that resale prices are moderated. But this means ensuring that the price increases are sustainable and will not crash or be very volatile. And again, I think that we are in agreement here.

So, if we agree that the imbalances that Minister Desmond Lee has laid out are the challenges facing us, then Mr Leong's proposal of the Affordability Housing Scheme (AHS) does not quite solve any of them. His scheme also raises more questions than it answers, as many Members, including Mr Xie Yao Quan, Mr Sitoh Yih Pin, Mr Raj Joshua Thomas, Ms Carrie Tan and Mr Lim Biow Chuan have been quick to point out.

I do not wish to recap too much of the scheme, because I think many Members have done so. Suffice to say, that the scheme has attracted much comment, and yet, I think it has also perplexed commentators, because it is not so clear whether it really will be attractive to applicants or not. And if it is attractive to applicants, I think that commentators see problems and if it is not attractive to applicants, I think there are also problems.

What do I mean by that? So, for instance, if there are a lot of applicants, then perhaps, they are attracted by the super low price upon entry. However, there is also a very high clawback consisting of the land cost if they wish to sell. And at the point of entry, because if the low prices really do attract applicants, we can imagine that it will also attract many applicants. But if there is a lot of demand, then does that not make it harder for first-timers to get a flat? And does that not worsen the current concerns that some have about accessibility?

And for those who may wish to one day sell, because the clawback is very large, and as Members have pointed out, this is a clawback on a cost base model, not the affordability model that we currently price BTOs on – so, it is possible that prospective sellers of these flats are actually looking at a much higher price that they have to pay to the Government, if you add everything up together. In fact, a paradoxical feature of this scheme is that you buy when you sell, or you sell when you buy.

If they are not able to muster the financial resources to sell, then what are their options? What does this mean for those who actually do want to exit, or they want to upgrade, or move somewhere else? Are they able to find buyers who are willing to pay a very high price? And also, should there be strong demand amongst applicants, Members have also pointed out the implications of upheaval in the resale market and they are concerned that the value of existing home owners' assets would also be negatively impacted.

That is if the scheme is attractive to applicants. If the scheme is not attractive to applicants, also for the reasons that commentators have pointed out, I think that is also a concern, because then would that not mean that, young people included, applicants would abandon the public housing scheme? And how is that also better for Singapore on the whole?

So, that is probably enough said about the perplexing nature of the BTO pricing scheme.

I think it is important to also address another prominent element in it. Many Members, including Members from the Opposition, have cited fiscal sustainability concerns and we are very glad to see convergence on this important issue.

But this prominent element in the "Affordable Homes Scheme" (AHS), which Mr Leong proposed, does not quite meet the test of sustainability. Under the scheme, the land cost is not paid if the applicant or the person does not sell the flat, but this is a draw on reserves. In fact, from the get-go, we can think of the scheme as a prepaid rental scheme leveraged on past reserves, because as long as the person is living in the flat and he is not selling it, he is not able to realise any gains or any value, and it does not seem that he has the rights of ownership.

HDB must pay for the cost of the land used to build flats. It is simply incorrect to say that the land on which HDB flats are built should be treated like the land on which public infrastructure is built. Although we call it public housing, the use of the flat is exclusive to the household that owns it. And this is completely different from public infrastructure.

More importantly, HDB flat owners can sell their flats if they wish, and keep the proceeds, but we cannot break public infrastructure up, sell it off and pocket the proceeds as individuals.

Let me move on to another proposal that Mr Leong has put forth. The "Millenial Apartments Scheme" to appeal to young people who are not yet ready to buy their own HDB flat. Mr Louis Chua and Assoc Prof Jamus Lim have made similar points.

The Government has heard a range of suggestions in our Forward Singapore conversations and we will be studying them and some of these suggestions also relate to similar ideas. We are sympathetic to the aspirations and diverse needs of our young. But we have good reasons for keeping subsidised rental housing very targeted, for families who cannot afford home ownership.

Home ownership remains an important goal of public housing as it gives Singaporeans a tangible stake in nation-building and also boosts their financial security, especially in retirement.

Paid rent, even if subsidised, is a consumption expense that could have gone towards financing home purchase. And compared to subsidising rental as a lifestyle, subsidising home ownership brings more benefits, especially if it is for the majority of Singaporeans for whom home ownership is attainable.

