With housing prices hovering near a record high, Singapore Prime Minister Lee Hsien Loong is expected to unveil policy changes to boost affordability in his annual National Day Rally address Sunday.
Lee signaled in a speech on Aug. 8 that adjustments will be made as the government “must still ensure public housing is accessible and affordable for Singaporeans of all income groups.”
Analysts are expecting the government to review the income ceiling to buy public apartments, where more than 80% of residents live. They also forecast an increase in housing supply and subsidies.
“The middle, or sandwich class, of first-timers may not be able to buy these new build-to-order flats based on the current income ceiling,” said Christine Sun, senior vice president of research and analytics at OrangeTee & Tie. “At the same time, they may not be able to afford private homes or public resale flats if prices continue to trend higher.”
The household income ceiling for new public flats is S$14,000 ($10,300) a month, last raised before the pandemic in 2019. Housing grants for first-time buyers of resale flats were increased in April.
After an influx of wealth in the past two years, soaring property prices are shaping up to be a major political issue in Singapore. An index of Housing & Development Board resale prices has risen for 13 straight quarters, while private property prices dipped just 0.2% in the second quarter after three years of growth.
Although the government raised property taxes in April that hit mostly foreign buyers, many Singaporeans are concerned about growing inequality and costs of living. A YouGov poll in December found that two-thirds of respondents said the government should place greater focus on housing affordability. The issue is set to be featured prominently during presidential elections in September, in a vote that will test the nation’s mood ahead of a general election that must be held by November 2025.
Growing anxieties over property strike at a pillar of government policy dating back to the 1960s, which has buoyed six decades of rule by the People’s Action Party: About 90% of residents own government-built apartments, bought at a steep discount with government subsidies. That has turned home ownership into a key way for Singaporeans to increase their wealth, while giving the city-state one of the highest home ownership rates in the world.
Read More: Why Singapore Has One of the Highest Home Ownership Rates
Though popular, the flats have strict eligibility criteria. Singaporean families and heterosexual married couples generally qualify for a new HDB apartment from age 21, while singles generally aren’t eligible until they hit 35.
Such conditions are “very restrictive,” said Nicholas Mak, chief research officer at real estate platform Mogul.sg. That may change since “singles are a growing group of people and they’re also voters,” he said.
Some analysts anticipate more diverse home ownership schemes. The government could allow buyers to “rent with an option to buy the flat later” and “the rents paid can be used to offset the purchase price,” said Lee Sze Teck, senior director of research at Huttons Asia Pte. “This will help Singaporeans, for example, single parents who struggle with the downpayment for various reasons.”
The government may also reclassify mature and non-mature estates, broadening access to prime locations, according to Sun. However, that is unlikely to impact prices, as “some properties in the city fringe now cost more than some in prime locations,” she said.
The city is seeing a growing preference for HDB Jumbo flats, like five-bedrooms and walk-up apartments, according to Mak. In June, one such public housing unit resold for a record S$1.5 million. More than 220 resale public flats have sold for more than seven figures this year, according to HDB data.
To tame prices, Singapore has been ramping up construction after Covid disruptions. An estimated 23,000 public flats are to be completed in 2023 alone.
“The government wants to reduce the number of million-dollar flats,” said Mak. “But it’s inevitable with inflation — it’s something that’s here to stay.”