The Singapore Democratic Party has proposed the creation of two separate housing markets to keep property prices in check while increasing the supply of cheaper flats.
During a press conference at the Quality Hotel at Balestier on Sunday, SDP secretary-general Dr Chee Soon Juan launched the party’s 37-page housing manifesto, the result of “months of intense study and debate”. Criticising the current housing policy as a “huge profit-making enterprise”, he said the party’s newly proposed plan hopes to “fix the mess” created by previous housing ministers.
Key to the plan is the introduction of a “Non-Open Market” (NOM) – which will see new public housing being built and sold by the HDB at far lower prices than the status quo. Homes built under this scheme can only be sold back to the HDB, preventing profiteering and thus keeping prices affordable.
SDP predicts that at these lower prices, housing loans will only take between 9-15 years to be repaid, freeing up cash and CPF for Singaporeans to pursue other business interests and investments rather than have their liquidity locked into their homes.
The second market, the “Open Market”, will be where private housing and existing flats are bought and sold. “Open Market” home owners will be given the option to sell their homes back to the government, where they will be compensated.
Their homes are then assimilated into the NOM scheme, give OM home owners the option of having access to their CPF savings locked up in housing loans -- something the SDP says will be necessary when Singapore’s baby boomer generation retires in 15 years and starts facing liquidity problems as some realize their nest eggs are not substantial enough to maintain a decent standard of living.
Stabilising over inflated public housing prices
With both markets present – the NOM there to gradually stabilise and correct over inflated property prices, and the OM there to ensure that there are no sudden drops in value or loss of savings for existing home owners -- the SDP believes that over time, property prices in Singapore will begin to return to normal, affordable rates.
SDP’s housing panel also suggested the building up of “buffer housing” at hand to ensure that supply consistently meets demand – something they say is not happening under current housing policies as young couples postpone marriage and parenthood in the face of expensive and difficult to obtain Built-To-Order flats.
Under the NOM and OM scheme, said panel member Jeremy Chen, a PhD student from NUS Business School's Department of Decision Studies, the significantly more affordable prices SDP proposes are possible because they do not intend to include what is called the “land cost” – explaining that since the government had already acquired over 80 per cent of Singapore’s land at historically low prices, it should not be factoring it into the cost of building public housing.
“Costs should only include labour costs, material costs... public housing is a basic need, and a profit-seeking approach is unacceptable,” said Chen, showing statistics from government e-procurement portal GeBIZ revealing that the true cost of building works put forward by construction companies range between just $75,000 to $170,000 per unit.
Under the NOM and OM scheme, said panel member Jeremy Chen, the significantly more affordable prices SDP proposes are possible because they do not intend to include what is called the “land cost” – explaining that since the government had already acquired over 80 per cent of Singapore’s land at historically low prices, it should not be factoring the cost into the cost of building public housing.
“Costs should only include labour costs, material costs .. public housing is a basic need, and a profit seeking approach is unacceptable,” said Chen, showing statistics from GeBIZ revealing that the true cost of building works put forward by construction companies range between just $75,000 to $170,000 per unit.
“Inclusive” policy – singles, single-parent families not forgotten
SDP also touted its housing policy as being an “inclusive” one which does not discriminate against singles and elderly – two demographics they say fall through the cracks under the current policy.
While priority will be given to families with children or expecting couples, singles will also be allowed under their plan to ballot for flats with everyone else – with restrictions placed only on the types of flats they are allowed to ballot for.
Single-parent families with young children will also be given the same priority as families.
For lower-income Singaporeans who do not have the means to pay for NOM flats, SDP proposes that they continue to rent from the HDB -- but with grants that are more calibrated towards low-wage workers.
“I remember there was a case reported in the newspapers about an old lady who rejected a pay raise, because the raise would put her into a new income bracket where the rise in her monthly rent was more than her actual raise… that shouldn’t be the case,” said Mr Chen.
SDP also proposed a change to HDB’s current Lease Buy Back (LBB) scheme, where elderly Singaporeans in need of income re-mortgage their flats for a sum of money for a limited lease.
“Under SDP’s plan, senior citizens can convert their flats to the NOM scheme in return for an annuity to live on,” said Chen.
This annuity will be based on a basket of goods and inflation-adjusted, which Chen said should represent a “dignified” standard of living.
SDP’s annuity scheme, combined with the NOM scheme, which aims to increase retirement savings, will work to support existing needy elderly as well as reduce the number of Singaporeans who find themselves with not enough savings to retire.
What do you think of SDP’s housing manifesto? Do you think it will make a difference to Singapore’s state of public housing?
SDP's full Housing Policy scheme can be found here