SINGAPORE — When Mr J Parasuraman and his wife moved out of his parents’ three-room flat and bought his first house in 1986 from the Housing and Development Board (HDB) at the age of 29, there was only one thing on their minds: To have more living space. 

“Even though there were only the two of us at that time, we knew we would be having kids. So, we decided to go for the executive maisonette,” said the 67-year-old executive director and consultant of a financial advisory firm.

He forked out about S$111,000 — a sizeable sum back then — to get his dream home in Hougang. Today, his unit can fetch between S$830,000 and S$1.2 million on the resale market, based on the listings of similar maisonettes in Hougang. 

Almost four decades on, it is not only property prices that have risen in tandem with Singapore's rapid economic growth — housing expectations and aspirations of the younger generations have gone up too.  

Take 25-year-old entrepreneur Lhu Wen Kai for example. He moved out of his parents’ flat in 2021 and had rented a one-room condominium because he wanted more personal space. 

A few weeks ago, he returned to living with his parents, as the rent has gone up too much. Having had a taste of living in a private property, he said he is unlikely to buy a public flat in future if he were to get a place of his own.

He added that if the prices of private properties are out of reach, he would move to a neighbouring country to "fulfill my private housing dream". 

Mr Lhu is not alone in having the aspiration of owning a private property. 

The latest edition of the TODAY Youth Survey found that eight in 10 youths said owning a private property is one of their life goals, and six in 10 expect to be better off than their parents in terms of housing. 

The TODAY Youth Survey 2023, which was conducted in August, polled 1,000 respondents aged between 18 and 35. 

This was the third edition of the annual survey and it looked at youths’ views on housing, the importance of a university degree, career development, the gap between blue collar and white collar wages, and civic participation. The findings were published last month. 

On youths' housing aspirations, economist Song Seng Wun noted that these were part and parcel of a society becoming more affluent. While Singapore's economic growth has moderated in recent years as its economy matures, median household income has grown by 33 per cent in the past decade based on latest public statistics — from S$7,566 in 2012 to S$10,099 in 2022.

“The needs and the basic things may differ as economic development generates employment opportunities to allow people to aspire towards higher minimum basic needs,” said Mr Song, who is an economic adviser at financial service provider CGS-CIMB.

When the push for home ownership began during the early years of nation-building in the 1960s, the majority moved to affordable public housing, said Mr Song. 

Today, while public housing ownership is still high — about eight in 10 Singapore residents live in public housing — the proportion has been on an overall downward trend over the last decade. 

Based on data from the Singapore Department of Statistics, about 81.6 per cent of residents live in public housing in 2012. The proportion dropped to about 79.0 per cent in 2017. Last year, it fell further to about 77.9 per cent. 

“More people, even first timers, can afford private housing as their first home”, Mr Song noted.

On its part, the Government has continuously sought to meet the rising expectations including by raising the standard of public housing and surrounding amenities, while keeping flats affordable using benchmarks such as home price-to-income ratios and the proportion of monthly income that buyers use to service mortgage instalment payments, which remain lower compared to international benchmarks.

Meeting Singaporeans' housing needs and aspirations is a perennial concern, with the topic being aired in Parliament from time to time. Outside of Parliament, it is also a common topic of discussion, be it in the coffeeshops, on internet forums or social media. 

What's less talked about, however, are the trade-offs involved when a land-scarce city-state measuring 719 sq km seeks to meet the housing needs and aspirations of over four million residents (out of a total population of 5.92 million). 

Given Singapore’s limited land space and constraints as a city-state, some trade-offs are inevitable, economists and property analysts reiterated. 

For example, to set aside more land for private property development would mean less supply for public homes. And while a suppressed resale market may be a boon for potential buyers, it would mean the assets of existing homeowners cannot appreciate — which may even impact their retirement plans given that Singaporeans typically fund their homes using their Central Provident Fund (CPF) savings.

“You can have aspirations but (homeowners) must also be aware that there is always a price to be paid," said Mr Nicholas Mak, chief research officer at property technology company Mogul.sg. 

TODAY examines some of these trade-offs:

WHY CAN’T WE HAVE BIGGER, MORE AFFORDABLE HOMES?

Communications undergraduate Sherlyn Tan, who has twice applied unsuccessfully for a Build-to-Order (BTO) flat, noted that the five-room flat in Bedok that her parents bought in the late 1990s cost S$300,000 back then.

