Speech by SMS Sim Ann at the Institute of Policy Studies 35th Anniversary Conference

Jun 12, 2023

Good morning, distinguished guests, ladies and gentlemen. First of all, let me congratulate IPS on your 35th anniversary. Thank you for inviting me to join this session on “Revisiting Housing”.


Let me start by sharing an experience I had in April this year. I received a delegation of visiting MPs from the UK and they came to Singapore because they were interested to know more about our public housing policy.

I was struck by a remark they made: “In London where there are jobs, it’s hard to find affordable housing, especially for the young. In places outside of London where there is more affordable housing, it’s harder to find jobs.”

This is a conundrum that applies not only to the UK but housing markets in general, where there are fewer restrictions on buying and selling properties. That is because the prices tend to reflect where people want to live, and people want to live where there are good jobs and economic prospects.

This is true whether people prefer to buy or rent. When rents go up, because the yield goes up, so will the asset price which is the home price.

People move to, and want to remain in, cities where there is growth. But they also find themselves spending a large part of their income on housing – either on rent or mortgage payment. A commonly used measure for housing affordability is the ratio of median home price to median annual income, or HPI.

The Urban Land Institute has an Asia Pacific Home Attainability Index, and there’s a 2023 edition. This index covers 45 cities, and it shows that the HPI of major cities like Beijing or Tokyo can go up to something like 29 times.

It’s not easy to be a city that is both attractive to live in and one which offers affordable housing to most. Unless considerable restrictions are placed on the buying and selling of housing.

Our public housing policy: providing affordable homes even as Singapore continues to grow and prosper

Singapore is a city but we are also a country. Since we are without natural resources, the Government has to focus on economic development and job creation in Singapore – and this means we are committed to making Singapore a vibrant and attractive place to live in.

At the same time, we have no countryside with lower-cost housing that our people can consider leaving the city for. So we must ensure affordable homes for Singaporeans - especially for younger home buyers as well as households with lower incomes.

The Government recognised from the outset that housing cannot be left entirely to private sector provision and market forces. We intervene in the housing market, most significantly through the provision of an extensive public housing programme.

Our public housing programme developed, very early on, a focus on home ownership, not just the provision of shelter, because we believe this gives Singaporeans a tangible stake in our country.

The rights of HDB ownership include being able to sell one’s flat in the open market, including to some buyers who might not be eligible to buy a new flat from the HDB, or those who have more urgent housing needs or specific preferences, such as location.

The resale of HDB flats was introduced in 1971. Compared to selling back to HDB, owners can realise the market value of their property, as price is determined by what the buyer is willing to pay.

Beyond consuming it as a home, a homeowner has the option of selling his flat to a willing buyer, or monetising it by means of renting out their rooms or the whole flat, or taking part in the Lease Buyback Scheme.

Prices in the resale market do fluctuate, and may even sometimes fall, but they have generally moved upwards over the past decades in line with economic conditions and growth in wages.

This is an important way for HDB homeowners to share in the fruits of Singapore’s economic success. This is especially meaningful for those who are no longer economically active, such as seniors and retirees.

Our public housing policy is part of our answer to the conundrum that I mentioned earlier in the speech, which is to make Singapore attractive to live in, while also offering affordable housing to citizens.

It is a two-pronged approach -- subsidies and grants from Government to ensure affordability for buyers, coupled with an active resale market.

The resale market provides a robust way for determining the value of the flats, while new flats are priced based on buyers’ incomes and affordability, not to recover cost.

We have been using the HPI to track how affordable public housing has been in Singapore. Another way of doing so is via the Mortgage Servicing Ratio (MSR), and that measures the proportion of income used to service housing mortgages.

The HPI and MSR of 4-room new flats in non-mature estates and their historical equivalents have generally remained at around four to five times and 25% or less respectively. That is no different from 40 years ago, as prices of new flats rose in tandem with incomes.

We have made many adjustments to public housing policy over time to keep pace with changes in citizens’ aspirations and market conditions.

Where allocation of new flats is concerned, we certainly made adjustments. We went from a balloting system, to the Registration for Flats system in 1994, and to the Build-to-Order or BTO system in 2002. So well known is the BTO system now that people popularly refer to HDB flats as BTOs.

We have also sought to provide “in-between” housing products for those whose incomes might be higher but find private housing out of reach, such as the former HUDC scheme, and now we have Executive Condominiums or ECs.

These adjustments were made while HDB was constantly improving built quality, as well as the connectivity and amenities in our heartlands.

Concerns over housing prices may prompt calls to revisit public housing model

We are now in a period of heightened anxiety over housing prices and affordability.

There are many reasons for this – global inflation, geopolitical conflict and tensions, uncertain economic outlook, and also a sense of disequilibrium as economies and entire industry sectors recover unevenly from the impact of the COVID-19 pandemic.

Locally, we are still in the process of overcoming the construction delays caused by the COVID-19 pandemic, which in turn led to short-term housing shortage and a rapid rise in resale prices and rents.

