More subsidies, higher income ceiling? Analysts weigh in on possible tweaks to public housing

SINGAPORE: The government could roll out more public housing options for seniors, provide more grants and even raise the income ceiling to apply for Build-to-Order (BTO) flats, property analysts said.

This comes after Prime Minister Lee Hsien Loong's National Day message, which dwelled on two main topics - housing and retirement adequacy.

Mr Lee said on Tuesday evening (Aug 8) that as Singapore continues to develop more public housing, fewer and fewer undeveloped sites are left to build new estates. Existing non-mature estates are also steadily maturing, as their transport links and amenities improve.

"In time to come, more and more new HDB flats will be built in existing estates, like here in Dawson. Such flats will naturally be in greater demand. Their launch prices and resale prices will reflect that," he said.

"But even amidst this changing landscape, we must still ensure public housing is accessible and affordable for Singaporeans of all income groups. We must also keep our housing schemes fair and inclusive for all."

He added that he will share more at the National Day Rally, which is on Aug 20, on how the Housing & Development Board's schemes will be adjusted.

Mr Lee also said that the government is making special efforts to adapt HDB estates and flats to serve a rapidly ageing population. On retirement adequacy, he promised to share how the government will help older workers in their 50s and early 60s who have still not built up enough retirement savings in their Central Provident Funds (CPF).

Following the broadcast, property analysts gave their views on possible changes that could be in the works. 

RECLASSIFICATION OF ESTATES

Analysts agreed that the government will roll out more housing estates in prime locations. The Ministry of National Development (MND) has said before that it is reviewing its classification of estates as mature versus non-mature, although details have yet to be announced.

Professor Qian Wenlan, director of the Institute of Real Estate and Urban Studies at the National University of Singapore, said that with urbanisation becoming more uniform across the country, the distinction between mature and non-mature estates may erode, and the resulting gentrification is expected to push up the cost of home ownership.

"Lower-income families may thus face difficulty as would first-timer applicants without the equity of an existing residential property," said Prof Qian, who is also the Ng Teng Fong Chair Professor in Real Estate.

Mr Lee Sze Teck, senior director of data analytics at Huttons proposed that the review of mature and non-mature estates classification may possibly result in HDB estates reclassified as Central and Non-Central similar to how the private residential market is segmented.

He added that the towns in Central could include Ang Mo Kio, Bedok, Bishan, Bukit Merah, Bukit Timah, Central, Clementi, Geylang, Kallang/Whampoa, Marine Parade, Pasir Ris, Queenstown, Serangoon, Tampines and Toa Payoh. Jurong East may be included in the Central area as it is the future second central business district (CBD).

The Non-Central towns could include Bukit Batok, Bukit Panjang, Choa Chu Kang, Hougang, Jurong West, Punggol, Sembawang, Sengkang, Tengah, Woodlands and Yishun.

Said OrangeTee & Tie's senior vice president of research and analytics Ms Christine Sun: "We are unsure how the government is going to reclassify mature and non-mature estates in (the) future. But I feel a reclassification could be timely as we have already seen overlaps in prices such that prices of flats in some non-mature estates have already overtaken mature estates."

INCOME CEILING

Some analysts also thought that the income ceiling to apply for BTO flats could be raised, though not all agreed.

Ms Sun said that in the next few years, there could be more Prime Location Housing (PLH) or BTO projects coming up in prime sites such as the Greater Southern Waterfront or Jurong East Lakeside. In the mid-term, there could also be more Selective En bloc Redevelopment Scheme (SERS) projects in mature estates as there will be more ageing flats.

"Naturally, the prices of future projects could be higher on these prime sites," she said.

First-timers from the middle or sandwich class may not be able to buy these new BTO flats based on the current income ceiling. At the same time, they may not be able to afford private homes or HDB resale flats if prices continue to trend higher.

Mr Lee said that it has been four years since the last income ceiling was reviewed so it may be timely to look at this matter. The income ceiling for BTO flats may be revised to S$16,000 (US$11,859) per month and for new executive condominiums (ECs), it could be revised to S$18,000. This will widen the demand pool for the flats and ensure accessibility for buyers.

But Mr Eugene Lim, key executive officer of ERA Realty Network, does not think there will be a change. MND said in November last year that there are no plans to revise the income ceilings at this point.  

MND also said that at the income ceiling of S$14,000, about eight in 10 Singaporeans are eligible to apply for a BTO flat; while the S$16,000 ceiling enables about nine in 10 Singaporeans to apply for an EC.

HOUSING FOR SENIORS

Dr Lee Nai Jia, Head of Real Estate Intelligence, Data and Software Solutions, PropertyGuru Group, thinks that Mr Lee is likely to give updates on health districts or plans to create more elderly-friendly estates, due to the growing ageing population in Singapore.

"We should see more housing estates rolled out in prime locations, as that will be aligned with the messaging of creating inclusive communities with a good mix of people from different income groups," he said.

"Baby boomers would likely be the group these measures intend to support. More housing options may be introduced to help those with financial challenges, compounded with health issues.”

The government may offer more Community Care apartments for the elderly, and provide additional schemes to help the elderly cash out part of their housing equity to supplement their CPF savings, he said.

OTHER POSSIBLE CHANGES

To help first-timers manage the cost of housing, analysts think the government may continue to provide more subsidies to help first-timers manage the cost of housing.

Mr Lim said that the current Enhanced CPF Housing Grant (EHG) amounts can be recalibrated so that more income tiers can be added and the grant amounts can be increased. The EHG is for those buying from HDB or resale flats, and the amount depends on the applicants' household income.

Separately, housing grants for first-timers buying resale flats were raised in February this year.

Both Ms Sun and Mr Lee brought up the possibility of providing a new rent-then-own scheme as a way to manage the cost of housing. Mr Lee explained that this would involve having the buyers rent with an option to buy the flat later.

"The option could be five or 10 years and the rents paid can be used to offset the purchase price. This will help Singaporeans, for example single parents, who struggle with the downpayment for various reasons," he said.

He also suggested that more flats can have varying leases, just like how two-room flexi flat buyers now have the option of selecting the tenure to cover them till the age of 95. This flexible tenure mode may possibly be extended to three-room flats, he said.

"It could help seniors who are relying on a domestic worker as the additional room can double up as a helper’s room or be rented (out) to offset daily expenses. This will improve (the) affordability of flats," he said.