Photo by Ivan Yeo, Unsplash
The rise in the prices of Housing Development Board (HDB) flats, both new Build-To-Order (BTO) flats and resale flats has generated high amounts of controversy in Singapore. There has been growing sentiment among many younger families that HDB flats are not affordable. Moreover, the rise in interest rates has led to higher home loan rates leading to higher borrowing costs, exacerbating this issue to a certain extent. As such, the affordability of HDB flats have come into question within parliament.
Recently, HDB unveiled its pricing strategies, indicating that BTO prices are priced with consideration of the prices of resale flats in nearby areas. Along with that, as resale prices of nearby HDBs increase, subsidies by the government will increase too. Arguably, many new HDB flats have been quite affordable and below the market price, as the average price of a new four-room flat in a non-mature estate (an estate that has more land space, but might have lesser amenities) was quite stable, standing at S$341,000 in 2019 and S$348,000 in the first three quarters of 2022 due to these subsidies. More importantly, the ability for Singaporeans to tap into funds from their Central Provident Fund (CPF) further increases the affordability of housing. Also, according to a recent study by the urban land institute, it pointed out that Singapore has the most affordable housing in major Asian cities like Seoul, Tokyo and Shanghai. Singapore’s median housing price per unit is much lower than these cities. Simultaneously, Singapore’s average unit size is much bigger than these cities in Korea, Japan and China. As such, there is a strong case to argue for flats being more affordable in Singapore.
However, the issue of affordability certainly differs across a couple of variables. One such variable is time. For Singaporean families who want to get a flat immediately, the costs of housing certainly increase, because a BTO flat minimally takes 4 to 5 years to build, hence resulting in them having to resort to purchasing resale flats or sales of balance flats (remaining flats from BTO flats). Furthermore, affordability depends on the location of the flats. The costs of HDBs in more mature estates, like Clementi and Marine Parade, are certainly higher. Mature estates are older estates with more developed amenities. Certainly, these locations have higher demand, which would lead to higher costs of flats, and more balloting involved. This certainly hinders affordability for Singaporeans. As such, for Singaporeans who want more affordable HDB flats, they would need to purchase flats in non-mature estates. However, it is worth noting that urban planners have made sure each non-mature estate has great amenities, transport connectivity and are crafted to be sustainable and smart towns. Many non-mature estates are being developed with more amenities, more Mass Rapid Transit (MRT) lines that improve transport connectivity. As such, even though many families in Singapore might have to wait longer and opt for flats in non-mature estates to have more affordable housing, that does not mean that they might have to sacrifice their quality of housing.
In conclusion, considering the grants available in Singapore and how Singapore’s housing is much more affordable than many other countries, HDB flats can be said to be quite affordable. However, the affordability of HDB flats in Singapore depends on Singaporeans’ ability to wait and the location of their housing. Nonetheless, Singaporeans can be sure to be able to afford the bare minimum of a BTO flat, a flat with sufficient amenities around it and sufficient subsidies.
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