This article first appeared in City & Country, The Edge Malaysia Weekly on March 10, 2025 - March 16, 2025

To keep homes in the city state affordable, the Singaporean government provides citizens with subsidies and substantial discounts in various circumstances through its public housing authority, the Housing & Development Board (HDB).

This means the final price is significantly lower than the cost of a similar flat on the open market. A government loan scheme allows most buyers to cover their mortgage with a state-mandated pension and savings plan.

For example, the priciest 3-bedroom flats in the latest built-to-order (BTO) exercise last month cost S$749,000 (RM2.49 million), less than a third of the price of a new private condominium unit of a similar size, according to Bloomberg.

This is how Singapore has been able to rank at No 11 out of 94 global cities in terms of housing affordability in Demographia’s 2024 report. Its median house price-to-household income ratio is 3.8, far lower than that of New York (7), London (8.1) and Hong Kong (16.7).

Nevertheless, there has been growing discontent among Singaporeans regarding how HDB builds and allocates homes.

First, HDB’s rules favour married couples, pushing Singaporeans into early engagements to get on the ballot for a new home. Then, to secure a new HDB flat, most citizens must navigate the BTO system, which is designed to fairly allocate flats among those who meet the requirements. Prospective buyers must be either married, engaged or at least 35 years old.

Applicants, who are successful in securing a new unit, must wait three to five years for the homes to be built and must live in the flat for at least five years before they can sell it. Some BTO applicants may reject a flat offered by the HDB if it isn’t in a good location, which could affect its appreciation value, or hope for a better unit in a future ballot.

Ganesh Raj Kumaraguru, who runs a local consultancy, secured a BTO flat with his Singaporean fiancée in the north of the city centre last year. “The conventional wisdom in Singapore is to get a BTO — it is almost like an entitlement,” he is quoted by Bloomberg as saying.

His 3-bedroom flat, which will be completed around 2028, costs less than S$700,000. However, the fierce competition for BTO flats took them six attempts to secure a unit.

“It is the best option. There is nothing cheaper,” he says.

Part of the problem is that since 2007, Singapore’s population has ballooned to more than six million people, including an increase of around half a million citizens. As a result, the government has been allocating large tracts of land, including public golf courses and former horse-racing tracks, to increase HDB flat construction. But the spread of Covid-19 and the subsequent lockdowns have driven costs up by almost 30%.

In his parliamentary speech on Feb 28, Singapore’s Prime Minister Lawrence Wong said, “We can and we will build enough housing for every Singaporean household. We are confident that HDB prices will remain affordable.”

He also acknowledged that resale prices “have gone up a lot”, but reckoned that BTO flat prices have risen “in line with median incomes” because of government subsidies.

The country’s residential property market has boomed, with an index of resale flats rising more than 50% in the past five years, compared to a gain of about 20% in median resident household incomes. As prices of private condo units and resale government apartments soared, demand for the much cheaper BTO flats increased.

The increase in resale prices can be seen from the number of units that cost more than S$1 million. In 2020, there were fewer than 100 such sales. Last year, there were more than 1,000.

Nevertheless, the rising construction costs and subsidies have made it increasingly expensive for the government to meet the demand for affordable homes. In the financial year ended March 2024, HDB recorded a loss of more than S$6.7 billion to cover the costs of subsidies, grants and construction.

To cool the resale market, the government has doubled the minimum occupation period for new flats in sought-after or prime locations, introduced partial clawbacks for subsidies on such homes when they are sold and curbed loans for HDB flats.

While HDB flats have traditionally been seen as the first step towards the ultimate goal of many Singaporeans, that is to subsequently own a private condo or landed property that typically comes with amenities not found in HDB blocks, the surge in prices has blurred this vision, according to Alan Cheong, executive director of research at Savills plc.

Nevertheless, he says some newer public housing developments are beginning to feature more upmarket characteristics. For example, a 700ha site in the west — a former military training site twice the size of New York’s Central Park — is now a town called Tengah, featuring giant solar-powered air conditioners, vacuum garbage collection systems, subterranean roads and integrated urban farms.

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