HDB flat prices should not include land cost: PSP’s Leong Mun Wai

Singapore Housing Affordability: A Critical Analysis

Key Concepts:

• HDB Flats: Public housing in Singapore.
• BTO (Build-To-Order): A type of HDB flat where construction only begins when a certain percentage of units are booked.
• Land Cost: The cost of the land on which HDB flats are built, charged by the government.
• Prime and Plus Scheme: Government initiatives to moderate BTO prices.
• Affordable Home Scheme: A proposed scheme by the PSP (Progress Singapore Party) to remove land costs for Singaporeans buying HDB flats.
• HDB Deficit: The financial shortfall in the HDB budget, attributed to land costs and increased construction costs.
• GST (Goods and Services Tax): A consumption tax levied on goods and services.
• Speculation: Buying property with the expectation of profiting from future price increases.

1. Escalating HDB Flat Prices:

• The speaker highlights the rising cost of HDB flats, citing an example of a three-room flat in Queenstown selling for $935,000.
• The speaker argues that despite government efforts to increase the supply of HDB flats, an overall strategy is needed to control escalating public housing prices.
• The speaker claims that BTO prices would have exceeded $1 million without the Prime and Plus schemes.
• The speaker asserts that under the current system, HDB prices, including BTO prices, will continue to rise rapidly.

2. PSP's Affordable Home Scheme:

• The PSP proposes an "Affordable Home Scheme" where Singaporeans who want to live in HDB flats would not need to pay land cost.
• The speaker believes this scheme would significantly improve the lives of Singaporeans.
• The PSP intends to push for this scheme in parliament if elected.

3. Land Cost as a Burden on Singaporeans:

• The speaker argues that the current system places a significant burden on Singaporeans because the government charges an unaffordable land cost for BTO flats.
• The speaker claims that all Singaporean taxpayers effectively pay for this land cost.

4. HDB Deficit and its Implications:

• The speaker notes that the HDB deficit has been escalating due to:
  • Higher land costs charged by the government.
  • Increased construction costs resulting from the government's response to past policy failures in increasing HDB supply.
• The speaker argues that the HDB deficit, driven by subsidizing land cost that goes into the reserve, will burden the budget, leading to higher taxes for Singaporeans.
• The speaker estimates the HDB deficit to be in the region of $5 to $7 billion per year.
• The speaker contrasts this deficit with the estimated $3 to $4 billion in additional revenue from a 2% GST increase (as per the government's 2022 debate estimates).
• The speaker suggests that eliminating land costs could save $5 to $7 billion, which could be used for other purposes.

5. Government's Role in Encouraging High Prices and Speculation:

• The speaker accuses the government of encouraging high HDB prices.
• The speaker claims that the government's policies have encouraged speculation in the HDB market, particularly for BTO flats.
• The speaker argues that this speculation distorts the original purpose of public housing, which should be to provide a roof over people's heads, not an investment opportunity.

6. Notable Quotes:

• "Singaporeans who just want to live in HTB flats do not need to pay land cost." (Referring to the PSP's Affordable Home Scheme)

7. Logical Connections:

• The rising HDB prices are presented as a problem that necessitates a solution.
• The PSP's Affordable Home Scheme is presented as a solution to the problem of high HDB prices.
• The HDB deficit is presented as a consequence of the government's land cost policy.
• The HDB deficit is linked to the need for higher taxes, creating a negative impact on Singaporeans.
• Speculation is presented as a distortion of the original purpose of public housing, driven by government policies.

8. Synthesis/Conclusion:

The speaker argues that the current system of HDB pricing, particularly the inclusion of land costs, is unsustainable and burdens Singaporeans. The speaker advocates for the PSP's Affordable Home Scheme, which would eliminate land costs for HDB buyers. The speaker criticizes the government's policies for contributing to high prices, speculation, and a growing HDB deficit, ultimately leading to higher taxes for Singaporeans. The main takeaway is that a fundamental change in the approach to HDB pricing is needed to ensure affordability and prevent further financial strain on Singaporeans.