SINGAPORE — On Tuesday, National Development Minister Khaw Boon Wan announced that the income ceilings for Build-to-Order flats and executive condo could be raised — for the second time since 2011 — as soon as August or September.
Mr Khaw’s recent comment that every Singaporean couple — regardless of their financial means — ought to have a chance of living in Housing and Development Board (HDB) flats signals a shift in the Government’s thinking and could have profound implications on housing policy, experts said yesterday.
Nevertheless, some of them noted that it was an inevitable shift given Singapore’s changing circumstances and the need for public housing to retain its role as a social institution here.
And as the Government seeks to provide public housing to more people, there may come a time when income ceilings are removed, the experts said, and the authorities would have to ensure that HDB flats remain affordable to the lower-income group by providing them larger subsidies or putting in place restrictions that, say, dictate what flat types the more well-off can buy.
Mr Colin Tan, director of research and consultancy at Suntec Real Estate Consultants, said: “It’s a deviation from providing affordable housing, but raising the income ceiling can have social benefits because public housing is also a platform for the rich and poor to live together. This is something the Government has been doing, for example mixing the different types of flats in a block or racial quota — these social aspects are what public housing is built for, too.”
Associate Professor Sing Tien Foo from the Department of Real Estate at the National University of Singapore pointed out that Government policies have to evolve with the times. “In the early years of independence, we had to provide for people who didn’t have homes but now, demand from that segment has more or less been met. Singapore has experienced years of economic boom and wages grow, but as a result of that some people exceed the income ceiling and cannot qualify for public housing, so I think it’s fair that this group be given the chance to benefit from this social welfare,” he said.
To safeguard the interests of the low- and middle-income groups, the Government can still prioritise public housing for these households, said Mr Ong Kah Seng, director of R’ST Research. “There can be some restrictions, for example, letting the higher-income group buy five-room flats or introducing higher-tier HDB flats like executive flats or maisonettes so they don’t crowd the space.”
Speaking during a “live” radio talk show on MediaCorp’s Chinese-language station Capital 95.8FM, he said: “You may come from, say, an upper-income group. You do not need an HDB flat. But I feel that it’s good for … almost all Singaporeans to have a chance of living in HDB for five years, and interacting with the community … It’s part of the Singaporean way of life.”
Currently, the income ceilings for BTO flats and ECs are S$10,000 and S$12,000, respectively. These were each raised by S$2,000 in August 2011. Prospective buyers welcomed the announcement by Mr Khaw.
One of them, who wished to be known only as Mr Lin, said that he and his fiancee are both self-employed. And although they are considered well-to-do, they are unable to get as high a loan as salaried persons, and this limits their options. “We have to fork out more money for downpayment as a result, and that can amount to a lot,” the 32-year-old said.
Mr Z Ng, 26, who works in legal services, noted that while he and his girlfriend meet the existing income ceiling for BTO flats, they would probably exceed it by the time they saved enough for the downpayment. “We’re almost exceeding the BTO income ceiling with our current pay, and we’re not ready to get a flat yet,” Mr Ng said.
The analysts also weighed in on the potential impact of raising the income ceilings on the private property market. Mr Donald Han, managing director of Chesterton Singapore, said: “Whatever demand is shifted to the HDB BTO market would affect activity in the private market — it can be leasing, resale or the developers’ projects. It’s a zero-sum game at the end of the day.”
But other analysts said the private residential market enjoys demand from both local and foreign investors as Singapore’s standing as an investment destination remains. Moreover, developers will have a larger catchment of buyers for Executive Condo when the income ceiling for these are raised.
Mr Tan said: “Although it remains to be seen how many of these higher-income people will eventually choose HDB, I don’t think that number is big. There will also be HDB flat owners who aspire to upgrade to private housing, so there will be a market for private properties.”