We recently went through a 2-day Parliamentary debate about housing affordability and accessibility in February. But concerns about housing prices persist, and understandably so, because the global and regional economic outlook has not yet improved, while the measures we have taken to address imbalances in the local housing market have yet to take full effect.

These concerns continue to drive discussions and suggestions to revisit our housing model, all with the hope of making BTO and/or resale flat prices significantly lower, and preferably within a short time.

I believe many who are here in the audience – not just my fellow panellists – come ready to share your ideas, or at least you want to hear what is being considered and why.

What are some of these suggestions to cool housing prices? I think they tend to be along the following lines:

a) One approach is to limit demand and/or liquidity. Government has in fact been doing this periodically over the years when circumstances warrant, such as adjusting the loan-to-value (LTV) ratio and also, more recently, adjusting the credit assessment floor in terms of interest rate assumptions.

b) Another approach is to question the basis of valuation altogether, especially the valuation of land. Now, based on this argument, if land cost doesn’t need to be counted, then public housing can be made available at much lower prices. The Government has addressed this issue of why land cost cannot be at zero over the years, and most recently during the February debate in Parliament. I don’t propose to go over this in detail here.

c) But let me mention a third approach, which calls for a review of the balance between housing as a consumption good and housing as a form of investment. Now, this call to revisit the balance between these two roles of housing would involve more changes and restrictions on resale and various forms of monetisation, again in the hope of dampening prices. There is a most radical version of this which we have heard from time to time, which is to just do away with resale market altogether, and for people who no longer need their flats, just sell back to HDB. But there are more moderate versions of this, and essentially, it’s about fettering the resale market in the hope that prices will also come down. 

Public housing is primarily for owner-occupation

I am aware that my fellow panellists have been pondering the question of housing as investment vs housing as consumption. I am sure during the panel discussion or the Q&A session, you might hear suggestions for the Government to “move away from public housing as investment”, so I am glad for this opportunity to set out some views here first.

Public housing is focused on owner-occupation. This means using the HDB flat primarily as a home.  But there is also flexibility which is part and parcel of ownership.  For example, HDB has relaxed the rules on use of flats as home offices.

Many HDB homeowners have come to view the ability to monetise through renting out of rooms or whole-flat subletting, and participating in the resale market, as important elements of ownership.

The Government sees no reason to prevent flat prices from appreciating in line with economic conditions, because the benefits do accrue to home owners. But we consider volatile price fluctuations to be undesirable.

Sudden and significant drops in prices are clearly detrimental. But we are also concerned when HDB resale prices rise too quickly, because: we do need to minimise distortions in the market, such as windfall effects; and, very importantly, subsidies and grants which we deploy to make housing affordable to a wide range of buyers, must be at a level that Singapore taxpayers can afford over the long term.

And we certainly discourage speculation. HDB will adjust policies to strengthen the owner-occupation intent of public housing when necessary: For example, investigating claims of BTO flats being sold in violation of the Minimum Occupation Period; or tightening rules on non-selection of BTO which we’re going to do from the sales exercise this August onwards.  

What we are revisiting

The theme of this session is “Revisiting Housing”. And I would like to speak about the policy parameters that we have been revisiting because, after all, housing policy regularly undergoes adjustments. 

Addressing Windfall Effects and Stratification

Let me begin with the ‘windfall effect’ that I have just mentioned. This windfall effect arises when eligible home buyers who were lucky enough to obtain particularly sought-after units, sell them in the open market after the Minimum Occupation Period (MOP), and realise large financial gains.

There is a large difference between how the market values such flats, and what the Government prices them at in order to make them affordable to more buyers.

This windfall effect causes unhappiness among equally eligible home buyers who did not manage to obtain such units in the first place. And motivates even more people to apply for flats in highly desirable locations – even if they don’t really need one to live in.

Another effect that we were concerned about is the likelihood for highly valued HDB neighbourhoods to stratify along income lines, otherwise known as gentrification, once the units start to change hands in the open market after MOP ends.

Now, the subsidies that are embedded in the initial prices set by HDB might allow less well-off buyers to be the first owners of such units, but if there is no intervention in the resale markets, then these units may transact at very high market prices that can only be afforded by higher-income buyers. And this would make our neighbourhoods and some of our HDB heartlands less inclusive.

Some of you would have heard about the Prime Location Housing (PLH) model that we have recently introduced, and it seeks to address this through measures that include: a longer MOP; restrictions on who the owner can sell the unit on to subsequently; and also recovery of the additional subsidy that was required to price the new flats within the reach of more buyers.

These PLH requirements did add significantly to the existing restrictions on resale that apply to all HDB flats. Some might consider these to be fetters on the open market. Indeed we do not take these decisions lightly.

But we felt it was important to make these changes to strengthen the owner-occupation intent of public housing and keep neighbourhoods as inclusive and for as long as possible.

New housing typologies

The next area we are revisiting concerns housing typologies. Many Singaporeans would be familiar with the HDB standard configurations, whether 3-Room, 4-Room or 5-Room. These flat types have served the needs of the majority of Singaporeans well over the last 50 years.