PSP and WP Members, who have spoken on their concerns about retirement adequacy, ought to appreciate how having one’s own home protects us against the uncertainties of the rental market. I will speak a little bit more about that later.

And we are doing our utmost to ensure BTO flats continue to be accessible and affordable to younger buyers.

Several Members have identified resale prices as a concern. And here, I wish to make a distinction between the long-term trend in resale prices and the short-term spike that occurred during the pandemic.

Resale prices have moved up over the long term, certainly more than BTO prices have. That is because we changed the basis of calculating HDB loans since 1993. Instead of giving out HDB loans for resale based on the posted price of new flats, we began to provide HDB loans based on the market valuation of the actual resale flats. This is a good thing for HDB home owners, because they would otherwise not be able to benefit from the fully realised market value of their flats.

Over the long term, resale prices reflect broad economic conditions and income levels. Ideally, prices should be stable, with as few sharp fluctuations as possible.

What about the buyers of resale flats? We recognise that some first-timers do turn to the resale market instead of buying direct from HDB. And this is why the Government provides grants to make resale flats more affordable to eligible buyers. We believe this approach is fair to both sellers and buyers – allowing homeowners to enjoy the full value of their asset and yet also giving some help to buyers to bridge the affordability gap.

These points I have made about resale are relevant to my next topic, a concern that the PSP’s curious BTO pricing proposal is purported to resolve and that is liberating more CPF from being deployed for housing purchase, and thereby improving retirement adequacy.

The PSP claims that as the value of a home owner’s flat falls as the lease diminishes, and since much of his CPF savings had been used towards the flat’s purchase, retirement adequacy is at risk. And Assoc Prof Jamus Lim appears to share similar thoughts.

This claim is flawed and has to be clarified.

Helping Singaporeans achieve home ownership and retirement adequacy are both important goals for the Government. Hence, our CPF and HDB policies are closely inter-linked.

Owning a HDB flat that can last us for life is, in itself, important for retirement security. Why? Because the retiree would be assured of a home without having to rent accommodation.

The flat could potentially also be monetised to supplement living expenses, through renting out a room, the whole flat, or through the Lease Buyback Scheme. And this is why we allow the use of the CPF Ordinary Account (OA) towards housing purchase.

But we do not depend on home ownership alone for retirement needs and this is why CPF policy is also focused on helping individuals secure a lifelong cash payout through CPF LIFE.

CPF monies cannot be channelled wholly into housing purchase. Your Special Account (SA) is safeguarded, and as you grow older, more of your CPF contributions will need to go to SA rather than OA. There is also a limit to how much you can draw on the OA for your HDB loan.

For BTO flat owners who took HDB loans, HDB does encourage those who have the means and are able to do so, to make early repayments. The earlier they repay the loan, the more they can save on the accrued interest.

And many are able to do so. The average tenure for those who have fully paid up their loans is 17 years, while their average original loan tenure was 23 years.

Mr Leong advocates for Singaporeans having the Basic Retirement Sum (BRS) in CPF without having to downgrade or sell part of their lease to the Government.

Today, we expect about eight in 10 active CPF members turning 55 in 2027 to be able to set aside at least the BRS in their Retirement Account and hence, receive the corresponding BRS payout or more. And that is without having to right-size or monetise their HDB flat.

Of the remaining two in 10, a significant proportion will be expected to accrue additional contributions through employment from age 55 so that they could receive similar payouts at age 65 as those who set aside the cohort BRS when they were at age 55.

Many seniors also receive additional retirement support from their loved ones and from their private savings.

For members with less in retirement, the Government can provide additional support, such as the Silver Support Scheme.

I should add that individual prudence in housing choice is also relevant here. CPF Members who choose not to max out their OA use towards housing purchase and thus set aside more savings for retirement can look forward to higher CPF LIFE payouts.

Assoc Prof Jamus Lim expressed concern about the scenario where a home owner has bought a lease that he is likely to outlive. Will his retirement be less secure? The Government has already considered this possibility and put in place safeguards.

