Affordable And Accessible Public Housing, and Public Housing Policies

Thank you, Mr Speaker. Just a quick clarification for Senior Minister of State Sim Ann on VERS, as I took some time to relook at what has been shared so far in the public space. I think Senior Minister of State spoke about how the Government under VERS would be the buyer of last resort. And I think this is actually a key plank of what the Workers' Party (WP) has said in the Universal Sale and Lease Back Scheme which we put out, that the HDB is the buyer of last resort for all lessees, at the option of the lessee.

But can I confirm that VERS is subject to voting on a precinct level and that it is far less generous than SERS? This is what we know so far. So, for a young family that buy, say, a Marine Parade flat today which has about 50 years left, the original owner would be able to monetise. But for this young family, should the precincts not actually vote for VERS, then, what recourse would he or she has, and does it mean that their home, or rather, their household net worth would be declining as a result of this.

Mr Speaker, we have shared what we can about VERS at the moment, but it is still a work-in-progress and more details will be forthcoming when ready.

Mr Speaker, I appreciate the opportunity to participate in this debate on the subject of affordability of public housing in Singapore.

Do Singaporeans have access to affordable public housing? Has Singapore's public housing policies enabled Singapore Citizens, especially in the lower middle-income group, to own their own homes?

Let us start with the facts. So, I must thank the hon Member Mr Leong Mun Wai for putting up the Motion because it then gave me the motivation to go find out the outcomes. So, what are Singapore's public housing outcomes?

Outcome number one: 78.3% of Singapore resident households live in HDB flats, and today, HDB has supplied more than 1.09 million flats in Singapore, nine in 10 of which are owner-occupied, resulting in Singapore having one of the highest home ownership rates in the world. And even more heartwarming to know is that 85% of low-income households in Singapore own and live in their own HDB flats.

Outcome number two: housing is usually the highest expenditure for any household. Mortgage service rate, or MSR, refers to the proportion of a borrower's gross monthly income that goes towards mortgage repayments for the HDB flat, and is a good benchmark for affordability.

In the first half of 2022, almost 90% of all buyers who collected keys for their new HDB flats has a MSR of 25% or lower. By global comparison, Singapore's MSR of 25% or lower is below the international benchmark of 30% to 35%, which indicates that public housing in Singapore is more affordable than elsewhere.

Outcome number three: moreover, given that for employees aged 55 years and below, employee and employer CPF contributions amount to 20% and 17% of employee income respectively, totaling 37% of income. So, for the buyers with MSR of 25% or lower, they can service their HDB loans using their monthly CPF contributions, with little or no cash outlay.

Outcome number four: in 2021, the median price-to-income ratio for HDB flats in Singapore was 4.5, which means that the median HDB flat price is about four and a half times the median annual household income in Singapore. This is remarkably lower than the median price-to-income ratios in cities, like Hong Kong at 30.8, Beijing at 26.8, Shanghai at 24.5, Seoul at 18.6 and Tokyo at 16.6.

Outcome number five: in most parts of the world, affordable housing usually refers to low-income housing. But for us in Singapore, our affordable housing wins international accolades and awards for providing well-designed flats and high-quality living environments that is green, liveable and sustainable, and have the greatest effect on the people who use them each day.

Outcome number six: a study on International Housing Affordability Survey 2020 recognised the Singapore Government for heavily investing in the upgrading and renewal of HDB neighbourhoods. This helps to forestall urban decay, they wrote, in older areas and allows homeowners of all income levels a quality living environment comparable to newer neighbourhoods.

Outcome number seven: HDB housing is referred to locally as public housing. Yet, unlike other public housing programmes, HDB flats are owned under 99-year leases by purchasers who are able to sell their units after a Minimum Occupancy Period (MOP) of five years, or 10 years for the Prime Location Public Housing (PLH) model, resale of HDB flats help to unlock the value of the HDB flats for many Singaporeans over the years, facilitating social mobility for HDB dwellers to upgrade to larger units, or to private housing even.

Outcome number eight: as Singaporeans move into the retirement phase, they are supported by the HDB Lease Buyback Scheme (LBS) and the Silver Housing Bonus (SHB) scheme, which allows the seniors to monetise their HDB flat while still living in it, or to monetise their HDB flat in the resale market and move into a smaller unit, with a shorter lease. In their golden days, they continue to have a home to age in place and have cash to support their retirement needs.

How would you answer the two questions I posed at the start? A resounding "yes" would be my response.

What Singapore has achieved is truly a miracle and, definitely, not by accident. Our leaders and our pioneering generation dared to dream together of the possibility of a metropolis rising out of a mudflat swamp and they worked together to make it happen, one brick at a time. We are blessed that the successive generation of leaders in our Government continue to build on that dream and bring us to where we are today.

There are many economists and governments studying the Singapore model and lessons learnt. I quote from the Demographia International Housing Affordability Survey, 2020 edition: "no major metropolitan area in the high-income world faces the housing affordability challenge of Singapore. Singapore's six million people live on a fully developed island nation so small, that they could fit into one-half of Tokyo Bay. As a result, Singapore lacks the supply vent of low-cost suburban or exurban land that moderates house prices across an urban area. This is Singapore's unequaled housing challenge... but Singapore has effectively managed its scarce land supply and established a market that produces middle-income housing affordability. HDB also seeks to achieve social objectives through its policies, such as to: promote progressivity by giving a higher grant amount to the lower income; promote family formation by providing bigger grant amounts for families than for singles; promote mutual care and support by encouraging families to live with or close to their parents or children.

The lesson of Singapore for the world is not so much the intricacies of its housing market design. Rather, it is that Singapore pro-actively and successfully prioritized affordable home ownership for its citizens, and developed means to accomplish that objective based upon its unique conditions."

Kudos to colleagues at MND, HDB, CPF and the whole-of-Government, for all that you do to house Singaporeans from cradle to retirement. You deserve our show of appreciation.

What is waiting for the road ahead? The paradigm shifts all the time and the COVID-19 pandemic has thrown quite a few curveballs at us from many directions and public housing is not precluded. Over these past two days, many ideas have been thrown around and indulge me as I add a few to the already long list.

Challenge number one is said many times, long wait time for BTO Flats with median wait time of 4.3 years, not counting the long queue to apply and book for a flat. HDB is already implementing a hybrid of Build-ahead a certain number of flats to compliment BTOs to shorten wait times. And as Minister Desmond shared yesterday, HDB is ramping up the construction of flats to catch up on lost time caused by COVID-19.

Of course, the key question is, what would it take for HDB to further ramp up the numbers and reduce the median wait time by half, to address the backlog and demand from, especially, the first-time applicants. Share with us your 苦中 or pain.

Meanwhile, I hear from a young couple that the interim rentals HDB offered for young families to set up home while waiting for the HDB keys have been most helpful. They are very grateful for HDB supporting them in their journey and more can benefit from this.

