The 2013 budget announcement form earlier this week identified housing as one of the most immediate challenges in creating a better Singapore with quality growth and an inclusive society.
As Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam noted in his speech, the 2013 budget prioritises the reduction of the cost of housing so that it corresponds to the income of young Singaporeans.
“Prices in the HDB resale market and private market have risen too rapidly in the cycle that began as we recovered from the 2009 economic crisis,” he said, adding that the Government has taken major steps to cool the housing market and ramp up supply of HDB flats.
Singapore’s land constraints, an open property market, and population growth make housing a difficult issue to tackle.
Escalating property prices have been central to major debates around the cost of living, and the discussions on the 2013 budget are no exception.
While there isn’t a magic solution to the problem in the long run, recent cooling measures have helped curb prices from spiralling further out of control; policies favouring first-time homeowners and curbing speculative buying are solid steps in the right direction.
But affordability of housing remains a big issue for most Singaporeans.
Land Use Plan
The government’s main obstacle seems to be the risk of driving foreign investors to competing neighbouring markets like Malaysia or Australia.
The property market, an essential contributor to the economy, needs to strikes a fine balance between ensuring affordable housing for young Singaporean couples so that they can start their families and making enough room to woo foreign property investors to our shores.
That’s why the Ministry of National Development’s recent release of the Land Use Plan in January covers some of the major development and redevelopment plans to support Singapore’s future population.
Some of the key points include the following:
- 700,000 more new homes will be built by 2030; out of these, 200,000 are already in the works.
- More housing will be available in and around central Singapore to enable Singaporeans to live nearer to their workplaces (Kallang Riverside, Keppel, and Bukit Brown).
- Three new towns and housing estates will be opened up in Bidadari, Tampines North, and Tengah.
- Punggol will be expanded to make it one of the largest HDB towns, while mature estates like Yishun and Bedok will undergo an infrastructure refresh.
If all goes according to plan, Singaporeans would not have to worry unnecessarily about not being able to afford a home in the next 20 years. After all, Singapore has one of the highest rates of home ownership in the world.
That is not to say that housing in Singapore will ever be cheap, but it is important for one to have a macro view on global property prices to put things into perspective.
Comparison Snapshot: Singapore vs. Hong Kong
According to the 9th Annual Demographic International Housing Affordability Survey, housing in Singapore is approximately half (or less) as expensive as in Hong Kong.
Hong Kong, on the other hand, has the most unaffordable housing in the world for the third straight year. Prices are so notoriously high that they have increased by nearly one year’s median household income in a single year!
Both Singapore and Hong Kong have similar characteristics in terms of types of public housing and land scarcity; housing units in Singapore and Hong Kong are predominantly high-rise apartments, which is more costly to build than the detached or semi-detached housing most common across Australia, Canada, Ireland, New Zealand, the United Kingdom, and the United States (the other markets that were analysed in the same survey).
So, it would be remiss for direct comparisons to be made with these bigger countries which don’t face the same set of challenges.
Hopefully the changes announced by Finance Minister Tharman Shanmugaratnam will come about quickly so that people can soon feel the full effects of a sensible housing market.