SINGAPORE — The Government has been "working very hard" over the last few years to restore stability in the housing market and balance the supply and demand of flats after disruptions caused by the Covid-19 pandemic, said Minister for National Development Desmond Lee.

This comes as high resale prices, greater housing demand, and delayed Build-to-Order (BTO) projects were observed during the pandemic years. 

The unprecedented crisis disrupted people's lives, affected supply chains, caused shortages in manpower, and heavily impacted the construction and property sectors, said Mr Lee on Monday (March 11) in an exclusive interview with CNA.

“It does take time to restore that balance because injecting supply, changing the property market psychology, adjusting the parameters of various cooling measures, all these take time to filter through the market, and even then you cannot ever be quite certain of what the impact will necessarily be,” he said.

UNCERTAIN ECONOMIC OUTLOOK

Mr Lee spoke about various issues during the interview, including keeping housing affordable, redeveloping heritage buildings, and helping young couples own a home earlier. 

Overall BTO flat application rates have stabilised. Last year, there were 1.9 first-time applicants per flat, lower than the 3.7 in 2019.

The new flat supply has also gone up significantly, and the authorities are on track to deliver on the promise of launching 100,000 BTO flats from 2021 to 2025, said Mr Lee.

More than 63,000 flats were rolled out between 2021 and last year, and about 19,600 will be launched this year.

The resale and private property markets are also stabilising, added Mr Lee. 

However, home buyers need to be more cautious and prudent amid the unclear economic outlook, he urged. 

“We see interest rates staying higher for longer. We see economic uncertainties in the road ahead of us. We see geopolitical tensions, and all these will have an impact on the property sector,” he said. 

“We will monitor and take whatever measures may be necessary to ensure stability in our property market, and ensure that the property market does not run ahead of economic fundamentals.”

GIVING YOUNG COUPLES MORE SUPPORT

Mr Lee announced during his ministry’s recent Committee of Supply debate that eligible young couples will get more help when buying a new Housing Board (HDB) flat, including a reduced initial downpayment of 2.5 per cent of the purchase price.

The Staggered Downpayment Scheme enhancement is aimed at easing the initial cost for young couples in buying a flat, and will kick in from the BTO sales exercise in June.

Some couples delay their plans to settle down and start a family as they have difficulties making the initial down payment, Mr Lee explained. 

“Some of them don't have family backgrounds that allow family to come in and help them. So with this move, we hope that it will help these young couples, especially those with more modest means, to be able to start their home ownership journey early.”

On the waiting time for a BTO flat, Mr Lee assured: “We have been working hard to catch up on the delays caused by Covid, and we are very appreciative of the many families who have shown us forbearance, understanding the delays caused by Covid-19. 

“But we've caught up with a lot of delays and are on track to deliver the keys for delayed units by next year. That's our commitment.”

At the peak of the pandemic, the waiting time for a BTO flat was between four and five years, up from the pre-pandemic norm of three to four years.

The waiting time has now come down due to HDB’s various efforts, from doing effective procurement to raising construction productivity, said Mr Lee. 

In the February 2024 BTO launch, more than 80 per cent of the flats have less than three-and-a-half years' wait time.

Mr Lee also touched on the prices of BTO flats, noting that the flats are priced with market discounts. 

“During Covid, resale prices went up, but BTO prices have largely stayed stable during this period, and that's a result of us putting in more support through subsidies and market discounts,” he said. 

A new categorisation kicking in later this year will see BTO projects offered under Standard, Plus, or Prime models, instead of whether they are in mature or non-mature estates. The change was announced by Prime Minister Lee Hsien Loong at the National Day Rally last year. 

Standard flats will come with the same subsidies and restrictions currently applied to all BTO flats, while Plus flats are in choicer locations within a region and will have tighter restrictions such as a 10-year minimum occupation period. 

Prime flats, located in the central region, will have the tightest restrictions.

“This of course means it comes with trade-offs in the form of more stringent criteria to ensure that those flats are tilted in favour of owner occupation rather than for asset monetisation,” said Mr Lee. 

HELPING FAMILIES WAITING FOR NEW FLATS

Meanwhile, eligible families waiting for their BTO units will soon be able to tap a rental voucher of S$300 per month to offset rent for an HDB flat or bedroom on the open market. 

The initiative under the Parenthood Provisional Housing Scheme (PPHS), a temporary housing option for families waiting for their new flats to be completed, will run from July this year to June 2025. 

Mr Lee said the move comes as the overall rental market sees some stabilisation and is “a measure to bridge from now till next year, when we double our PPHS supply even further”. 

“We are very mindful that if you put in measures on the demand side of the house, in the form of vouchers or subsidies, there's always the potential for it to fuel inflation, and for the subsidies to be creamed off, and then it doesn't really help the families,” he added. 

“That is why when rents were really actively on the upward march, you have to be very careful in putting in such a measure.”

REIMAGINING, REJUVENATING PUBLIC HOUSING

When asked about the Voluntary Early Redevelopment Scheme (Vers), which is part of the Government's efforts to renew older public housing estates, Mr Lee said there is a need to ensure that national housing in Singapore continues to be relevant and purposeful. 

“All these are programmes and schemes that we have to carefully design, but their purpose is to further the overall reimagination, rejuvenation of public housing in Singapore because our flats are getting older,” said Mr Lee. 

“We have a new generation of Singaporeans entering home ownership and living in public housing.”

Under Vers, the Government will compensate residents whose flats are taken back early, and will also help them get another flat to live in. This is offered to selected precincts when they are aged about 70 years or older.

“We have to make sure that when we successfully carry out Vers for an estate, that there are adequate housing options for those families who may need to move,” said Mr Lee, adding that there are other considerations such as further support for such families and the impact on residents living in surrounding areas. 

“We also have to make sure that the redevelopment, which of course will involve not just roads, services and other facilities and amenities, is done seamlessly.”

INCENTIVES FOR HERITAGE BUILDING OWNERS

Buildings with heritage and environmental value must be carefully studied before redevelopment plans are put in place, said Mr Lee. 

Even as Singapore develops to meet housing and other needs, “we also want to make sure that our city retains its character and its soul in the form of the protection of heritage buildings, and ensure that we are truly a city in nature, that we maintain and protect our greenery and ensure that our biodiversity thrives in our city as well”, he added. 

“That is why when we open up sites that have got heritage or environmental value, we take great care.”

For instance, when looking at developing a new public housing estate in the Mount Pleasant area, largely on the site of the Old Police Academy, a heritage study was convened to look at the site, and stakeholders including historians, environmentalists, heritage experts, and the larger police fraternity were consulted. 

“As a result, we are able to develop or plan the development of Mount Pleasant taking into account our needs, but also the need to protect heritage buildings, protect the parade square in Mount Pleasant because of its historic value, and also protect green areas, including some of the streams,” said Mr Lee on how the Mount Pleasant estate will include heritage elements from the Old Police Academy.

The Government has also rolled out a package of measures and incentives to ensure the interests of heritage building owners are looked after, he added. 

“So when it comes to new sites that we open up, it enables us to meet the needs and aspirations of Singaporeans, while at the same time ensuring that we protect our heritage and protect our biodiversity and greenery, for a livable and sustainable city,” said Mr Lee. CNA