Speech by Minister Lawrence Wong at the HDB Awards 2019

Sep 10, 2019

I am very happy to join you this evening for this year’s HDB Awards. 

HDB was set up nearly six decades ago in 1960, and we’ve built over one million flats across 26 towns and estates. Sometimes we take it for granted that these new flats will magically spring up from the ground. But I think all of you who have been involved with us in the HDB journey will know that the process of building these new flats and towns is anything but straightforward. 

In fact, as Singapore gets more and more built up, it becomes increasingly more complex because of the constraints that we face. As you can see from the Awards tonight, many of our architects, builders and engineers have come up with many innovative solutions to tackle these constraints and develop new HDB towns, and to upgrade existing ones. We can also look around the world to compare, and really there is no other city which has an institution like HDB. 

Many will come to us to learn, but no one has been able to replicate the HDB. There is no other society which has a housing programme where young couples are able to get a new flat with zero out-of-pocket cash payments when they just start working. It’s only here in Singapore where we have painstakingly built up this institution, and today, it is a tremendous success. Without the HDB, Singapore would have been a very different country. 

HDB, as the largest developer in Singapore, has its own team of planners, architects, and engineers, but HDB cannot do everything on its own, given the scale of the work that it does. So we work with many private sector stakeholders and we have many successful collaborations with all of you here tonight to build and design high-quality homes for Singaporeans. This evening is really an occasion to thank all of you and to recognise our valued partners. Once again, let’s give a big round of applause to all our partners.

Improving affordability and accessibility of HDB homes 

One of the key reasons for HDB’s success is that we’re always evolving and updating our programmes. We’re always looking for new, better, greener and smarter urban solutions, so that each new town that we develop, each version of HDB living, is better than the one before. We also continuously review and update our housing schemes to ensure the accessibility and affordability of HDB flats. 

Tonight, I thought I would share with you some updates on our housing schemes.  

Increase in Income Ceiling

First, we will do something about access to subsidised public housing. Today, to be eligible to buy HDB flats and executive condominiums (ECs), there is an income ceiling as all of you are aware. It is $12,000 for HDB and $14,000 for ECs. The income ceiling also applies to grants for resale flats and the taking of HDB loans. We raised the income ceiling four years ago. Since then, incomes have risen, and I think we should allow more Singaporeans to qualify. We will increase the income ceiling to $14,000 for HDB and $16,000 for ECs.

The income ceiling for singles will be adjusted accordingly, which means that more homebuyers, more Singaporeans, first-timers, will have access to affordable housing options. 

Revision to Grants – BTO Flats

The second area is in our housing grants. Today, young couples receive significant support when buying their first home. If you were to buy a new flat from the HDB, you will first receive a generous discount compared to the prices of similar resale flats in the neighbouring area. Then you get an Additional CPF Housing Grant (or AHG) of up to $40,000. And then there’s another layer called the Special CPF Housing Grant (or SHG) of up to $40,000, but the SHG only applies if you are buying a 4-room or smaller new flat in non-mature estates. 

It’s a very complex scheme, so I’ve tried to put it down into a simple diagram so you understand the different layers of grants. There is first of all a price discount for new flats, and you have an additional grant, and special grant. The grants are such that the higher the income, the smaller the grant, so it’s progressive – meant to help those with lower incomes.

We have reviewed the conditions for the SHG and I think there is scope for more flexibility. For example, some couples may prefer new flats in mature estates to live close to their parents, and we want to support such preferences. Likewise, some families may want additional space because they want to have more children in the future, or they may wish to accommodate their parents or other family members. For these families, a 4-room flat may not be big enough. 

Having studied this carefully, I have decided to remove the restrictions for the SHG, which means that we will extend the SHG to those buying new flats in mature estates, and to those buying 5-room and larger flats. This means first-timers can potentially get up to $40,000 more in grants when they purchase a new flat. 

With these enhancements, more young couples may want to buy BTO flats. To support this additional demand, we will increase our BTO flat supply. We’re on track for about 15,000 units this year. Next year, we are likely to have to release more units, which should be good news for the industry – because we are putting out more supply, there will be more business for everyone, be it an architect, builder or engineer. We are not only going to build more new flats, we are also going to have more upgrading projects in the coming year. We are studying this and we will share more details on the exact quantum when we are ready.

