New HDB flats more affordable than housing in comparable cities: Desmond Lee

Oct 04, 2022

IN Singapore, a first-time home-owning couple with a new four-room Housing Development Board (HDB) flat in a non-mature estate would have a median home price to median household income ratio of four times.

As a broad comparison, the ratio in other comparable cities such as London, Los Angeles and Sydney is much higher – at eight to 15 times.

This is based on the assumption that the Singapore couple are fresh graduates with a combined salary of about S$6,500.

If the first-timer household is earning about S$5,000, which is slightly less than the 30th percentile of resident household incomes, the home price-to-income ratio is around five, meaning the price of their home is about five times their annual household income.

In Hong Kong, the ratio is more than 20 times.

National Development Minister Desmond Lee said this in Parliament on Tuesday (Oct 4), while reiterating the government’s commitment to keeping public housing affordable, and making it possible to meet Singaporeans’ aspirations of owning their own home.

In response to questions from Yip Hon Weng (Yio Chu Kang) on the affordability of HDB flats, Lee recapped the rationale for the property cooling measures announced on Sep 30, explaining that they were meant to moderate demand in the HDB resale market to ensure that they remain affordable, as well as to encourage prudent borrowing amid a rising-interest-rate environment.

For HDB flats, the measures include an interest rate floor of 3 per cent, used for computing the eligible loan amount available to borrowers seeking HDB loans for public housing.

The loan-to-value limit for HDB housing loans has also been cut from 85 per cent to 80 per cent.

Additionally, there is now a wait-out period of 15 months for private residential property owners, as well as for former private property owners looking to buy a non-subsidised HDB resale flat.

Lee said the wait-out period aims to moderate demand and slow the momentum of price increases in the HDB resale market by deferring demand from private property owners.

Flash estimates released yesterday showed that HDB resale prices rose 2.4 per cent in the third quarter of 2022.

Year on year, resale prices are up 11.4 per cent; overall prices climbed by 7.8 per cent in the first nine months of 2022.