Response to Mr Leong Mun Wai by Minister Desmond Lee at MOM Committee Of Supply Debate 2025

Mar 7, 2025

I would like to make a clarification without detracting from MOM’s debate.

Yesterday, Mr Leong Mun Wai made two points in his speech. 

First, he spoke about selective use of data on Singaporean and PR employment.

Second, he said that Singaporeans today are worse off than in the past, and he used the example of public housing, comparing HDB affordability for university and Vocational and Industrial Training Board (VITB) graduates in 1979, with affordability today.

These were not raised at MND’s COS at all. Member did not speak at MND’s COS or raise any clarification. I checked and would like to make a few points, to add to what Minister Tan said yesterday. He spoke about the situation, the improvements in our graduate situation, and I will talk about housing.

Sir, Singapore in 1979 is firstly very different from Singapore in 2025.

In 1979, only 4% of each cohort went to university. Today, it is more than 40%.

Mr Leong used median wages of VITB graduates in 1979. But he didn’t mention that back then, only 9% of each cohort went to VITB. Today, around 60% of each cohort go to Polytechnic and ITE.

So the vast majority of each cohort today goes to university, Polytechnic and ITE, compared to only around 13% going to university and VITB in 1979. Mr Leong was comparing housing affordability for a small group in 1979 with housing affordability for the vast majority of Singaporeans today.

He also did not present the affordability picture for the majority of Singaporeans back in 1979, who were less well-educated, less skilled, and earned much less, in those early days of Singapore.

Second, the HDB flat in 1979 is also very different from the HDB flat in 2025.

In the 70s, HDB flats were simple, functional homes in estates, with few amenities and very limited transport links.

Today, our flats come with modern amenities and far better transport connectivity, offering residents a higher standard of living. 

In 1979, only 68% of our population lived in HDB flats, of whom 62% owned their flats. This is not surprising, because the university and VITB graduates that Mr Leong cited yesterday, were at the higher end of the income spectrum.

Today, more than 80% of Singaporeans live in HDB homes, and over 90% own their flats. In fact, more than 8 in 10 first-timer households who collected their keys to their BTO flats and resale flats in 2024, used little to no cash to service their HDB monthly mortgage instalments.

Third, the housing market in 1979 was very different too – 

In the 1960s and 1970s, there was almost no resale market to speak of. It was early days.

In the 1960s, buyers had to return the flat to HDB at a sum that was less than what they had initially paid. In the 1970s, there was only a very rudimentary resale market, with strict conditions and limited financing. We were just starting out.

Back then, there was limited potential for appreciation. It was not quite a store of value. It was a basic home and expense for Singaporeans.

The resale market only started to mature in the 1980s and 1990s, after changes in conditions for resale and mortgage financing policies.

Today, our HDB flats are both a home and a store of value for Singaporeans, which they can monetize in their older years for retirement by selling on the open market, renting out a room or a flat, or through our Lease Buyback Scheme, and so on.

We also wondered why Mr Leong was so selective in using the year 1979 and we realised why. From 1968 to 1987, in the early years of HDB, we sold flats to Singaporeans and the flat price was fixed to recover costs. So, this most resembles PSP’s Affordable Housing Scheme (AHS). In a way, PSP’s idea is not an original idea, but an idea adapted from the past.

HDB flats back in those days were priced based on construction cost. The PSP’s AHS uses a similar idea.

But construction cost then, as it is today, fluctuates based on economic factors, like labour availability, prices of construction materials, global commodities, like oil.

In the 1960s to 70s, construction costs were relatively low. But the turning point came at around 1979. Around 1979 and 1980, construction cost went up by 30%, because there was a construction boom which led to severe labour and material shortages. So HDB flat prices went up by 15% in 1979, another 20% in 1980 and another 38% in 1981. So, Mr Leong presented selectively the 1979 data, but did not mention what happened the next one to two years.

He did not share this with the House. In fact, the challenge of sharply fluctuating construction and therefore HDB prices, according to the AHS, when pegged to construction cost, applies equally to PSP’s AHS.

Sir, we have long since moved away from the system where HDB flats’ price were based on construction cost. In fact, we do not price flats to recover land and construction cost. We look at the market value of the flat, apply significant market discounts to bring the price down so that there are flats that are affordable to Singaporeans of different income levels. And then, we do means-testing for explicit grants, on top of the market discounts. This ensures HDB flats remain affordable to a wide range of incomes.

Sir, since the 70s, we have matured and progressed as a society. We have improved upon our initial policies. We have developed our strong social compact, where Singaporeans, have affordable housing, have a tangible stake in this country, and form strong communities.

Sir, most importantly, what the PSP has suggested through the AHS is a major change from the social compact we have had all these decades. They want to go backwards, to the time where housing was a shelter and an expense, and did not serve as a store of value and assurance for retirement, where Singaporeans did not have a stake – when they leave, according to the AHS, just return keys and move on. Is this really the kind of Singapore we want to have?

We have come a long way since 1979. We will continue to look forward instead, to ensure that our policies remain relevant, effective in providing public housing as affordable, accessible, and inclusive for Singaporeans. 

I would like to thank Minister Tan. Thank you.