Revision to Grants – Resale Flats 

While we need to ensure adequate supply of new flats, it will not be possible to meet all of the growing demand with new flats alone. Because in some locations, particularly in the mature estates, we just don’t have enough land to build so many new flats. Over the longer-term, we have to ensure there is a sustainable balance in the demand and supply of flats. If you look at the statistics, last year, 75% of first-timer families purchased new flats, and 25% purchased resale flats, so three quarters and one quarter. This is already much higher than 10 years ago, when only 55% bought new flats, and 45% chose resale flats.  

This preference for new flats is not surprising, because the incentive structure today encourages first-timers towards new flats. The SHG, for example, is not applicable to those who buy resale flats. Resale flat buyers are only eligible for the CPF Housing Grant and the AHG. If you go for a resale flat, you can’t get the SHG. You may be eligible for the Proximity Housing Grant if you live near or with parents, but this is not unique to first-timers. It is no surprise that preferences are tilted towards new flats.

Let me illustrate this with an example. James and Janet, a young first-timer couple with a monthly household income of $4,800, bought a 4-room new flat in Yishun in the Nov 2018 Sales Exercise. The flat price is $290,000 after the discount. Based on their income, they would have enjoyed up to $45,000 in grants. After grants, they would have had to pay around $245,000 for their 4-room flat. 

If they had bought a similar 4-room resale flat in Yishun, they would have to pay more. Such a 4-room resale flat would have cost about $345,000 before grants. They will get up $55,000 in grants, slightly more, but not enough to make up for the higher price in the resale market. So the after-grant price is $290,000. It is higher than the price of a similar BTO flat. 

It is no surprise that many young couples will prefer buying a new flat. So we really ought to adjust our grant structure to achieve a better balance between new and resale flats.  

We will make two changes to our housing grants for resale flats.  First, we will extend the SHG to all resale flats. With this change, the AHG and SHG will apply to all flat types, all locations and for new and resale flats. With this change, we will be able to simplify the structure of our schemes. We can combine all of these together into a new grant called the Enhanced CPF Housing Grant (EHG). The maximum grant is $80,000, and with the increase in income ceiling, the income ceiling for this grant will be raised to $9,000. 

Second, we will introduce a new requirement for the EHG which is tied to the duration of the remaining lease of the flat. We will extend the full EHG to those buying a flat with remaining lease that covers them until at least 95 years old. For example, for a couple that are both 30 years old, they will need to buy a flat with 65 years or more of remaining lease to receive the full grant. Those who choose to buy a flat that does not cover them to the age of 95 can still receive the EHG, but it will be pro-rated based on the extent to which the flat can cover them to age 95, using the same formula that we are now using for the pro-ration of CPF and housing loan quantum for older resale flats, which we have recently introduced. In this way, we also hope to encourage home seekers to buy flats that can last them for life.

Again, to illustrate what all of these mean, let’s go back to the earlier example of James and Janet. With the grant enhancement, based on their household income, the couple can now get up to $45,000 in grants. They will get the full grant if they buy a flat that can last them until age 95. If they choose a flat with a slightly shorter remaining lease, for example, if it only covers them until age 90, the grants will be pro-rated accordingly based on the formula, and they will get a grant of $40,000, slightly less. But regardless, in both cases, they will still receive a total of around $90,000 in grants, significantly more than what they can receive today.  

The EHG is a major step forward in making HDB flats more affordable for all first-timers. Home buyers will have more options for larger BTO flats in mature estates, and also the wide variety of readily available flats in the resale market. For those who want to live near their parents, or who want a home to set up a family quickly, they will now have many more affordable options. 

I am very happy to announce that these enhancements will take effect from tomorrow onwards.

New HDB portal 

Besides affordability, we also want to streamline and simplify the process of buying and selling HDB flats. 

Last year, we automated the resale transaction process.  We’ve been able to halve the total transaction processing time from 16 to 8 weeks and many resale transactions have benefited from this because we have shortened the transaction process.

HDB has been studying how we can further improve the process, and make buying and selling HDB flats more convenient and more seamless. Today, there is no single, one-stop platform for buyers and sellers to transact HDB flats. The entire process can be quite time-consuming. So we intend to introduce a new HDB portal.    

It will feature a flat listing service where buyers can look at the range of flats available – be it new of resale flats –  and compare their options holistically. 

This is just a mock-up of what the portal will look like, including the flat listing service. Buyers will be able to find information about current and upcoming new flats, be it the BTO flats or balance flats, and also options for flats in the resale market.  And then you can make detailed comparisons among your shortlisted options, see which flats are within your budget, and look at which ones have leases that can cover you for life. Then you can make more informed decisions on your home purchases, all on one single platform. 

