In a recent case that highlights the growing challenges of homeownership in Singapore, a 40-year-old man has finally received his Build-To-Order (BTO) flat, but he faces the daunting prospect of making payments until he turns 65. This situation reflects a broader trend where Housing & Development Board (HDB) flats, once considered a symbol of affordable public housing, are increasingly viewed as unaffordable by many Singaporeans. Here are several key factors contributing to this sentiment:
1. Escalating BTO Prices in Prime Locations
While BTO flats are designed to be subsidized, new launches in mature estates such as Queenstown, Bukit Merah, and Kallang/Whampoa often come with hefty price tags exceeding S$600,000 for a four-room unit—before any grants are applied. Even with Enhanced Housing Grants of up to S$80,000, many young couples and middle-income earners find it challenging to afford these units without extending their financial commitments over 25 to 30 years.
2. Surging Resale Flat Prices
The resale market has experienced unprecedented price increases. In 2023 alone, over 500 resale flats were sold for more than S$1 million, with properties in central locations like Pinnacle@Duxton frequently surpassing this threshold. This surge in prices places homeownership out of reach for many families, particularly those lacking substantial family support or significant cash savings.
3. Disparity Between Income Growth and Housing Inflation
From 2013 to 2023, Singapore’s median household income increased by approximately 30%. In contrast, resale flat prices surged by over 40% during the same period. This disconnect means that many individuals and families are struggling to keep pace with the rising costs of homeownership, especially when considering additional expenses such as mortgage interest, renovation costs, and the increasing costs of Certificate of Entitlement (COE) for car ownership.
4. High Down Payments and Monthly Financial Commitments
Even with available grants, prospective buyers face substantial financial hurdles:
- A 5% cash down payment is required for BTOs or resale flats purchased with bank loans.
- A total down payment of 20% (combining CPF and cash) is necessary when using a bank loan.
- Monthly loan repayments for flats priced over S500,000typicallyrangefromS1,500 to S$2,000 over a 25-year period.
These financial obligations can create significant strain, particularly for young couples, gig workers, or single-income households.
5. Concerns Over the 99-Year Lease
While a 99-year lease may seem sufficient, many buyers are apprehensive about the long-term value of their investments. Older flats, particularly those over 30 years old, may experience depreciation in value, limited CPF usage, and uncertainty regarding the Selective En bloc Redevelopment Scheme (SERS) or Voluntary Early Redevelopment Scheme (VERS). Paying high prices for leasehold properties with uncertain future value exacerbates affordability concerns.
6. The Illusion of Affordability Through Grants
HDB grants are often touted as a means of making flats more affordable. However, these grants do not actually reduce the market value of the flats; they merely subsidize the buyer. This can lead to inflated demand, which in turn raises resale prices, undermining the intended goal of enhancing affordability.
Conclusion
HDB flats were once the cornerstone of affordable homeownership in Singapore, but the landscape has shifted dramatically. High prices in both the BTO and resale markets, coupled with a rising cost of living, slower income growth, and extended loan tenures, have made homeownership increasingly challenging. For many Singaporeans—especially young families, singles, and lower-income groups—HDB housing is no longer a viable option without significant financial strain or compromises in location and space. As the affordability crisis deepens, it raises critical questions about the future of public housing in Singapore and the need for sustainable solutions.