Notwithstanding the fact that 99% of those owning a HDB flat now can live in it till age 95 or more, we recently refined our policies to make it even less likely that a Singaporean would outlive the lease of his flat while also not having a significant CPF LIFE payout.

Those purchasing a flat whose lease can last them till age 95 can obtain the maximum CPF usage and HDB housing loan, while those buying flats with shorter leases would have CPF utilisation and HDB loan amount pro-rated.

Having a lease that lasts the buyer till age 95 is also a condition for withdrawing CPF savings above the BRS.

So, we have policies in place to safeguard Singaporeans’ retirement adequacy, which do not rely on whether the value of their flat holds or appreciates.

Still, I can sense a conundrum behind some of the speeches that Members have made, which is how do we reconcile the phenomenon of appreciating flat values with the fact of eventual lease expiry? Allow me to address this briefly.

Yesterday, Assoc Prof Jamus Lim provided a handout showing how the value of a HDB flat with 94 years left on the lease would gradually rise and then decline from 2023 to 2116. He acknowledged the effect of inflation, but he left out the impact of strong economic fundamentals and rising incomes on the value of our flat. These are important drivers of resale prices.

How do we achieve this? Well, unity, hard work and good policies would help to continue creating favourable economic conditions for Singapore. Now that our economy is more mature, growth rates cannot be as fast as in the past, but we still work towards delivering a better life for Singaporeans, which would include improvement in incomes. Getting this right would mean that the value of this flat would continue rising for a considerable time.

So, on Assoc Prof Jamus Lim’s chart, the trajectory of value appreciation continues, I believe, for more than 60 of the 94 years, before it begins to fall beyond its original value. I hope I got it right. I am pretty sure he drew it to scale. I hope so.

And 60 years, that means a 30-year-old who bought this flat on the resale market in 2023 can see asset appreciation over his lifetime.

Our policies allow this buyer to fully realise the value should he chose to monetise by selling – which would not be possible if we mistakenly view rising resale prices as a bad thing to be curbed at all cost. At the same time our policies are also flexible in providing monetisation options while ageing in place, such as through renting out rooms or Lease Buyback.

This is the reason why although the value of the flat must go to zero after 99 years, that same flat can be a good store of value over a buyer’s lifetime, over the owner's lifetime, and possibly more – so even his children might benefit to some extent – just not over his grandchildren’s lifetimes as well. But his children and grandchildren will get Government support in turn to buy their own HDB flats and benefit from having a tangible stake that also appreciates in value.

Mr Speaker, I have also explained how our policies put brakes on the purchase of leases that owners are likelier to outlive. So, I hope this reassures Singaporeans who are worried about claims that they will be stuck without recourse when the lease of the flat they bought expires on them.

Which brings me to a favourite theme of Mr Leong’s – SERS, VERS and trying to make Singaporeans unhappy over the plain truth that 99 years is 99 years. He has not forgotten to riff on this theme during this debate too.

I have explained how HDB flats hold their value well and can even appreciate over the owner’s lifetime, albeit not necessarily the entirety of his children’s lifetimes and certainly not his grandchildren’s lifetimes.

The Government has been upfront about this with Singaporeans. It is Mr Leong who has been creating ungrounded expectations by trying to convince Singaporeans that it ought to cost them little or nothing to extend the length and value of their leases when it approaches zero.

It is the benchmark by which he has been judging SERS and VERS, and unfairly too, because that is simply not their purpose.

If market valuation does not deliver the windfall outcome that Mr Leong so celebrates, then who will deliver it? It becomes a cost that taxpayers should bear. This is something which Mr Murali Pillai has also pointed out yesterday.

Mr Leong does not acknowledge that what he is encouraging Singaporeans to expect would create an extended benefit that lasts indefinitely over generations, nor does he explain how this is fair. Because he cannot.

Our policies already equip every generation with the opportunity to own homes and benefit for more than one lifetime. We all cherish this deeply.

The fair and sustainable thing to do would be for land and buildings to be redeveloped after lease expiry, so that a new generation of Singaporeans can have the same opportunities too, whether or not they were lucky enough to inherit advantages from their parents and grandparents.

Mr Speaker, I would also like to address some points about affordability that other Members have made. Mr Leon Perera and also, I believe, yesterday, Assoc Prof Jamus Lim have put forth this suggestion that perhaps the HPI for non-mature estate 4-room flats should be three, that is, an HPI of three and not an HPI of five.

