Singapore moves to rein in million-dollar public housing flats ahead of elections

Prices of second-hand flats have surged in recent years, driven by pandemic-induced construction delays and high demand

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Housing & Development Board flats in Singapore. The affordability of public housing has become a contentious issue for the ruling People’s Action Party. Photo: Roy Issa

Published: 1:47pm, 20 Aug 2024

Singapore introduced new curbs on public housing as new Prime Minister Lawrence Wong seeks to tame prices that threaten to become a political flashpoint in coming elections.

The measures, which include a lower loan-to-value limit on financing from the public housing authority, are aimed at promoting a “stable and sustainable” market, according to a joint statement late on Monday from the Ministry of National Development and the Housing & Development Board.

The affordability of public housing has become a contentious issue for the ruling People’s Action Party, which has governed the city state since independence in 1965 and has seen its popularity decline. Almost 80 per cent of households live in public housing units, which are built and sold at subsidised prices by the state.

Prices of second-hand flats have surged in recent years – in some cases topping S$1 million (US$760,000) – driven by pandemic-induced construction delays for new homes and high demand for flats in popular neighbourhoods. Last year, resale public flat prices rose 4.9 per cent, and they have risen more than 4 per cent in the first half of 2024, according to government data.

Under the new measures, loan-to-value limits, which determine the maximum amount an individual can borrow from the HDB, will be lowered to 75 per cent of a property’s price or value from 80 per cent. The limit on loans from commercial banks will remain at 75 per cent. The changes kicked in from Tuesday and will apply to transactions in the secondary market as well as new units known as Build-To-Order flats starting in October.

Private residential houses and HDB public housing estates in the Hougang area. Industry players expect Singapore’s property market to “continue to set records”. Photo: Bloomberg

“Given the sustained, strong, broad-based demand for HDB resale flats, these measures will help cool the market and encourage prudent borrowing,” according to the statement.