And of course, four in 10 applications reject when offered a flat, and perhaps that is why the supply demand forecasting is a little bit in the air. This issue has to be managed, so that HDB can better plan demand and supply and I ask applicants: be serious, $10 for one application, that is why four in 10 applications reject.

Challenge number two: perception that BTO flat prices are unaffordable. From what I have seen, Singapore public housing is higher quality and more affordable than most other cities. Affordability, as my fellow Nominated Member colleague said just now, is all about buying within your budget. HDB has assured that there is a HDB flat out there for a different range of incomes and needs, and that the BTO flat is priced to affordability and is not priced to recover cost.

This explains the big deficit that HDB chalks up every year for its Home Ownership Programme. So, how will HDB persuade home buyers that there is a BTO flat for them that is affordable and accessible, rather than for them to hear from coffeeshop talk that HDB flats are not affordable.

Maybe an AI app may help the home buyer to match their needs and budgets to HDB BTO launches as well as resale flats and discover the opportunities that they have not thought of, and that might even save them cost. Affordability is all about managing your own expectations.

Challenge number three is that HDB resale prices are driving up BTO prices. Now, more subsidies for those flats in popular locations, in my opinion will only lead to the BTO flats in these locations being more prize trophies. So, putting too much premium for BTO flats in these locations may put it out of reach for ordinary Singaporeans. I think the premium location housing is a good scheme that can be expanded to more popular locales to address this good problem.

Challenge number four is the resale prices of HDB flats. The Government measures to cool the currently heated resale market have already been introduced and will take time to work through the market. Of course, the question is whether this is enough to deter speculative behaviour. And for buyers, do not kill me – I like the idea of the principle of Government sharing in the gains of the resale flats since there were grants involved. And of course, I like the idea of expanding the PLH rules to cover non-PLH locales and perhaps there can be some form of ABSD or stamp duty when you buy resale.

Challenge number five is the current generation of retirees and soon-to-be-retired. There are some Singaporeans who have planned the move to sell their private property or to downsize from the current HDB flat and to retire in a smaller HDB apartment. Their retirement plans are of course impacted by the cooling measures. It is their own bad timing. However, might the HDB support their efforts to retire well joyfully in a HDB home.

Challenge number 6 is now the younger generation. In preparing for my speech, I listen to some young people. There is a changing attitude and lifestyle among the younger generation. They want more personal space and we have seen more singles moving out of their parents' homes, even when it is a landed property, even when they have their own bedroom, to share a rental flat with friends. The work-from-home norm which is catching on among the younger generation in particular would require more space at home for work.

My advice to them, from my experience working from home should be the flexibility that I can have and not the permanent shift from the employers' real estate costs to my personal real estate expense. For many of them, they do feel that Government grants are all very helpful, but insufficient BTO and resale prices continue to escalate and the downpayment of 20% is a non-starter unless they get help from their parents.

Challenge number seven is the sandwich middle class. With private condominiums pricing going up, the sandwich middle class hopes that the HDB can raise the income ceiling for HDB's executive condominiums (ECs) and maisonettes so that they may be able to meet their upgrade aspirations at the lower quantum value.

Challenge number eight: as HDB is intended to be owner-occupied but the rules allow for them to rent out the HDB flat and live in their private housing, it is good to see the HDB has given our fellow Singaporeans the lift up and the progress to be able to invest in property and, without breaking HDB rules, have the ability to enjoy passive income from renting out their HDB flats most likely to our foreign workforce like nurses, therapists, technician, so on and so forth; all who need affordable rentals place to live. We read in the news about escalating rentals even for HDB rooms and HDB flats. HDB is after all subsidised housing. I hope that the owners will exercise restraint in the exuberance of profiting from this privilege of having a HDB flat to rent out.

Are there any rules or caps on rental gains for this category of HDB owners? Is there any rent control to ensure that the rental prices of HDB rooms and HDB flats will provide affordable rental housing for our guest workers?

Challenge number nine: notwithstanding that the debate today is around affordability of HDB flats, I would like for us to spend a minute to look at the overall Singapore real estate. In a UBS Global Real Estate Bubble Index Report, it is reported that most households can no longer afford to buy property in the top financial centres of the world without a substantial inheritance. While we do want Singapore to be one of the top global financial hubs, how can we prevent and limit our risk of being in that same situation? How does MAS and MND collectively plan to help ensure that Singaporeans can still get to own our limited residential real estate even as we welcome wealthy family offices into Singapore whose purchasing power will inevitably drive up property sale and rental prices?

Mr Speaker, MND, HDB, MOF, WOG, being the custodians and stewards of our land and resources have the unenviable job to prioritise for the greater good of all of Singapore. It is a very tough job and they have created a system that works and is admired. For all of us in this Chamber, I submit to you that we ought to debate difficult issues in truth and in love.

We should strive to unite and not divide. We are all here to find solutions that support the integral human development of our society in this small little 724.2 square metres of land.

As Harvard University economist Edward Glaeser once said, "All policies need to be judged by the impact on people."

Speaking of people, I would like to share with this House the story of Mdm T told to me by Montford Care, Caritas. By the way, all names have been changed to protect the confidentiality of the persons.

Mdm T is a single mother, aged 43, with two children from her second marriage. One child has a medical condition and the other child is highly active. They were victims of family violence resulting in Mdm T divorcing the second husband. Mdm T moved back to her mother's place and was dependent on her financially. She moved into a rental flat with her children in 2016. She was emplaced in HDB's Fresh Start Housing Scheme (FSHS) in March 2020 and was referred to the Fresh Start Support Programme (FSSP) in July 2020.

To cut a long story short, Mdm T, with the help of the FSSP social worker, managed to get a full-time job, moved into her HDB flat under the FSSH, got help from generous donors to set up her home, learnt to be more confident in planning, managing her children and is taking on the responsibility of managing her own bills and not burdening her mother and still have some savings left over.

HDB is not only providing affordable homes for Singaporeans, but HDB is taking care of the vulnerable and integrating the resources across the whole-of-Government, MSF and social service agencies to help Singaporeans like Mdm T and her children to have a fresh start in life. That is the Singapore Spirit, that is the Singapore system.

Mr. Speaker, indulge me this final quote: “Intentions are not enough – they must be converted into tangible results. Singapore’s success is in facilitating results consistent with intentions that are both meaningful and routinely evaluated.”

I have faith that we have done it before, and we will do it again. I stand in support of the Motion in Minister Desmond Lee's name for affordable and accessible public housing, and that this House affirms the importance of keeping public housing affordable and accessible while protecting the interests of current and future generations of Singaporeans and endorses the commitment of the Government to these twin goals. [Applause.]

Mr Speaker, the Workers' Party's Members of Parliament have spoken on a number of relevant areas and shared our views on the Motions before the House.

Sengkang GRC Member of Parliament Louis Chua Kheng Wee has spoken about the inadequacy of Build-To-Order HDB launches. Sengkang GRC Member of Parliament Jamus Lim has spoken about the tension between housing as an asset and retirement solution.