Today, a five-room BTO flat in the same area was priced at up to S$737,000 in a recent launch. “I grew up in Bedok and I'm afraid that I might not be able to afford to live near my parents with rising costs and all,” said the 23-year-old.

For 35-year-old Zakiah Fatin Saiful Imran, who just gave birth to her third child a few months ago, moving from her current four-room BTO to a bigger house in the future was very much on their minds.  

“The main reason we would move is to get more space. And you will only get that in a resale flat, because BTOs today are pretty much all the same size,” said the technical support engineer, who also noted that not all BTO projects have five-room flats for sale. 

The sizes of HDB flats have not changed since 1997, while average household sizes have decreased, the Ministry of National Development said in April last year. 

“Given Singapore’s land constraints, HDB has to strike a balance between the size of HDB flats and the supply of flats,” said the ministry, in response to a parliamentary question on whether the Government would consider increasing the average size of HDB flats.

To keep public housing affordable, the Government currently provides targeted subsidies for certain groups deemed to need them the most, such as first-time homeowners, property analysts noted.

Huttons Asia's senior director for research Lee Sze Teck said handing out more subsidies is the “easiest” way to help home buyers but cautioned that this is “not sustainable”.

Agreeing, Mr Mak said: “The subsidy that is paid up in the BTO exercises today is actually from the taxpayers of yesteryears.”

Handing out more subsidies to flat buyers simply means growing a bigger bill that the latter would “end up also paying for” indirectly through taxes, he added.

Mr Christopher Gee, senior research fellow and deputy director at Institute of Policy Studies (IPS), said that it is worth considering whether it would really be better to expand subsidies to include multiple-time home buyers or upgraders who can “clearly afford” a higher value home, or if the aid should remain focused on helping people take that “first step on the upward social mobility ladder.”

This is given Singapore’s other public expenditure needs, such as caring for an ageing population, he said.

With demand partly contributing to rising prices, Mr Alan Cheong, executive director for research and consultancy at Savills Singapore, said one way to cool housing demand is by managing population growth, particularly by “turning off the immigration tap”. 

Mr Song from CGS-CIMB noted that hypothetically, reducing Singapore's population size could limit housing demand to a certain degree, but such a move taken to the extreme would only be detrimental in the long run, given Singapore’s ageing population. 

“We have fewer youth and people are ageing fast. The population will die off. Then, what do you want to do with your property or your car, when there’s nobody who wants to buy?” 

Singapore must also maintain a healthy population size in order to sustain economic growth and generate well-paying jobs, he added.

WHY CAN’T WE BUY LOW, SELL HIGH?

Ms Zakiah said that when her flat reached its minimum occupation period (MOP) about two years ago, she and her husband were contemplating selling their home as it was a “sellers’ market”.

While their home could have fetched a handsome sum on the resale market, she noted that the price of a new home would likely cancel out any gains, unless they choose to downgrade.

While market cooling measures can go some way in making houses affordable, Ms Zakiah said that there must be some balance so that sellers can make some money too. “If you sell at a loss, it would be more difficult to afford the next house," she added. 

Mr Gee of IPS said that subsidies for new flats have benefited first-time buyers by making such homes affordable. And when these owners sell their flats, they can enjoy capital gains and are able to “monetise” the subsidies.

“We are now seeing the consequences of that. It (capital gain) has been desirable. It has done some things in terms of savings accumulation, the build-up of home equity for Singaporeans,” he added. 

Mr Mak of Mogul.sg noted that as of 2022, there were over 1.2 million owner-occupied HDB flats.

Pointing out that Singaporeans typically use CPF savings to pay for their flats, he noted that suppressing resale market prices would effectively “reduce your wealth, (affecting) the flat in which your CPF money is invested in”.

“You're using your CPF money, your retirement fund is tied to your flat,” he said.

“Imagine the next generation of buyers, because they... want cheaper flats, you’ll make everybody else's flat worth less? That’s quite disruptive,” he said.

Mr Song said that realistically, a homeowner cannot have it both ways. “Unless obviously, you're looking at different (housing) areas, where you hope to benefit from the higher selling prices from that particular area, and benefit from an area where you may not have to pay as much (for a house),” he said. 

WHY CAN’T EVERYONE HAVE HOMES IN GOOD LOCATIONS?

For Ms Tan the undergraduate and her boyfriend, location is a key consideration when picking a house, as they do not intend to buy a car. 

“I just want to get a BTO flat within walking distance of an MRT station,” she said.

