SINGAPORE – Changing the way that land is priced to lower the cost of Housing Board flats will risk destabilising the entire property market, said Deputy Prime Minister Lawrence Wong.
He cautioned against artificially resetting the housing market in this manner.
Mr Wong was responding on Friday to proposals and concerns raised by MPs over housing during the Budget debate.
Some MPs had flagged that the Government’s policy on land value appears to be driving up HDB flat prices, leading to increases in subsidies for Build-To-Order (BTO) flats that may not be sustainable.
“The concern arises because of the current cyclical tightness in the public housing market. The situation will be different once the market stabilises or if you have a down market. So, rather than look at the ups and downs cyclically, the fact is, the land value will ultimately be based on economic fundamentals,” said Mr Wong, who is also Finance Minister.
He noted that there was “a great anxiety that there would be a huge overhang of flats” and Singapore would end up with a price meltdown when HDB resale prices fell for six consecutive years from 2013 to 2019.
But the Covid-19 pandemic disrupted BTO construction, which prompted more people to start applying for flats earlier. Others decided to get a resale flat instead due to the longer waiting time, which drove resale demand, he noted. “So, we had a confluence of both delayed project delivery and increased demand, contributing to the situation that we are in now.”
Adding that there are “no magic solutions” to solve the current housing issues, he said the Government’s approach is to tackle the root cause of the problem by ramping up BTO supply to catch up with the delays that had arisen during the pandemic.