Aljunied GRC Member of Parliament Leon Perera has proposed building ahead of demand and the prospect of 70-year leases to build up CPF retirement funds and Aljunied GRC Member of Parliament Gerald Giam has spoken of how to arrest resale prices.

As for my speech, it is in four parts.

First, I will touch on how housing policy has evolved in the past. Second, I will discuss where we stand on both affordability and accessibility of HDB flats. Third, I will make some inquiries on how land is priced. And finally, I will ask the Minister some questions on public housing and taxpayer subsidies.

Let me start with a look at public housing policy in the past.

In 1964, the Government introduced the Home Ownership for the People Scheme so that Singaporeans would own rather than rent their flats. It was intended that through home ownership, Singaporeans would have a tangible stake in Singapore's success. The policy then was that flats would only be sold to families earning less than $800 a month.

The Home Ownership for the People Scheme did not really take off at the beginning as not many people could afford the 20% downpayment in cash to secure a flat. This changed dramatically some four years later in 1968 when CPF funds were made available to pay for public housing.

In 1971, there was a significant shake-up in public housing when the Government allowed HDB flats to be resold for a profit, although not investment. This created the HDB resale market.

In 1973, an amendment to the Land Acquisition Act allowed the Government to purchase land from owners at prices independent of the land's purchase price or prevailing market rates. This allowed the Government to purchase a great deal of land at low prices.

This historical fact accounts for the ever so often heard view that because HDB bought the land cheaply and since that land would be returned to the state after 99 years, there is scope or there could be scope for the state to take a different, more enlightened view about land costs in order to make public housing more affordable and consider other approaches beyond strict market pricing to keep HDB flats affordable.

In the 1970s, 1980s and 1990s, property prices in Singapore kept rising. Lease decay did not factor heavily in the public consciousness as many flats were relatively new. However, a serious correction to housing prices hit hard on the back of the Asian Financial Crisis.

After the 2001 elections, then Prime Minister Goh Chok Tong promised a review of costs. Much was expected of the Economic Review Committee, in particular, the Land Working Group. Then, land costs came into the gun sights of those worrying about the cost of doing business in Singapore and the cost of housing.

Instead of precipitating bold changes, the Land Working Group took the view that it was tough to demolish and rebuild Singapore's land policy. The group's report restated the constraints policy-makers faced while advocating a greater role to be played by the private sector in the provision of public housing and even suggesting the extension of grants for private home buyers.

As a country, we have been at the current property cycle before – more recently, slightly more than a decade ago, when the prices of HDB flats increased rapidly after the Global Financial Crisis.

To deal with that, the then Minister for National Development Khaw Boon Wan announced the policy decision to delink HDB prices from resale prices. However, much less was broadcasted about the fact that the increased subsidies to make flats affordable would be paid by taxpayers.

This is significant because a large part of the government solution whenever HDB prices went, perhaps, out of hand, would be to resort to deploying more taxpayer monies, ostensibly in greater quanta, to make up the difference.

A significant overlay to the property cycles over the last few decades has been the public expectation that HDB flats would be ever appreciating assets. This incorrect expectation was created, perpetuated and not corrected by previous PAP Governments.

A more responsible narrative would have informed the public that capital gains will be possible only in the short to medium term. It should have been made clear to all that quite simply, public housing on a 99-year lease cannot be expected to appreciate endlessly.

A few years ago, then Minister for National Development Lawrence Wong finally spoke the unvarnished truth about 99-year leases – that flats would be returned to HDB and only a small percentage of flats would undergo the Selective En bloc Redevelopment Scheme.

There was a highly negative public reaction to this clarification. One academic at the Lee Kuan Yew School of Public Policy put it this way, "The government hasn't been entirely consistent in their messaging with regard to housing policy, which created the uncertainty and anxiety."

Singaporeans, or at least some Singaporeans, felt that there was a reneging of what they perceived as an asset appreciation promised by PAP.

I now move on to the second part of my speech – where are we now?

Property prices in Singapore have soared in the last couple of years. As far as HDB flats are concerned, resale prices are breaking new records.

Singapore is unique in this regard. In most parts of the developed world, property prices are moderating or falling because of rising interest rates. Since the US Federal Reserve System started raising rates in March 2022, the situation in other countries has developed in a normal way. When interest rates rise, property transactions decrease and prices drop.

In Singapore, despite steeply rising interest rates for nearly a year now, prices have shot sky high. This is not normal. It is only because of new cooling measures that the property market shows signs of moderating.

The fact of Singapore's property prices going in a different direction from many other countries provides some proof that external circumstances are not the cause.

Sir, housing prices are essentially a matter of supply and demand. As far as property in Singapore is concerned, the Singapore Government controls the supply of new property in the market, both in the public and private sectors.

The Singapore Government also controls the number of new citizens and permanent residents (PRs) and has full information on birth rates. It controls the inflow of work and employment pass holders.

The Government knows the application rates for HDB flats and controls HDB allocation. The Government is the largest landowner and developer of land and is the regulator of land policy.

Because of a preponderance of control over land supply, the Government is in the best position to ensure housing prices remain affordable and stable.

The levers at the disposal of the Government do not just include introducing cooling measures overnight by way of fiat. They include building public housing ahead of demand and stepping up private land sales to meet demand at reasonable prices.

The fact is that the prices of HDB BTO flats, resale flats and private condominiums generally move in synchrony – which brings me to today's two Motions.

The different phrasing of today's two Motions indicates the different thrust of each. The Government's Motion implies that HDB flats have been kept affordable and accessible while PSP's Motion suggests that flats are now not affordable and accessible.

Some of the difference could be due to a different understanding of what each word means and represents.

I would argue that affordable HDB flats mean HDB flat pricing that is not out of synchrony with salaries. For example, the rise in resale flat prices, should not be perceived to outstrip salary increases. Resale prices have increased because people need homes and the HDB did not build enough BTOs to meet demand, which should have been known and calculable, notwithstanding COVID-19 related delays.

Over the last five years, the prices of larger resale flat, specifically 5-room and executive flats, have risen even faster than 4-room resale flats. Million-dollar HDB flats no longer make the news. Such sales take place even in areas such as Woodlands, heightening the anxieties of parents and young families and adults with regard to affordability.

While the house price to annual income (HPI) is a common gauge to appreciate the affordability of HDB flats, in the Singapore context, it is the taxpayer subsidy, or what the Government refers to as generous subsidies, that is keeping the number in check.

In all likelihood, either these subsidies will grow ever larger to keep HDB flats affordable or more subsidies will have to be recouped at the point of sale, similar to how it is proposed for Prime Location Public Housing (PLH) flats currently.

This would be a somewhat analogous albeit different situation to the PSP's proposal for deferred land cost by way of its Affordable Homes Scheme. In one situation, in this case, PLH flats, a designated portion of taxpayer subsidies are returned to the Consolidated Fund. In the other, land cost will be returned into the past reserves.

The Government regularly trots out that the HDB housing backlog after the Asian Financial Crisis as a reason for not wanting to build excessively. However, this sacred cow is one that needs to be slaughtered, particularly because of the serious implications an overheated housing market has on public housing prices for the common man and woman.

