Parliament is debating a housing motion these two days (6 and 7 February) and our PAP MPs have been providing some concrete suggestions on how Singapore can keep its public housing affordable and accessible.
MP Xie Yao Quan: More flats with shorter waiting times, cap on BTO prices
The issue that Jurong GRC MP Xie Yao Quan highlighted was the supply of BTO flats.
Many Singaporeans struggle to attain a Balance flat (i.e. flats with zero wait time). There are also couples who opt for BTOs but “rueing the four-to-five-year wait time”.
Beside launching more flats, Mr Xie suggested that there is a real need to provide many more flats with much shorter wait times, which could become an anchor product or a regular staple in future BTO launches.
“This is a case where demand – for shorter wait times – can be induced by the right amount of supply,” said MP Xie.
“Many more flats with much shorter wait times would certainly be useful for first-timer couples who are marrying later in life, those already married but looking to settle in their own ‘nest’ before starting a family, and certainly those already married and with child.”
Cap on BTO flat prices
MP Xie compared prices of a 4-room BTO flat in Ang Mo Kio Central Weave and a Prime Location Housing (PLH) BTO flat in Queenstown.
A Prime Location Housing BTO flat actually costs less than a BTO flat in Ang Mo Kio after taking into account subsidies.
To keep BTO flats within the reach of Singaporean households, Xie suggested capping their price:
- Price of 4-room BTO flat capped at $500,000
- Price of 5-room BTO flat capped at $650,000
“A price cap would ensure that any project in any location will still be within reach of a broad segment of Singaporeans,” said MP Xie.
It ensures that all projects, across all locations, will have an inclusive mix of Singaporeans.
How to achieve this? MP Xie suggested expanding the Prime Location Housing model and applying higher subsidies to more projects and push down BTO flat launch prices to be within reach of most Singaporeans.
However, the BTO flats will need a longer Minimum Occupation Period of 10 years and the Government would have to implement a subsidy recovery of 6 per cent at the point of resale.
MP Xie also offered a second suggestion: Extend the Prime Location Housing model to create a more flexible and finely tiered levels of Minimum Occupation Periods and subsidy recovery rates (e.g. MOP of six years with subsidy recovery of two per cent, or MOP of seven years with subsidy recovery of three per cent).
“Flexibility in our system of public housing subsidies will help keep all BTO projects within reach Singaporeans and mitigate the windfall effects for projects with higher resale potential,” he said.
MP Vikram Nair: Remove MOP for resale flats
Sembawang GRC MP Vikram Nair believes the Minimum Occupation Period (MOP) for resale flats is driving up prices and can be removed.
He explained that the Minimum Occupation Period is a fair measure for those who obtained subsidised BTO flats, but questioned if it is necessary for those who bought resale flats at fair market value.
“The unintended consequence of this measure is that the supply of resale flats is restricted because every transaction results in resale flat being taken off the market for five years.”
Other property cooling measures like the seller stamp duties should still be retained to prevent speculation, he said.
With this, prices of resale flats will moderate themselves over time and become comparable to the price of a BTO flat once resale subsidies are added to the equation. This, said MP Nair, will likely reduce the queue for a BTO flat and eliminate the pain point—the supply crunch of BTO flats—at the moment.
Images credit: HDB, MCI/YouTube