However, as our economy and lifestyles evolve, housing aspirations also changed. Coupled with an ageing population, how we design our flats would need to change. Keeping to the status quo would not meet the needs of our people.

So public housing must continue to evolve. One example of how we have evolved is through the introduction of a new housing typology, the Community Care Apartments (CCA), and this was introduced in 2021.

These CCA flats are tailored to meet seniors’ needs, with senior-friendly design and fittings inside the flat, and communal spaces for seniors to participate in social activities and interact with their neighbours.

This is a particularly new feature of CCAs compared to our existing typologies. These flats are bundled with care services that can be customised based on seniors’ needs to help them remain healthy and active as they age. We are heartened that the initial response to the CCA flats has been positive, and we will continue refining the model as we gain experience.

Our public housing reflects our commitment to be pro-family. But the government is also aware of the aspirations of singles. Compared to before, there is greater demand for housing from singles.

As part of MND’s Housing Conversations with Singaporeans, we have started engaging singles, among other groups like first-timers and seniors, to hear their views and aspirations on housing.

They have given us interesting and creative ideas, such as considering how we can meet the needs of single parents better, or designing new flats with more compact personal spaces and larger communal areas in a public housing context, akin to co-living spaces. Or could we perhaps enable intergenerational housing, a model that has been implemented overseas? We will take in various ideas as we chart the next chapter of our public housing story.

How we classify estates

There is another area that we are revisiting and that has to do with how we think of HDB estates.

Our estates are currently classified into Mature Estates or Non-Mature Estates. To many Singaporeans, this has become short-hand for how well-equipped with facilities and amenities a town is, and the desirability of having a flat there.

We see this being reflected in the prices of flats in Non-Mature and Mature Estates, where flats in Mature Estates generally fetch higher prices.

The classification has policy implications too. Eligibility conditions and allocation policies for new flats, such as the proportion of flats that we prioritise for first-timer families, are currently tied to this classification.

We know, however, that the distinction between Mature Estates and Non-Mature Estates is not always very clear. Some locations within Non-Mature Estates feature amenities and connectivity that are as good as older town centres. Conversely, some locations within the boundaries of Mature Estates may be less sought after because of site-specific characteristics.

The Government has therefore been rethinking the relevance of the ME/NME classification. This will have an impact on policy, because the current classification guides how we focus our efforts on making public housing affordable and accessible. We hope to share more on this soon.

Addressing Immediate Concerns

I have shared some policy parameters that we are revisiting. But even as we do this, there are immediate concerns that the Government has been working on. Whether it is about: catching up on our BTO building programme; meeting the strong demand for public housing; or addressing high rental prices.

As of May 2023, HDB has successfully delivered over 60% of the delayed BTO projects over the last 2 years. HDB is working hard to deliver the remaining projects.

We are also on track in ramping up on our BTO supply, by launching up to 100,000 flats from 2021 to 2025, including more flats with shorter waiting times. We also hear the concerns of younger homebuyers who urgently need interim housing before their BTO flats are ready, and who feel daunted by the current state of the rental market.

Previously, we shared that HDB will be increasing the supply of Parenthood Provisional Housing Scheme (PPHS) flats from 800 units in 2021 to 1,800 units in 2023. I am happy to share that we have achieved this target, and will in fact supply close to 2,000 PPHS flats by the end of this year. As a result of this doubling of supply, PPHS application rates have come down significantly from over 20 times in 2021, to around 3 times now.

But we understand that buyers who booked their flats in the past two years have experienced longer waiting times because of the delays caused by COVID-19.  So, HDB is hard at work to increase the PPHS supply further, doubling it again to 4,000 units over the next two years. 

We hope these efforts will bring about some relief to the young families, and to support their parenthood journeys.

Nonetheless, we recognise that there is sustained demand for such flats, while supply remains limited.  Hence, we are studying ways to further maximise the available pool of PPHS flats, such as requiring flat sharing for the larger PPHS units.  This will allow more homebuyers awaiting their HDB flats to benefit from subsidised market rental.

There will also be almost 40,000 home completions across the public and private residential markets – the highest number of home completions in the last 5 years. Households that are currently renting on a temporary basis while waiting for the completion of their new homes will likely vacate their units, thereby easing the pressure on the rental market.

We have started to see some of these efforts take effect. For the most recent BTO launch in May that concluded last week, the median first-timer application rates for 3-room or larger flats was around 2.3 times, and this is closer to pre-COVID levels. HDB resale prices also saw its smallest increase last quarter in more than two years.


We are entering a new phase of our nation building, amidst a broader economic environment that remains extremely uncertain. The global economy, according to some analysts, may experience a shallow downturn in the coming quarters. Mortgage rates are likely to stay elevated for some time.  We therefore encourage households to exercise financial prudence.

Being core to the Singapore way of life, our public housing policy will need to be revisited and adjusted regularly.

I want to thank IPS for the opportunity to speak on what we are revisiting, and look forward to the panel discussion and Q&A. Thank you.