Clearly, the orthodoxy is one that feeds itself. If the Government does not release adequate parcels of land quickly enough, a bubble can rapidly form, one that has a direct implication on HDB BTO and resale prices and the prospect of an increase in taxes to fund subsidies.

What about the word "accessible"? Accessibility includes not just being able to apply for and book a flat. It also means securing a flat in a timely way.

Today, waiting times can stretch up to four to five years for BTO flats. When people get their flats later, they may also put off having children earlier, a largely perverse policy outcome in the face of our efforts to encourage young couples to form families and have children.

The decision to build to order rather than ahead of demand has likely had an impact on the reproductive rates of Singaporeans. It should not come as a surprise if couples and newer generations of Singaporeans want to occupy their own home before starting a family and having children.

Let me share a newspaper article with an approach to accessibility that needs to be reviewed. This will address accessibility in a meaningful way. The multi page advertisement from HDB in The Straits Times is dated 3 July 1989. It is titled, "The new HDB booking system, how it works for you."

And I quote from this newspaper article: "Under the booking system, HDB will announce every quarter, the building contracts it has awarded. The number of units of each type of flat, their location, layout and design and the price range for each type of flat in each location as well as the expected date of completion will also be made known. HDB will simultaneously release broad plans of the building contracts for the subsequent nine months. The number and type of flat and their locations will also be made known. The details provided in these broad plans may change depending on the demand for flats in the area. Thus, HDB will in effect announce a rolling 12-month building programme every three months. It will do the same at the start of every quarter and applicant who has booked a flat will normally take possession of his flat in about two and a half years after booking."

Today, the BTO system is both similar and different to the booking system of 1989 in some respects. But one fact is dramatically different. The BTO system today does not promise flats for buyers in two and a half years. Of course, the downside of this pre-BTO model, which ensures an ample supply of flats is that in the event of a "black swan" episode, like the Asian Financial Crisis, there may well be an excess stock of flats which take time to clear, including administrative costs.

But in that worst-case scenario, new accessibility options can be considered, for example, HDB would be able to offer excess flats towards schemes like the Parenthood Provisional Housing Scheme, which is, oversubscribed even today. Other options include expanding rental options for low-income households, which host large families to flat types that can be up to 3-room or even 4-room in size. I acknowledge the reply given by Minister Desmond Lee to Sengkang GRC Member of Parliament, Mr Louis Chua Kheng Wee by way of his Parliamentary Question that since 2018, the HDB has offered close to 11,000 BTO flats with shorter waiting times of less than three years.

However, as the Minister revealed, for the 23,184 flats launched in 2022, only 8% are short-wait BTO flats. The Minister's new commitment, as announced yesterday, to increase this to 2,000 to 3,000 flats each year, will not move the 2022 figure of 8% in a significant way.

How is it that the HDB could build high-quality flats at a much faster rate decades ago compared to today, even after the introduction of productivity measures, such as prefabrication technology? Can the Minister make a commitment to bring accessibility to commitments made in 1989?

Mr Speaker, it is trite to say that any major reset of public housing policy cannot take place without upsetting either buyers or sellers or perhaps both. The Government currently sets land costs at fair market value to the price of flats. Mr Leong Mun Wai has sought to address that the land cost component of HDB flat prices from a new perspective, through the PSP Affordable Homes Scheme proposal. The Government would be familiar with the gist of this proposal as it was originally put forward by a researcher from The Institute of Policy Studies, a Government think tank about a decade ago.

The idea of the land cost for public housing being accounted for differently is not new. There have been calls from the public and in the mainstream media to see how land cost can be dealt with to make HDB prices more affordable. And these come from a good place, and they should not be received by accusations of wanting to raid the reserves.

In 2002, The Business Times published a reader's letter which said, "land is purchased and assigned to HDB by the Singapore Land Authority. The actual land costs on the assignment to HDB should not be governed by the market, as the role of HDB must include the important social objective to provide public housing to those who are unable to participate in the private sector. This is a fundamental policy issue which needs to be acknowledged. We need to be more transparent with regard to the cost of land assignment, so that the public can constructively and actively participate in examining the formula of land assignment to HDB."

In 2013, on the back of the "Our Singapore Conversation", a Straits Times editorial titled, "Pondering next phase of public housing" stated, "When the HDB's key mission of building affordable homes has to go hand-in-hand with broader considerations, a variety of fresh ideas deserved to be explored. Those floated by National Development Minister Khaw Boon Wan recently are lower-priced BTO flats with a longer Minimum Occupation Period before these can be sold on the open market. A shorter lease to match cheaper prices and the separation of new flats from others by allowing resale only to the HDB. Other means of lowering prices could be to increase grants to first timers or take land costs out of prices and recover this when the flat is resold."

In a POFMA clarification on 14 October 2022 directed at Yeoh Lam Keong by the Ministry of National Development, the Government stated that it cannot sell state land at nominal or at a much lower cost than its fair market value without the President's approval, as doing so would constitute a draw on past reserves.

On this point, I have some questions for the Minister. Can the Minister confirm if the words, "not much lower cost than its fair market value" – the emphasis being on not much lower – as stated in the POFMA direction, does it suggest that land for HDB flats can be sold to HDB at a price lower than its market value, as established by the Chief Valuer? If so, under what circumstances can this be done?

In comparison, such an interpretation would not be inconsistent with the concept of a reserve price for sites sold under the Government Land Sales, GLS, for private housing, and industrial GLS programmes which are pegged to 85% of the estimated market valuation of each site. Tenderers will qualify if they bid more than 85% of the assessed market value of the land. If they bid less than up to 85%, the tender exercise can be aborted or is aborted.

Does the 15% discount on the market price of land or the reserve price under GLS programmes constitute a draw on past reserves? And will the President's approval be required for such land sales which are sold below market valuation, and if not, why not?

Finally, how did the Government decide on accepting tenders for private land at 15% below the market value and what is the basis to this figure of 15%?

Based on a recent Parliamentary Question by Sengkang GRC Member of Parliament, Mr Louis Chua Kheng Wee, we also know that the Government does not automatically rule out bids below the reserve price for GLS sites. And that the award of a site depends on the prevailing market conditions, number of independent bids received and the specific circumstances of each site.

I would like to ask the Minister, how do these exceptions – because they are exceptions – avoid the often heard PAP criticism of raiding pass reserves? Would such exceptions provide enough reason and context to review how the Government prices land for public housing with a view to gradually cool the market? Conceptually, this would not be dissimilar to the fiat the Government can wield in not ruling out tender bids below the reserve price for private land.

I now come to the final section of my speech with questions for the Minister on taxpayer subsidies.

Sir, the quantum of subsidies the HDB allocates for the home ownership scheme is another important but less ventilated aspect of HDB policy when it comes to affordability. These are taxpayers' subsidies and they represent the "loss" that the HDB incurs on the HDB's home ownership programme. This loss is fully funded and made good by the taxpayer. In his oral reply to my supplementary question last month, Minister said that resale prices had increased to around 28% or 29% over the last few years. But that BTO prices had been kept stable, ostensibly because taxpayer subsidies made up the difference.

