New homes with shorter leases and resale restricted to Housing Board only are some proposals to be considered for future public housing projects in prime locations, National Development Secretary Desmond Lee said yesterday.
Another idea is to have a longer minimum occupancy time (MOP) before the units can be sold or rented.
However, each of these proposals comes with trade-offs, added Mr Lee, speaking at real estate agency OrangeTee & Tie’s virtual business conference yesterday.
While the introduction of BTO (Build-To-Order) apartments with shorter leases makes them cheaper, he said, “But what about subsequent buyers – would the remaining lease be enough to meet their needs?”
One suggestion is to allow owners to sell premium BTO units only to the HDB, which they can then resell at affordable prices. But this idea also has disadvantages.
“It is difficult to come up with a fair repurchase price, and why should these home buyers have a stopgap when others don’t? And we want to avoid artificially guaranteeing the values of these homes, which existing homeowners may find unfair,” he said Mr. Lee.
A longer MOP period beyond the current five years could emphasize that these HDB apartments are for personal residency and not seen as an investment, he added.
“But this can inadvertently hinder home buyers who really need to move out when their family’s needs change,” Lee said.
While some people have suggested not having public housing in prime areas, he noted that there are important social reasons for the government to do so.
The idea of a new housing model aimed at keeping future projects in prime locations – such as the city center and the Greater Southern Waterfront – affordable and inclusive for Singaporeans was first put into practice by Mr Lee last December.
He noted yesterday that living in many global cities has become so expensive over time that it is inaccessible to the average shopper, resulting in wealthy households focused in prime areas.
“We believe that Singaporeans with different incomes should be able to live and enjoy these prime locations. And, like other parts of Singapore, these prime locations should reflect the diversity of our society,” he added.
Mr. Lee reiterated the need to add additional subsidies to these prime housing on top of those already granted today to ensure that they remain affordable not only in the BTO launch phase but also to subsequent buyers.
However, he did acknowledge that there are many downstream effects to consider, such as first owners benefiting much more than those who buy without these additional subsidies.
“To be fair, we may need to find a way to recapture some of this additional subsidy for housing in prime locations,” he added.
Alan Cheong, executive director of research and advice at Savills Singapore, said none of the previous proposals had provided satisfactory solutions to the “lottery effect” of HDB homes in prime locations.
“If all the proposed solutions have side effects and are difficult to resolve, it clearly shows that we should avoid this problem in the first place,” he added.
“It has already been proven that there will be a lottery effect based on what is happening now in places like The Pinnacle @ Duxton, and the cost of building more homes like this is greater than the benefits,” he said.
Steven Choo, associate professor of real estate at the National University of Singapore, said a resale tax could be levied based on the appraisal of these apartments, although the intricacies of such a policy need to be further elaborated.
“But ultimately, as long as the HDB resale market remains a free market, it cannot be distorted too much and market forces must be allowed to work,” he said.
Yesterday, Mr Lee said that despite the challenges posed by a labor shortage in the construction industry due to Covid-19, BTO apartments are not being offered to cover rising construction costs. Therefore, the pricing of new apartments is not significantly affected.
This is because BTO projects are expected to be postponed for another three months, on top of the six to nine month delay HDB announced last month.