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THE affordable housing scheme proposed by the Progress Singapore Party (PSP) is a step backwards from Singapore’s “strong social compact” on housing, Minister for National Development Desmond Lee said on Friday (Mar 7) in Parliament. 

Housing and Development Board flats are no longer just “simple functional homes” but also a store of value for Singaporeans, which they can monetise in their older years for retirement, said Lee.

The public housing market in 2025 is very different from that of 1979, the minister said, referring to Non-Constituency MP Leong Mun Wai’s assertions comparing HDB affordability for university and Vocational and Industrial Training Board (VITB) graduates in 1979, with affordability today.

Leong had raised these points during the Ministry of Manpower’s Committee of Supply debate the previous day, saying Singaporeans today are worse off than in the past, giving the example of public housing.

In his speech in Parliament on Thursday, Leong said that university graduates earning median wages were worse off today than those in the late 1970s and early 1980s. “Those years were truly the golden age for the Singaporean worker with high starting salaries, plentiful jobs and high CPF (Central Provident Fund) contribution rates of up to 50 per cent.” 

For example, Leong said in the past, the price of a new four-room HDB flat in new towns was S$27,100, around 28 times the median starting salary of a university graduate, or 43 times that of a VITB graduate. 

In comparison, he noted that the cheapest four-room flat at the latest Build-To-Order sales exercise in October was 64 times a university graduate’s median starting salary of S$4,500 a month in 2024.

In response, the minister noted that the vast majority of each cohort today attended an institute of higher learning, versus only about 13 per cent back in 1979.

Keeping prices affordable

Further, HDB flats in the 1970s were “simple, functional homes in estates with few amenities and very limited transport links”, Lee said. “Today, our flats come with modern amenities, far better transport connectivity, offering residents the highest standard of living.”

He also said that there was not a resale market in the 1960s and 1970s. Instead, buyers had to return the flat to HDB “at a sum that was less than what they had initially paid”. 

“There was limited potential for appreciation, it was not quite the store of value,” he said. 

The minister pointed out that public housing flat prices were fixed from 1968 to 1987 to simply recover costs. “This most resembles PSP’s affordable housing scheme. In a way, PSP’s idea is not an original idea, but an idea adapted from the past.”

But, construction costs fluctuate based on various economic factors, such as labour availability, material costs and global commodity prices. This was relatively low in the 1960s and 1970s, but a “turning point” came at around 1979 when construction costs rose 30 per cent, on severe labour and material shortages, said Lee. 

HDB flat prices consequently grew by 15 per cent in 1979, another 20 per cent in 1980, and another 38 per cent in 1981, he said. 

“We’ve long since moved away from the system where HDB flats prices were based on construction costs,” said the minister. Today, HDB establishes the market value of the flat by looking at comparable resale flats nearby, before applying “significant market discounts” to keep prices affordable. 

Under the scheme proposed by PSP, homebuyers do not have to pay land cost – only construction costs – when they buy a new flat from HDB. The payment of the land cost will be deferred and paid upon selling their flat on the resale market. 

“Today, our HDB flats are both a home and a store of value for Singaporeans, which they can monetise in their older years for retirement by selling on the open market, renting out a room or a flat, or through our lease buyback scheme, and so on,” said Lee.

PSP’s proposals are therefore a major change from the social compact Singapore has had all these decades, Lee said. “They want to go backwards to the time where housing was shelter and expense, and does not serve as a store of value and assurance for retirement.” 

“Is this really the kind of Singapore that we want to have?” he said. “We’ve come a long way since 1979. We will continue to look forward instead, to ensure that our policies remain relevant (and) effective in providing public housing that’s affordable, accessible and inclusive for Singaporeans.”