The issue of affordable housing weighs heavily on the minds of aspiring homeowners in Singapore.
With tough times expected ahead, many wonder whether public housing in Singapore is still something they can afford down the road.
Deputy Prime Minister Lawrence Wong assured the public that there was no need to worry as housing loans can still be serviced by a quarter of a household’s income.
Source: Lawrence Wong on Facebook
Even though prices have risen considerably compared to four decades ago, the incomes of the people have also gone up at the same time, making BTO flats stay affordable.
Here are highlights of what he said on public housing in his May Day Speech at Suntec Convention Centre on Monday (1 May).
According to Mr Wong, affordability shouldn’t be measured by looking at the headline price of a BTO flat.
Also consider how prices relate to income, as well as the proportion of income needed to service the housing loan.
He recounted a recent conversation with a union leader, who lamented that a 4-room flat in the 80s cost only S$40,000.
Source: Lawrence Wong on Facebook
While that’s true, Mr Wong also said the median household income was around S$900 then. The typical household would use about a quarter of their income to service the loan.
As for the situation today, prices have risen tenfold. The price of a 4-room flat in a non-mature estate like Bukit Batok is about S$350,000.
“But the median household income has risen tenfold too, from S$900 to S$9,000 today. So BTO flat prices have moved in tandem with incomes,” he noted.
“What I’ve just described does not include the housing grants of up to $80,000 for first-timers, which make the flats more affordable for them,” he said.
With this comparison, Mr Wong stressed that BTO flats remain affordable. “The typical household now continues to use less than 25% of their income to service the loan, like in 1980.
“And the vast majority of our first-time homebuyers today service their housing loans through CPF contributions, with very little or even no out-of-pocket cash,” he said.
He added that the Government will continue to provide affordable and quality public housing.
We’ve created the world’s best public housing. You go anywhere in the world: No country has public housing of the quality that we do.
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Featured image by MS News.
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