I would like to share that actually, the HPI is not our only affordability target. There is another one, which in fact just now Prof Hoon Hian Teck alluded to – which is the mortgage servicing ratio or MSR.

Nine in 10 first-timer BTO flat buyers who collected their keys to non-mature estate flats in 2022 had an MSR of 25% or less and could service their loan fully with CPF, without cash.

This, we believe, is also a very good complementary affordability target, particularly because it demonstrates the unique benefits of our CPF system when it works in tandem with our housing policy.

However, let us address his question of whether the HPI should be five or four or three because I believe it was the subject of some lively back and forth earlier in the day between I believe Mr Leon Perera and Mr Xie Yao Quan.

I think whether or not the HPI should be four or three, as long as the current target is about five, I think any number that is below five must look attractive to buyers. But, of course, there will be some trade-offs. I think it is also in the spirit of what Workers' Party Members have mentioned. They are concerned about fiscal sustainability, that we also consider some trade-offs.

In fact, in the spirit of leaving no stones unturned, this is also a question that my colleagues and I have been asking ourselves. Sir, we have done some projections. What would it take to bring the HPI down, say, to three?

There is an estimated fiscal cost because additional subsidies would be required in order to make this happen. Based on our projections, it comes up to more than $2.3 billion per year. This would be the equivalent of about 20% of our annual healthcare expenditure or about one third of what we spend annually on general education.

If our Members are curious as to what this means in terms of additional revenue that has to be raised through taxes, this is more than the value of the 1% increase in GST. It is more like 1.3%. Mr Speaker, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] Mr Speaker, housing policies and home prices are hot topics. There has been much discussion and varied viewpoints among the public. This Parliamentary debate provides some opportunities for us to clarify public discourse.

First, has our public housing policy gone terribly wrong? Has it veered from its mission, requiring a full reset? This is PSP Member Mr Leong Mun Wai's point of view.

Minister Desmond Lee has made clear in his speech yesterday that HDB has ensured the affordability and accessibility of flats, especially that of BTO units in non-mature estates. We have been building HDB flats at a faster rate than HDB residential population growth, while generally keeping to affordability targets.

Our building programme was suspended at one point due to COVID-19, resulting in a short-term crunch in the supply of new flats. Many home-buyers turned to the resale market and with shifts in the demand for living spaces during the pandemic, we saw a simultaneous increase in demand for both BTO and resale flats. Resale prices have risen rapidly too. MND and HDB have been working on increasing supply and moderating demand, to restore balance and stability in the market as quickly as possible.

In his speech, Mr Leong was not able to substantiate his view that public housing policy has gone terribly wrong. He also suggested disregarding land costs so as to sharply reduce the prices of new flats. If one plans to sell his flat in the open market, he will have to refund the land cost to the Government. This suggestion does not address objective reality and hence offers no solution to current issues. Not only does it do nothing to relieve the current shortage in housing supply, it may in fact trigger further demand, and can cause serious impact on resale prices. Furthermore, the plan contradicts itself in places, resulting in many doubts raised by Members.

Second, are Singaporeans over-committing their CPF towards housing? If flats are not able to hold their value and if homeowners are not able to fully refund their CPF account after selling their flats, would it mean that CPF members have lost out? Is this not an argument for drastically reducing housing prices? The handout which Mr Leong distributed in Parliament yesterday propagates this spurious argument.

This is not how we should be looking at this issue. The CPF system was designed to support home ownership as well as provide lifelong monthly payouts at old age. This is why other than the Ordinary Account which can be used for housing purchase, we have the Special Account and Retirement Account which cannot be used for housing purchase. In addition, there are limits on how much Ordinary Account savings can be used towards housing.

Having a flat of one's own has a positive impact on retirement security. Hence, the amount of CPF used towards housing purchase would not be in vain, regardless of whether the value of the flat goes up or down.

With a home of our own, we no longer have to worry about renting accommodation. When necessary, one can monetise by renting out a room or tap on the Lease Buyback Scheme. Even if the homeowner does not monetise or sell his flat, he can still receive lifelong monthly cash payouts through CPF LIFE.