The new portal will also make the sales process more convenient. We will allow sellers to list and advertise their flats online and they can then continue to complete the resale application seamlessly on the same platform. 

With this one-stop portal, we can add many value-added features for the convenience of both buyers and sellers. We can have financial calculators with customised information for every individual. For example, we can enable buyers to estimate their housing budget, and sellers to estimate their sales proceeds.

All this is work in progress, and we intend to get the new portal ready by the end of next year. HDB will be engaging industry players and stakeholders, to share more details of this work and to see how we can work together on this project.  

I believe the HDB portal can complement existing property portals and the work of property agents to make real estate transactions more convenient and efficient. For example, property agents can use the new HDB portal to list flats on behalf of their clients. This can then free up their time to focus on other value-added services for their clients. HDB will also share common APIs – these are the Application Programming Interface – with industry players. So industries can use these to enhance the information and offerings available on their own portals. All these will help towards transforming the real estate sector and providing better services for Singaporeans.  

Recognising our exemplary partners 

I’ve shared some of these major changes to our housing schemes so that HDB flats can continue to be affordable and accessible for Singaporeans.  

In parallel, we have been working hard to innovate on the design and quality of HDB flats to meet the higher expectations of young couples. This is work that all of you are involved in. Each time we embark on an HDB project, we learn from the previous one, and we strive to make it better, to design and build distinctive HDB flats and estates, with lush greenery, good facilities, and a high-quality living environment.  

These are shared objectives for all of us, so we are really all in this journey together.  Whether you are working in HDB or working as a private architect, builder or engineer, we are all part of the same team, working to provide better homes for every generation of Singaporeans. 

And working in partnership, we have made good progress. In the last 10 years, the average CONQUAS score for public housing projects has climbed steadily. CONQUAS, as all of you know, is the benchmark BCA puts out for quality. Last year, the CONQUAS score for public housing was 92.0, and that has surpassed the average CONQUAS score of private housing developments. So we can say, hand on heart, that HDB offers better quality homes than even private developments. That’s thanks to all your efforts.  

As all of you know, HDB has been pushing for even higher levels of precast and prefab. This has increased quality and safety of our HDB flats, and has reduced construction waste, noise and dust levels in construction sites. It has translated into tangible productivity improvements.  Last year, HDB achieved 17.8% improvement in productivity compared to 2010 levels. This is on track to achieve 25% productivity improvement by 2020, which is a target that HDB has set for itself. 

To illustrate, if you look at the number of man-days to build a 90 m² space – which is the equivalent of a 4-room flat. Ten years ago, it took 205 man days. Now, it takes around 174 man days, quite a bit of savings and we are continuing to push the boundaries with new technologies. HDB is now working with NTU researchers, the private sector, Robin Village, which is a subsidiary of Tiong Seng, Witteveen + Bos, which is a specialist in 3D printing, on 3D concrete printing. 

We now have the largest 3D concrete printer in whole of South East Asia. It has been proven to be able to produce something that is better and faster. But it is still more expensive, unfortunately. But if over time, if the cost can come down, this will be a possible game changer in construction productivity in the coming years.

And that’s to illustrate the spirit of continuous innovation that all of us must have in our public housing journey. That’s why tonight, we are very happy to recognise several of our key partners who have exemplified this spirit of excellence and innovation. We have 14 Design, Construction, and Engineering award winners; and 13 Certificate of Merit recipients. Congratulations to all our award recipients! Well done!

Conclusion

To conclude, HDB is an integral part of the Singapore story. It has a profound influence on the lives of Singaporeans. Because of HDB, we are a nation of home owners. Because of HDB, we are a cohesive society, with diverse communities living side-by-side, and forging a closer sense of shared identity. Because of HDB, we are able to deliver a quality of life that is unique and that you cannot find anywhere else in the world.  Our commitment is that anywhere you go, in any part of Singapore, you will be able to secure affordable and quality homes with vibrant communities in good and safe neighbourhoods.  

All of you here tonight have a part to play in these achievements. But our job is not done. We are not done yet. Because there’s still much more we can do together, as we continue to re-make and re-invent our city over the coming years and decades.  I look forward to continuing our partnership with all of you to build better homes for Singaporeans for many more years to come.

Thank you very much.