PM Lee's NDR promise: Every Singapore family who is working can afford their home

The government will continue to maintain the value of HDB flats for old age but at the same time, keep flats affordable to future flat buyers, said PM Lee during his National Day Rally speech on Sunday.

"I will make sure every Singaporean family who is working can afford their home," he said in a key cornerstone of his three-hour speech delivered from the ITE auditorium in Ang Mo Kio.
 
For starters, the government will make sure that families with a monthly household income of $1,000 will be able to afford a two–room Housing and Development Board (HDB) flat. The government will not reduce the prices of Build-To-Order flats but will provide more support through several financial assistance schemes -- such as the existing Additional CPF Housing Grant (AHG).

PM Lee also assured families with total earnings of $2,000 per month will be able to afford a three-room flat while those earning $4,000 will be able to afford a four-roomer. The Special Housing Grant of up to $20,000 — initially given only to low-income households to help them buy two and three-room flats at a lower price — will now be extended to middle-income families.
 
Playing the role of an HDB "housing agent", PM Lee gave an entertaining but detailed cost breakdown for families buying three and four-room flats at Fernvale Riverwalk respectively.
 
A three-room flat which typically costs $170,000, can be bought by a family earning $2,000 per month. Such families will be able to do so through a combination of grants that can amount to $55,000 and the ability to pay through their CPF account, leaving them with almost no cash payments, said PM Lee to a round of applause.
 
Meanwhile, a four-room flat which typically costs $285,000, can be bought by a family earning $4,000 per month through grants that amount to $35,000. Payment through their CPF account will leave them with a monthly cash payment of only $67.
 
The financial assistance provided to families will help them pay off their loan faster -- within a span of 25 years instead of the usual 30.
 
Factors still to be addressed

Housing issues was one of the hot button topics identified during the year-long Our Singapore Conversation (OSC) exercise.

And while many Singaporeans Yahoo! Singapore spoke to welcomed the announcements, they also said  some areas that still have to be addressed.

Freelance make-up artist Nurhidayah binte Saidon, 25, who recently bought a four-room Build-To-Order flat, said, “I think that these grants are helpful for families who cannot afford flats. However, I think the root problem is the supply of flats. Balloting for flats is very competitive. It took me five times to ballot before finally getting a house. This issue of housing should be addressed.”
 
For bank executive Andy Quek, 29, and fiancee Jean, 25, the price of a HDB flat is not a problem as they can "depend on their CPF account to cover the cost". However, the problem lies in the long wait before a flat is ready.
 
Quek said, “Couples still have to wait three to four years for their homes to be ready. So there is a big group of people our age who have to wait so long to get a home, get settled and have kids. It’s still very stressful for us. “
 
Marketing executive Adrian Matthew, 26 and his girlfriend Rani, 23, welcomed the housing grants.

“I think I can safely afford a three-room flat now based on the new schemes and subsidies," he said.
 
“Of course, I hope the government can make housing even cheaper, but I guess it’s not realistic if the houses are worth nothing in the long run," added Matthew, who earns about S$3,000 per month.

"I just think there must be something really wrong if the government keeps having to subsidise people like us who are considered middle-income wage earners. There's a real income inequality problem here and they need to address it.”
 
Head of consultation and research at SLP International Property, Nicholas Mak, said additional grants will help families who want to buy BTO flats, even though they are already subsidised by the government.
 
“They [grants] are still needed due to inflation… there is also further a need to widen the coverage of assistance to families,” he said.
 
"Cooling measures and housing grants should go hand-in-hand to improve affordability of houses in Singapore."