Revisiting the housing issues in Singapore

How Have Housing Indicators Been Performing Since 2011?

In this final article in our series, we zoom in on the hotly-debated issue surrounding our housing shortage and due to the demand-supply mismatch. Some of the major concerns highlighted back in the last General Elections were the rising costs of houses, long waiting time and multiple unsuccessful attempts when applying for a Build-To-Order (BTO) flat.

Let’s check out to see if the housing woes are addressed within these 4 years.

Shorter waiting time for BTO 

While we are unable to ascertain the average waiting time for BTO flats, a simple informal poll taken among people we know of revealed that many couples have managed to secure new flats in their first few attempts. This is in contrast to the past, where horrer stories of people giving up after attempting 5-7 times to apply for BTO appeared common.

According to PM Lee Hsien Loong’s foreword, a total of 100 thousand flats (equivalent to 2 Ang Mo Kio towns) have been launched during these past 4 years. From how we see it, the supply of HDB flats has indeed increased, albeit in non-mature towns like Sengkang, Punggol and Choa Chu Kang. Moreover, HDB has effectively shortened the time for flats to be delivered by calling for tenders as soon as architecture drawings are ready. It used to be launched only when at least 70% of the units have been sold.

Are Housing Affordable again?

Before we touch on whether the HDB flats are affordable, we have to recognize that affordability is relative to each household and their income levels. For some, a 4-room flat near Ang Mo Kio mrt selling for $500K may be affordable to a couple with a substantial amount of savings. Others who just started out working may find it expensive.

Let’s look through the numbers to understand what has happened over the past 4 years.

If we take a look at the chart extracted from Singstats below, median monthly household income from work rose from $7,037 in 2011 to $8,292 in 2014, representing a 17.83% growth in nominal terms, or 4.46% increase per annum.

Source: Singstats

Source: Trading Economics

On the other hand, the Singapore property price index has reflected a sharp decline from year 2013 onwards, almost touching the same level in 2011. These are primarily due to the property curbs the government has implemented from year 2012 such as a 5% to 7% across the board rate hike in Additional Buyer’s Stamp Duty (ABSD), tighter loan-to-value (LTV) limits and a 10% to 15% increase in the minimum cash down payments for potential buyers with at least one existing housing loan.

Let’s not forget about the various CPF grants like Proximity Housing Grants, Additional Housing Grants, Special Housing Grants and more. The income ceilings have also been raised from $10,000 to $12,000 for new HDB flats, while that for ECs will increase from $12,000 to $14,000.

Simply put, the overall property prices have moderated in the recent years and become relatively more affordable in addition to the grants entitled for the low-average income households. That aside, the increase in interest rates may continue to keep housing prices in check going forward too.

Conclusion

By looking purely at the statistics above, the housing issues have somewhat improved from the situation in year 2011. The government has put a brake on the heavy influx of immigrants and Singaporeans are better off with rising incomes and moderating housing prices.

All in all, we feel that the government has done a good job in this area since 2011.

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