Real estate has entered the political battle during Singapore’s election period, as Minister for National Development Mah Bow Tan recently criticised an Opposition party’s suggestion of providing cheaper housing.
In opposing the Tampines Group Representation Constituency (GRC), the National Solidarity Party (NSP) released a manifesto on 21 April, proposing that the government release new HDB flats to first-time home buyers on a cost-plus basis.
Mr. Mah responded by saying that the NSP has proposed to lower HDB flat prices through cost-plus pricing and under-paying for public housing land.
He believes that the NSP is contradicting the government’s approach of treating HDB flats as both an asset and a home for Singaporeans.
According to Mr. Mah, “The NSP is, in effect, proposing a public rental housing system, since they say flats should just be a roof over the head, without value appreciation. Without the hope of appreciation, housing is then just an expenditure item, rather than an investment — no different from long-term rental.”
Mr. Mah noted that other countries provide rental housing as a form of public housing but due to a lack of maintenance, most of them become slums.
He asked, “Is it really better for Singaporeans’ hard-earned money to go into paying rental, rather than paying for a house they own?”
In addressing concerns over affordability, Mr. Mah remarked that balancing asset enhancement and housing affordability is not an easy task. The minister said that he understood Singaporeans’ concerns about affordability, due to the recent price increase.
Mr. Mah noted that because of ample liquidity and low interest rates, the real estate boom is happening in many countries, especially in Asia.
“To address affordability concerns, we have increased the housing supply and moderated demand — we are monitoring this closely and managing carefully — so that we cool and not crash the market.”
The minister also stressed that eight out of 10 first-time home buyers in 2010 used 25 percent or less of their salaries to service their monthly mortgage.
He added that most young couples can raise the down payment for a new flat in around three years after starting work and expect their CPF contributions to cover most of their loans.
“This is possible because of the large subsidies and grants in place today, to help young couples buy their homes. But Mr. Goh (Meng Seng) claims that paying nothing as a deposit for a new flat or covering monthly mortgages with CPF contributions does not mean public housing is affordable.”
“If being able to use less than a quarter of your income and no cash to finance your flat is not considered affordable, what exactly does Mr. Goh define to be affordable housing?”