Ideally, they would also like to live near their respective parents — either at Bedok or Jurong East — and have tried applying for a flat in those areas, but to no avail.

Their sentiments echoed that of other young couples who had previously spoken to TODAY about not compromising on certain attributes when applying for a BTO flat, such as proximity to parents and connectivity to transport nodes.

At the National Day Rally (NDR) this year, Prime Minister Lee Hsien Loong announced that a new “Plus” model to classify public housing projects will be introduced from the second half of next year, and the current mature and non-mature estate classification will be phased out.

Under the new classification system, buyers of Plus and Prime flats — which are at more desirable locations — will get more subsidies from HDB but they will also face tighter restrictions, such as a 10-year minimum occupation period. The extra subsidies that applicants received must also be paid back to HDB upon resale, among other restrictions. 

Dr Tan Tee Khoon, country manager for Singapore at PropertyGuru Group, said: “These tighter measures are meant to address fairness and dissuade any perception of viewing HDB flats as a form of investment. 

“We should let this new reclassification scheme roll out fully and provide feedback through the government channels at the appropriate juncture.”

Experts said it would be untenable to keep building new homes in existing housing estates to place everyone near their parents, for example, given the limited land availability.

Can't the Government build taller flats and increase the supply of flats at mature estates? 

Not only would this involve displacing residents from existing flats to make way for new ones but building taller flats is also not without its limits, the experts pointed out.

“There is a limit on how high we can build our flats. We need to consider the flight path of planes, wind flow and shadow cast by tall buildings on shorter buildings,” said Mr Lee from Huttons Asia.

Dr Tan from PropertyGuru added that other limitations include higher construction costs with taller buildings and potential traffic congestions.

“The vision of the Master Plan is to create employment clusters and make suburban areas more appealing, like Tengah,” said Dr Tan. 

“The demand for mature and popular locations is infinite. Hence, how to temper demand while ensuring viability would be top on the agenda for building HDB estates.”

WHY CAN’T MORE PEOPLE OWN PRIVATE PROPERTY?

An undergraduate, who wanted to be known only as Lorilie, said that she would like to own a private property one day. 

Like many of her peers, she believes that such properties would better appreciate in value and also provide one with a sense of personal achievement. 

Lorilie said she is “definitely open” to the idea of the Government allocating more land to private property development, even though the possibility of this causing a general increase in housing prices is “not ideal”.

Mr Conrad Lau, 45, his wife and their two children currently live in a public flat. Mr Lau said the couple has always wanted to own a second property as an investment. However, that “seems to be a bit out of reach” for them for now.

He said that he hopes the Government can relax the restrictions on buying a second property — in particular to allow homeowners to buy one without waiting for their first flat to reach MOP.

“If people like us have to wait five years before we can buy a second property, then we might lose some very good investment opportunities,” he said.

He also thinks that if the Government sets aside more land for private property developments, the increased supply might lead to lower prices. 

However, the experts pointed out that any loosening of criteria to buy a private property would lead to a growth in demand, hence driving up prices. And even if more land were to be set aside for private property developers, there is “no guarantee” that prices would fall. 

IPS’ Mr Gee said developers in the private market are at liberty to set prices “however they wish”.

“If you (the Government) sell more land to private developers, are you then able to control the price of housing? They (developers) can charge whatever they want,” he added.

Mr Mak of Mogul.sg said that while there may be some degree of competition among different developers, it would not lead to lower prices as they would first and foremost want to protect their profit margins.

He added that developers would also need to bid for the land parcels which they intend to build the housing project on, which would then be taken into account when selling the properties.

The latest Home Attainability Index, which was published in May by the Urban Land Institute (ULI) Asia Pacific Centre for Housing, found that the median price of a private home in Singapore was the highest among 45 cities which the report looked at. The median price of private homes was 13.7 times that of median annual household income in Singapore, the report said. 

Mr Song said that from a policy standpoint, the Government's priority is to cater to first-time homeowners and ensure that they are able to afford public housing.

“(It is) not about making private housing more affordable because that's not the policy objective of homeownership,” he reiterated. 

WHY CAN’T WE HAVE MORE HOUSING OPTIONS FOR SINGLES?

Logistics professional Faizul Anuar, 39, moved out of his parents’ two-room flat eight years ago after his brother’s family moved there.

He had wanted to buy a flat but did not meet the minimum age requirement back then. Even when he reached 35 years old, he was faced with very limited choices as singles were only allowed to buy new flats in non-mature estates — a regulation that will be lifted from the second half of next year.