It is estimated that eight in every 10 active CPF members turning 55 in 2027 will be able to set aside the Basic Retirement Sum (BRS) and receive the corresponding BRS payout, and this is without having to monetise their HDB flat. For members with low CPF balances, the Government can provide support through other assistance schemes.

Of course, we should be prudent when making a home purchase and have a good understanding of the trade-offs involved. If our attitude towards CPF is to "use as much as we can", then naturally we will have less in our CPF account and our monthly CPF LIFE payout in future will be correspondingly lower.

Whichever the case may be, we should not perceive our CPF as "suffering a loss" because of home purchase.

Third, while a HDB flat may continue appreciating in value over the years, what should the homeowner do when the 99-year lease expires and value inevitably becomes zero? Is it the case that the only acceptable solution is to conjure up a large compensation sum for the flat owner to buy a brand new flat? This is the political issue that Mr Leong Mun Wai has been enthusiastically stirring up, with the intent of making people anxious and unhappy.

The Government would never mislead the public. 99 years means 99 years. It is common knowledge that home value will fall to zero when the time eventually comes. But 99 years is a very long time for a flat buyer, sufficient to cover his lifetime. Over this long period of time, his flat value is very likely to keep appreciating for considerable length of time. And how long is that? WP Member Jamus Lim shared a chart based on his own calculations. He cited a flat with a remaining lease of 94 years as an example and assessed that this flat will appreciate for more than 60 years before dropping in value.

If the buyer bought the flat at the age of 30, over the course of his lifetime, the value of this flat will go up. If his child lives in the flat with him, then the child would witness the growth in the value of his parents' flat over the decades while growing up, and for some of his adult years. The child would have aged by the time the value of the flat started to depreciate.

Why do flat values appreciate? Member Jamus Lim said this is due to inflation. Actually, he omitted a few important factors, mainly good economic conditions and rising incomes.

If we stay united, support sound, rational policies and work hard, we can continue to create favourable economic conditions and pursue better incomes for all.

As long as flat buyers do not buy flats whose leases are too short, it is entirely possible to enjoy the benefits of an appreciating asset throughout their lifetime.

By the way, what about cases where the flat owner outlives the 99-year lease of his flat? The Government has already thought of this and adjusted our policies in recent years, putting in place more restrictions in the use of CPF to buy flats with shorter leases, to make such situations less likely.

Hence, the same flat is very likely to bring the benefits of an appreciating asset to the flat owner over his lifetime and to an extent, part of his children's lifetime, although certainly not his grandchildren's lifetime. Afterall, 99 years is not that long. However, the flat owner's children and grandchildren can buy their own flats and, with support from Government policies, benefit from the appreciation of their own assets.

Mr Speaker, I hope these answers address the doubts in the public’s mind and provide them with greater awareness of and stronger confidence in our public housing policies.

(In English): Back to English. Mr Speaker, Sir, Mr Leong and the PSP have not shown that our housing policy is in need of a reset and the proposal they put forth does not address real issues that we are working hard to address today. I therefore cannot support their Motion.

However, the debate thus far has been helpful in drawing out views that are on the minds of many Singaporeans. I thank Members, especially PSP and the WP, for the opportunity to reaffirm the Government's approach towards home ownership, retirement adequacy and fairness across generations. Sir, I support the Motion standing in Minister Desmond Lee's name. [Applause.]

Assoc Prof Jamus Lim.

Assoc Prof Jamus Lim.

Mr Speaker, just to be clear, I think Senior Minister of State Sim Ann misunderstood what I said when I talked about the opportunity cost. I was not talking about the opportunity cost of retirement time, for which I am sure we all have plans. But rather the opportunity cost of investing too much in real estate and thereby foregoing investment in other higher-return assets, such as equities, for instance, which in general have higher returns than real estate. That was my first point.

The second point she asked was about whether I would acknowledge that the first part of the chart was actually high. Yes, in fact, the very reason why I modelled the chart in that fashion was to try to capture the realities of the secondary market. The concern that I have is that we may be over inflating; and the last thing we want to do is to encourage a bubble to grow even further. That is my concern.

Mr Leon Perera.

Mr Pritam Singh.

Deputy Leader, move for Exempted Business.