It must follow that Government expenditure would be reallocated or directed from some other programmes to fund the homeownership programme. This fact alone, one that has significant fiscal implications – but also a fact the Government, to my knowledge has thus far, never canvass as a reason to raise taxes would make it important for the Government to provide a breakdown of the dollar value of taxpayer subsidies for the home ownership programme. The broad answer given to my Parliamentary Question on a breakdown of taxpayer subsidies filed last month was that the taxpayer subsidies are not the same across BTO developments. This reply raises important, questions of fairness and equity.

Mature BTO flats are more highly sought after compared to non-mature flats precisely because there is a greater profit and upside to be made after the Minimum Occupation Period, bringing the question of subsidies into acute focus.

Mr Speaker, I speak without benefit of the information sought in my Parliamentary Question. Based on the Minister's reply, it would appear that an applicant who succeeds in securing a BTO flat in a mature estate where flats can be significantly more expensive, benefits from more taxpayer subsidies than one who secures a flat in a non-mature estate. With respect to these taxpayer subsidies, a distinction between mature and non-mature BTO flats is important because any deployment and subsequent recovery of subsidies for the home ownership programme ought to be, in principle, equitable and progressive.

To this end, different subsidies allocated for different HDB BTO developments did not prevent the former Minister for National Development Khaw Boon Wan from sharing the dollar value of subsidies for specific BTO developments. On 9 September 2012, in a written answer to a question by Member of Parliament Ellen Lee, even without being specifically asked, the Minister shared the example of Waterway Banks – a BTO project launched in November 2011 in Punggol. The then Minister shared that this project had 1,016 units of 2- to 4-room flats. The project cost was $279 million and the sales proceeds amounted to $240 million with taxpayer subsidies making up to $39 million.

The then Minister's answer starkly makes the point that there is actually no reason that can adequately explain why the current Government does not release the information on the taxpayer subsidies allocated for each BTO development. Coming back to Minister Khaw's revelation of subsidies from the Waterway Banks' project, will Minister Desmond Lee confirm if taxpayer subsidies to make up the difference between the sales proceeds and project costs are applied equally, regardless if a buyer purchased a 2-room or 4-room flat for example, or is the subsidy tiered proportionally to flat sizes?

Compounding the matter of limited transparency on subsidies further, is the application of the resale levy at the point of sale. The policy intent of the resale levy is to reduce the taxpayer subsidy the buyer receives on their second subsidised HDB BTO flat and ensures a fairer distribution of subsidies between first and second timers. At the point of sale of their first subsidised flat, the first time buyers of both a mature and non-mature BTO flat must return some portion of the taxpayers' subsidies they originally received through the resale levy.

Can the Minister clarify, for individuals who bought a BTO flat after 3 March 2006, when there was a change in resale levy policy, what is the range of subsidies a 4-room mature and non-mature BTO flat lessee respectively would have received, even though the actual resale levy is fixed for both lessees at $40,000 by HDB?

Until the Minister releases more information, it is open to question if the payment of the resale levy, which crucially does not distinguish between mature and non-mature flats, is either fair or equitable in view of the potentially wide variation between the original subsidies allocated to either lessee upon the purchase of their first BTO flat.

I hope this information is forthcoming so alternative pricing models for HDB flats, a fair allocation of taxpayer subsidies and new policy proposals can be considered and advanced.

In conclusion, Mr Speaker, the PAP Motion as drafted, does not sufficiently take into account the reality that the Government should endeavour to make HDB BTO flats more affordable and more accessible than they currently are. The Workers' Party proposes an amendment to the Motion in the name of the Minister for National Development.

The single amendment is as follows: in line three, to delete "endorses the commitment of the Government to" and insert "calls on the Government to intensify its efforts to meet".

Sir, I seek your permission to move the amendment. May I hand over a copy to you before seeking your approval to circulate it to Members?

Thank you, Mr Speaker. First, I would like to thank Members on both sides of this House who have shared your views on public housing. It is an important topic for this House. It is an important topic for Singapore and this discussion is taking place at the time that we are in, after the COVID-19 pandemic.

Sir, in many other cities, housing is largely a matter of personal responsibility. Residents look for their own housing on the open market, do their sums, borrow if they have to and find their way – whether to buy, rent or some other arrangement.

Governments intervene largely by enabling private developers to build and sell homes to people. They may provide public housing but this is usually as a social safety net for the lower income.

In Singapore, we have taken a very unique approach, one that has been developed over the decades since Independence and continually improved to achieve two very important fundamental objectives.

First, public housing is social policy. We are building homes to give Singaporeans a roof over their heads, but we are also building diverse communities for Singaporeans to live, bond and experience life together. In doing so, we build a nation as one people.

Second, we want to give Singaporeans a stake in the nation by having a home they call their own and sharing in the progress by unlocking the value of their homes and growing their nest egg. Today, 90% of Singaporean households own their HDB homes.

To achieve this, we harness a combination of national policy and Government resources on the one side and elements of the open market on the other side, to help unlock the value of people’s homes. But in so doing, we must be very clear-eyed about long-term sustainability, as many Members who spoke during the debate have underscored.

Mr Speaker, in my opening speech, I explained clearly that the supply tightness and the spike in resale prices we face today is a recent phenomenon triggered by COVID-19 disruptions. We all went through this together. We are taking active, concrete steps to resolve the imbalance and address the concerns that Singaporeans have raised.

We are decisively ramping up the housing supply and will launch up to a total of 100,000 new flats between 2021 and 2025. Members may recall that we announced this in 2021, in the midst of fighting COVID-19.

We will also launch more Shorter Waiting Time flats, of around 2,000 to 3,000 flats per year by 2025, and we will recalibrate our building programme over time so that they make up a larger proportion of new flat supply, with flat supply comprising BTO flats, Shorter Waiting Time flats as part of BTO flat supply, Sale of Balance Flats and Open Booking of Flats, on top of the resale market options.

Mr Xie Yao Quan, Ms Denise Phua, Mr Louis Chua and Mr Leon Perera had called for building ahead of demand and building Shorter Waiting Time flats.

We have priced BTO flats to ensure affordability and kept BTO prices stable in the last two years.

To prevent the resale market from running ahead of economic fundamentals, we implemented two rounds of cooling measures and are seeing some moderation in the rate of increase in resale prices.

We are still closely monitoring the housing market and we hope that Members can be patient and watch as it develops.

I have also committed to Singaporeans that we will not stand by but will continue to enhance the accessibility and affordability of public housing.

We acknowledge the concerns of first-timer couples trying to set up their very first home and have been studying ways to better help them get their first homes faster.

We understand the concerns that people have raised about higher BTO prices in mature estates.

We have sought to address some of these concerns through the Prime Location Public Housing (PLH) Model in the more central and very attractive locations in Singapore.