Hence, he had no choice but to rent a room in a condominium.

The TODAY Youth Survey found that 76 per cent of respondents believe the minimum age for singles to buy an HDB flat should be lowered from the current floor of 35.  At the same time, 75 per cent feel that society should prioritise public housing for families.

Likewise, Mr Faizul said he wished that singles like himself can be allowed to buy smaller flats at a younger age. 

“Some singles can actually afford a two- or three-room by the age 30. I don’t think people who want to have families would want to buy those types of flats,” Mr Faizul said, adding that singles can own a home without directly competing with couples or families.

Right now, he is looking to buy a four-room HDB flat, so that he could bring some of his family members to live with him.

“My nephew and niece (his brother’s children) for the last six or seven years have been living in the living room," he said. “I’m buying this house as a single, but I have obligations to family members, who can also occupy this house." 

When HDB's home ownership scheme was set up back in 1964 to support the marriage and parenthood aspirations of Singaporeans, those who were unmarried were not permitted to buy a public flat.

But over the decades, the rules for singles to buy an HDB flat have changed progressively. A turning point was reached in 1991 when the Government introduced the Single Singapore Citizen Scheme that allowed singles aged 35 and above to buy from a limited pool of smaller flats from the resale market.

In the last two decades, the Government has also upped housing grants and increased access to more flat types for singles. Another milestone was crossed after Mr Lee announced at this year's NDR that singles will be able to apply for a new two-room Flexi BTO flat or buy a resale flat in any estate from the second half of 2024.

Dr Tan of PropertyGuru said the measures to be implemented next year to give singles more accessibility to public housing is “a step in the right direction”.

However, he also pointed out that two of the five national Shared Values adopted since 1991 are “family as the basic unit of society” and “community support and respect for the individual”. The shared values were adopted to help forge a common Singaporean identity across all ethnic groups. 

Housing policies would have to be “in tandem” with such values, said Dr Tan.

Other property analysts said that lowering the age for singles to buy HDB flats would potentially lead to more demand in the market and push up prices.

Mr Lee of Huttons Asia said that in such a scenario, it is likely that BTO flats would see a higher demand than resale ones, given their greater affordability.

“This may lead to calls for more flats to be built for singles. A balance needs to be struck between building for families and singles,” he said.

The analysts pointed out that even though singles and families may not compete for the same type of flats, diverting some space meant for bigger flats to build smaller ones for singles instead could still reduce the supply of flats for families.

While the analysts welcome the Government’s move to increase housing accessibility, some stressed the importance of a gradual and calibrated approach.

Mr Cheong of Savills said that meeting the housing aspirations of singles should be done “with some lag effect, otherwise you’re (effectively) promoting it”.

“You can't move in anticipation (of demand) or otherwise you're encouraging certain lifestyles (such as singlehood) which are not necessarily good for the demographic of Singapore in the long run,” he said.

S'PORE HOUSING A SUCCESS STORY, EVEN AS TWEAKS MAY BE NEEDED: EXPERTS 

While more can still be done to meet the evolving homeownership aspirations of Singaporeans, property analysts said that by and large Singapore’s housing system has fared well.

IPS' Mr Gee called HDB's public housing programme a “success story” compared with other global cities, when it comes to affordability and home ownership. 

While the ULI report described Singapore’s private housing as the priciest in the region to own or rent, it gave a more positive assessment when it comes to the nation’s public housing and broader homeownership efforts.

Singapore has the highest proportion of homeownership at 89.3 per cent, leading by a significant margin ahead of second-placed Melbourne, which recorded 66.7 per cent.

In terms of public flats, the median price in Singapore was 4.7 times that of median annual household income. On this count, Singapore is the second-most affordable city in the Asia-Pacific, after Brisbane which has a ratio of 4.5.

Mr Mak from Mogul.sg said it is important to note however, that countries such as Australia — which Brisbane is a part of — have an advantage when it comes to supplying housing for its population.

“They can just keep letting the cities expand to build more housing and so on. We, unfortunately, face challenges in this sense,” he said, pointing to Singapore’s limited land supply compared to sprawling Australia.

At the end of the day, Mr Gee pointed to how much the housing system in Singapore has already achieved.

“It's allowed multiple generations of Singaporeans to become property owners. There’s a genuine national benefit, societal good in having that ownership ethos for Singaporeans,” he said.

“It anchors people to the society, they have a tangible stake in this society in this country called Singapore. Because we are a nation of home owners, not just tenants.”