I thank Mr Xie Yao Quan, Ms Janet Ang and Ms Denise Phua for their suggestions to expand the PLH model to other locations.

We will continue to review our housing models to ensure affordability and accessibility of flats in other mature estates and choice locations, while avoiding an excessive windfall gain to those who successfully book a flat in such areas.

In fact, the Leader of Opposition spoke about Central Weave @ AMK. The price he cited was that of the most expensive 5-room flat on the top floor in a location in the heart of Ang Mo Kio Central, next to a hawker centre, next to a wet market, next to two shopping malls, next to the MRT station, next to the bus interchange, next to parks and other amenities. It was a conscious decision to build public housing, as opposed to private housing.

Recently, there were GLS sites and launches of private housing in Ang Mo Kio, not in Ang Mo Kio Central. The prices for private housing, which I think you can compare and are clear for all to see, is that there is a clear distinction in prices between the HDB flats in this project in Ang Mo Kio Central and private housing launched by the private sector.

In the brochure itself, members of the public as well as Members of this House can see the range of BTO prices before grants as well as the market comparables for HDB resale prices nearby, which after adjustments, will give you a broad sense of the gap between what is available on the resale market and what is available as subsidised housing in a choice mature estate.

But what I have also emphasised is that this Government needs to provide affordable and accessible public housing, not just for this generation but also for future generations of Singaporean. This is long-term sustainability.

We are a small city-state, 720 square kilometres with many competing needs and our scarce land needs to be carefully stewarded. We will create space to meet the needs of today's Singaporeans and tomorrow's generation, but this will involve rejuvenating and recycling land, and building more intensively.

Resources are limited. Singapore has no natural resources to rely on. We have to create and build up the fiscal resources needed to support the home ownership aspirations of Singaporeans.

So, how do we allocate limited resources for public housing among potentially unlimited housing needs, while reflecting our values as a nation?

We will prioritise first-timer families who need housing to build their families. We will help lower-income households more because we believe in housing as a social leveller.

Our housing policies also reflect our values of prudence and sustainability. We must not subsidise housing at the expense of other equally important needs for Singapore. We must not enhance housing accessibility and affordability of this generation, by robbing our future generations, whether of land or fiscal resources, or the reserves which are intended to put them in better state, through thick or thin.

This is what a responsible Government should do. Above all, we must continue to build a nation of home owners, for this generation and the next, to continue the legacy our forefathers have started.

We firmly believe in home ownership, as it provides us the stability to build our families and raise our children, give us a sense of rootedness in Singapore and allow us to have a stake in our country's progress.

Home ownership has worked for us and we need to continue with the good work to make it work for the next generation. That is why we sell HDB flats on 99-year leasehold, which strikes a balance between providing a home-for-life, asset appreciation and enabling us to rejuvenate our city and build new homes for the next generation too.

Ms Hazel Poa, the Leader of the Opposition and Mr Louis Chua asked why we did not build even more and even faster. At the same time, several Members have sounded a word of caution, taking a longer-term view and looking at the lessons of the past.

I have just said that we are already doing that. Today, we are already overseeing almost 100 BTO projects island-wide, at different stages of construction. There are almost 80,000 HDB flats under construction, as we speak.

We will press on. This high tempo will continue and by about 2025, we expect to have about 150 BTO projects going on at the same time.

By contract value, HDB is not just the largest housing developer, but also exceeds all the other private residential housing contracts combined by more than 50%. So, we are already building aggressively and at large scale.

We should also remember that HDB is not the only one ramping up, especially after the pandemic. Since the pandemic started to subside, the overall pace of building and construction on our island has gone up very significantly.

Individuals, businesses, private developers, organisations, Government agencies are all pushing ahead with their important projects while doing catch-up on COVID-19-related delays suffered by existing projects.

Fiscal resources, foreign manpower and construction capacity are not without their limits.

Several Members, including Ms Hazel Poa, Mr Louis Chua and the Leader of the Opposition, have suggested that the Government has under-estimated demand and under-built the supply of flats. Ms Hazel Poa suggested that the Government knows the number of marriages and the immigration numbers. The Leader of Opposition has indicated a wider range of parameters.

We do in fact have models that take into account many considerations – marriages, births, deaths, income levels, economic conditions and cycles, demand for different housing types and so on – in trying to project the real demand for flats and for property in general.

However, as we all know, it is not a perfect science and it certainly cannot account for sudden shocks and what sudden shocks can cause in terms of human psychology and market behaviour. In fact, for many years before COVID-19 hit, application rates for BTO flats were low and in fact, the resale market was soft. I had mentioned all of these in my opening speech. I trust Members, including Members of the Opposition, had listened to that. In fact, my colleague, Senior Minister of State Sim Ann, had emphasised those points.

Then COVID-19 hit, the dynamics shifted rapidly and we are in the current situation where demand for housing shot up. The housing market is highly sentiment-driven and demand can suddenly appear, or disappear.

Let me give a real example. At the height of the property boom in the mid-1990s, there were as many as 150,000 buyers in the queue for public housing and the wait for a flat could be as long as seven years.

However, when the Asian Financial Crisis struck in 1997, the queue vanished, virtually overnight, some say. HDB ended up with 31,000 unsold flats, which took more than five years to clear.

Because of the unintended oversupply, home buyers could walk in to buy ready flats in the early 2000s. However, home owners paid a heavy price, with flat prices, or resale flat values, staying depressed. Some who bought flats just before the crisis ended up with negative equity and even lost their homes and hard-earned savings. The many unsold flats represented a waste of taxpayers' money.

The holding cost incurred from the vacant housing stock is not inconsequential. It was money that could have been spent on other uses – healthcare, education and other areas, especially after a financial crisis.

People who were sitting in this House at the time were asking lots of questions. The Auditor-General was asking lots of questions. I can tell you that if you were to look at the records, the mood was quite the opposite of what you are hearing today.

Several Members of Parliament like Miss Cheryl Chan and Mr Sitoh Yih Pin also pointed out that the danger of oversupply is real. Should there be a persistent or significant oversupply of housing, this imposes a downward pressure on the housing market, which in turn hurts the asset values of all flat owners.

Even the Workers' Party is cognisant of the implications of an oversupply, as seen in their 2019 Working Paper on HDB resale prices. But today, with perfect hindsight, they are asking about actions of the years before. This indicates that vulnerability.

The paper mentioned, "Assuming an average household size of 3.3, this would mean that around 9,000 or so new dwelling units are required annually. Completions within the same time period have far exceeded the resident population growth. Private vacancies have only started to inch down, but there are still around 12,000 private units completing up to 2022." And then it goes on to say, "Will the HDB have a vacancy rate problem, compounded by a still steady stream of 16,000 to 17,000 BTO units in the last few years, which will continue to increase supply up to 2022?"

This was a report commissioned within the Workers' Party, quoting experts from the property sector. In 2019, they cautioned HDB from persisting in building 16,000 to 17,000 BTO units, instead saying: would vacancies cause problems? Better just go down to around 9,000 BTO units or so because they made a lot of assumptions. They marshalled a lot of data and experience, and this was the recommendation.

So, in 2019, the Workers' Party was recommending that HDB should only build 9,000 dwelling units or so. To put this into context, HDB launched around 16,000 flats in 2018, the year before the report; 15,000 flats in 2019; and 17,000 flats in 2020. The rest is recent history. Had we tapered down our supply to the Workers' Party's levels in 2019, or listened to you and your experts, I think our BTO shortage would be even greater today.

So, I think we all accept that the best of models cannot, firstly, fully account for black swan events. Secondly, you cannot be certain how market psychology would work and there is a confluence of factors that come together to determine housing market sentiments. This shows just how difficult it is to accurately predict residential property demand, or for that matter, the direction and size of movements in the property market.

We therefore need to be careful in calibrating flat supply to meet demand. Most importantly, it is important for us not to try to ascribe a wrong set of reading of the facts because before COVID-19 struck, the data, in terms of application rates across the board, as well as resale prices, indicated that the housing market was relatively stable – until around the time of COVID-19 when the situation changed.

And in fact, think about the crises. During the Asian Financial Crisis, demand vanished and prices plunged. COVID-19 is a crisis of a different sort, but it is still a crisis. The exact opposite happened: demand went up. Today, with perfect hindsight, we still make conjectures as to what we think caused this change in movement. I described, or attempted to describe, just some of those broad strokes in my opening speech.

So, I think it is very important for us to recognise what we ourselves had said in 2019 as we sit here and try to pontificate about what the Government had or had not done.

Several Members, Mr Leong Mun Wai and Mr Jamus Lim for instance, have also put forward proposals that effectively will result in a draw on past reserves.

Most of the points have been dealt with by my colleague, Minister Indranee Rajah, but in fact, Mr Jamus Lim sought to justify that paying lower land price is a way of "being present" for the current generation.

Mr Leong proposed the Affordable Homes Scheme, which as my colleague, Senior Minister of State Sim Ann and many Members of this House have explained, is not a better alternative to addressing the challenges of affordability and accessibility, compared to what we have today and compared to what we intend to do and are studying to do.

Minister Indranee Rajah has also explained that if the occupiers of flats under this scheme do not sell the flats, then by leaving land costs out of the equation of this proposal, it is effectively a draw on the reserves.

We have also heard many suggestions on improving public housing affordability. We have shared that we price new BTO flats based on affordability, not at the median level as the Workers' Party has repeatedly called for, or what was originally in the PSP's manifesto of 2020 – though, having heard Mr Leong, I am not sure if the manifesto still stands.

We have shared that we price new BTO flats based on affordability for different income levels. Based on the market value of the comparable flats, we then apply a significant discount to ensure they remain affordable to first-time buyers across different income levels, not just at the median. On top of that, we provide additional grants for first-timer families, with more grants to those who need them the most.

With this approach, today, HPI, or Home Price to Income ratio, is less than three after grants for those at the 25th percentile – or households at the bottom 25% in terms of total household income.

In 2022, almost nine in 10 first-time BTO flat buyers have mortgage servicing ratios (MSRs) of less than 25%. What it means is not just a statistical fact. Nine in 10 of these families use less than a quarter of their total household income to pay for their mortgage instalments. They can finance their HDB loan completely with CPF, with little to no cash needed. The MSR figures are even lower for those at lower-income percentiles with the higher grants they receive.

To give an example, using the average price of $342,000 for a 4-room BTO flat in a non-mature estate in 2022, a family with a household income of $5,000 can receive $45,000 in housing grants and affordably purchase the BTO flat at an MSR of 21%.

In other words, they can service their mortgages entirely from their monthly CPF contributions, with no cash outlay.

This is an appropriate time in which I deal with the Leader of the Opposition's questions repeatedly about transparency and the extent of the subsidies given to buyers in the mature estates and the non-mature estates.

I have explained and my colleague Ms Indranee Rajah has tried to explain. In fact, in this speech, just moments earlier, and in my opening speech, I tried to explain and break down how we price HDB flats. Also, in reply to Mr Gerald Giam in a Parliamentary Question, I thought I tried to explain very clearly and answer some of his questions.

When we build HDB flats, we look at the market comparables for HDB because it is public housing. Then, we determine the affordability indicators for different income levels, the mortgage servicing ratios, and we then know that we need to price it at a certain level so that buyers can be able to afford at the indicators that are in the report card, as what we say each time when we announce on affordability. And these prices are significantly lower than what the resale market can bear.

I will just wind back. HDB is already the most transparent on its pricing and costs than any other property developer. You can look at the brochures. You asked for more information but the information is already there and explained at length to the Member.

Look at the information when we put out at every launch. For every project, we have the range of BTO prices, which are subsidised, and right next to it is a column of the comparable resale prices.

We have to make some adjustments because depending on the level, depending on the amenities, depending on the tenure, we have to make adjustments and these are adjustments made using valuation principles.

So, once you have done that, you can see that this difference in the brochures, in the information that we put out, for every launch, for many, many years already, broadly reflects the extent of the market discount, which is real and which buyers can realise after MOP when they sell because the BTO price is significantly below market.

But I have also taken pains to explain to the Member that we have to make adjustments. We have to recognise that for each flat type, there are different floors and so we put the range. Likewise, the comparables also have different flat heights. So, we put the range to be transparent.

That difference broadly reflects the extent of the market subsidy for the projects. And you can see today that it has become very large compared to, say, 10 years ago. It is very clear. That – and I did not mention in my opening speech – in turn feeds the psychology when you see the resale prices going up and BTO prices remaining almost the same. There is the sense that BTO is a better deal now, better go for it, especially in good locations.

But as I also explained to the Member, if you want to know the extent of the subsidies for each project, you also have to take into account the other half of the picture. Because apart from significant market discounts, you would be familiar with the grants that we give – Proximity Housing Grant, Enhanced CPF Housing Grant, so on and so forth. That has got various parameters, so it is not so straightforward. It depends on means testing, it depends on flat type, it depends on whether you tap on the scheme for Proximity Housing Grant to open up that grant to yourself. That gives you a sense of the picture.

The proceeds from the sale of flats – and all this is not new; I have said this a number of times – the proceeds that HDB collects is less than land and construction costs. And they are every year. And that is why Mr Leong Mun Wai's proposal is far more expensive to the ordinary citizen than it is under our scheme and Members who have spoken understand what this is so.

The land and construction costs every year is more for our HDB projects than the proceeds we collect because of the discounts we give in terms of market subsidy as well as the grants that are means tested or based on flat type, based on proximity, based on Fresh Start, based on this and that, and the proceeds we collect are significantly less than how much we spend.

That is why I explained in the opening speech, if you were listening carefully, that the development cost, which is how much we spend and how much we collect are on two parallel tracks and they converge when you see that there is a gap, a deficit, between how much you spend and how much you collect. That is the $3.85 billion deficit in HDB's Home Ownership Programme in the last financial year – and two-point something billion dollars before that and one-point something billion dollars before that. That is for all the projects.

The Leader of the Opposition makes a good point about whether there is equity. Are we giving people in certain projects more discounts or subsidies than others?

Whether there are more discounts and subsidies, again, depend on those factors, but the broad market discount across all projects, barring PLH, in the same launch is broadly in the same parameter to ensure there is equity. But later on, when they sell, it depends on the resale market, it depends on the condition of the flat. Property valuers will tell you that, property agents will tell you that, your residents who buy and sell instinctively know that.

Okay, maybe we can clarify over coffee later if you need more information. [Laughter.]

So, that is the extent of the difference. For PLH, we give additional market discount in order to make sure that the sticker price before grants is still within reach of Singaporeans. We have to give extra subsidy.

That is why for your mature estate BTO prices, they have to be higher generally than in non-mature estates because they account for the difference in location, the valuations, the amenities, the distance to the city, so, a number of factors and also because we try to apply an even-handed extent of market subsidy. You can see that information on the brochures. I have said that. This is the third time I have said that.

In terms of HDB as a transparent developer, I have said that it is more transparent on pricing than others.

Construction costs, if you care to know, most private developers will not tell you that. It is all a part and parcel of their financial statements. But construction costs are published on HDB's website and GeBIZ, and the cost of building flats and the revenue from sale of flats can be found in HDB's financial statements.

All of these are audited. All of these are subject to the Auditor-General's overall supervision.

This is more than what private developers typically disclose. We understand private developers, as I said in my opening speech, do things differently which is probably more intuitively to most of you. They look at the cost of development, cost of marketing, and recover that cost and price for profit and return.

But HDB is pursuing a social objective. Deficits are a function of achieving those goals of affordability and accessibility.

Let me turn to why – and I am not sure whether I need to go into this but many Members, including my colleagues have explained. As a result of what I have just described, the PSP's proposal is going to be far more expensive to those whom in the ordinary nature of things, buy because they want to have a home and then at some point in time, they need to sell.

Most people do not go into the housing market either thinking this is a home for the rest of my life or going in as a pure speculator.

I think it is perfectly human to say, when I buy a home, it is a home. I am going to spend money, I am going to invest in it. It may make money, it may lose money, it may break even. I hope to live there. It is a lot of effort to move in, renovate and move in and there is social capital to invest in your neighbours and all that, with children in the schools nearby.

But it is not wrong for some of these people to say at some point in time, my life circumstances have changed and I need to sell – not sell to make money but sell because it is part of life's circumstances.

So, I think if PSP ascribes to everyone who is a reseller that you must then punish them with a certain way of pricing on resale, then I do not think that is being fair to Singaporeans. That is not being fair to our own human nature when we are buying homes.

Yes, there are speculators, but I think most Singaporeans look for a home but hope that also helps with their retirement adequacy, gives them a sense that their asset will appreciate. Yes, there will be ups and downs based on the market cycle. But I think it is not incongruent to expect both, especially if this is the single largest expense or investment of your life.

So, therefore, we clearly charge below construction costs and land costs whereas the PSP's proposal is, well, you live here forever. It is an expense, it is a user fee. But the moment you resell, based on the land costs from I do not know how many years ago when you first bought from us, we will accrue the interest and if you bequeath to your children, they will pay the land costs and interests over two generations.

I think, clearly, without even the interest accruing, the fact that you expect the buyer of a flat to pay for construction and land costs at a point when they finally need to sell and move, is just plainly more expensive and more unaffordable for Singaporeans than the existing model.

Many Members have already explained why they think Mr Leong Mun Wai's Affordable Homes Scheme will not work and will not solve the issues we are facing today or tomorrow.

Mr Leon Perera and Mr Gerald Giam reiterated the Workers' Party's proposal to peg non-mature estate home prices at three times the median annual household income.

I will not go into detail on this because I think there was very robust discussion between Workers' Party's Members of Parliament and my colleague Senior Minister of State Sim Ann on this issue of affordability. But whether it is a HPI of 5.0 or 3.0, if you look at the Parliamentary Question data that we have given to you for the HPI that Singaporeans at different income levels have, you will see that it is at five generally for non-mature estates and for lower-income families, it is around three or less. The charts show that.

Most importantly, the vast majority use CPF and pay little to no cash. Those are indicators of affordability. Mr Lim Biow Chuan also very eloquently explained that the fact that people are prepared to spend and invest in a property as opposed to renting because they cannot afford – all these are indicators that give you a sense that BTOs are broadly affordable.

So, if the Workers' Party says they will want to make significant changes to the Motion because they think that a lot more work needs to be done for affordability, then I think they have not explained how in bringing the HPI from the current level to three; and in fact, for some, it is already below three and you are going to raise it to meet your HPI of three artificially, by increasing prices for the lower income to meet your dogmatic three, I think an important question is how will you fund it? Will you fund it by, like how Assoc Prof Jamus Lim has said, valuing housing so much like a social good, like a park, like a hospital, like a school, or like roads – $1 a metre he said.

So, while the proposal sounds attractive, it ignores the trade-off that far lower prices would attract even more flat applicants, whether they genuinely need housing or not. It also does not address the windfall gains enjoyed by flat buyers, some of whom may be from the higher income levels and, quite apart from first-time BTO sale, how do you ensure the affordability of the resale market over time. That dogmatic proposal achieves none of that.

And so, we think this is one-dimensional and my colleague Senior Minister of State Sim Ann had already addressed this and keeping in mind time and that my learned colleague Mr Leong has to speak after this.

So, instead, we want to offer a variety of housing options of different sizes in different locations at different price points to cater to varying housing needs from our flat buyers.

Sir, in over 50 years, we have provided housing for a nation in what Ms Janet Ang rightly pointed out – a city-state, very limited land, no resources but for the industry of people and their imagination, their will power, their drive, their willingness to sacrifice and see the big picture.

We have done this against the odds. Not us, but our forefathers have set the right example. They demonstrated the ethos of hard work, prudence, selflessness and sacrifice. They not only resettled in and housed a generation – and it was by no means an easy feat – but also built up the resources that we enjoy today. We must embrace the same values and not pursue housing policies that benefit ourselves at the expense of future generations. But we should also embody our pioneers' spirit of always seeking to do better and to overcome our constraints with creativity and far-sighted planning.

Therefore, we started a series of Housing Conversations with Singaporeans under Forward Singapore since last year to hear their aspirations and ideas, their hopes and fears. We will study their ideas, including the suggestions we hear from Members from both sides of this House during these two days of debate, so that we fulfil that commitment to the twin goals of continually ensuring affordability, accessibility and continuing to improve our housing system.

My colleague Minister of States Assoc Prof Faishal Ibrahim has already explained how we proactively planned ahead and made provisions to help seniors monetise their flats to supplement their retirement. Because one important theme that came up in this debate was whether housing gives you a peace of mind, build up a nest egg and affords retirement adequacy. And we have also come up with new and better housing schemes such as the Community Care Apartments.