In the Singapore Parliament, we often get quality debates and suggestions regarding housing policy. Some of these, such as the implementation of extra cooling measures, may be unpopular among those in the real estate industry but is essentially good for the average Singaporean. The move to make public housing more accessible to single parents is also highly laudable.
However, what Ang Mo Kio MP Gan Thiam Poh suggested in Parliament on 31 August about removing HDB Build-to-Order (BTO) flat income ceilings was none of it.
When certain MPs deliver ideas that seem ill-informed and/or detrimental to Singapore, it’s the duty of citizens to speak up. Since the subject of BTO income ceilings is housing-related, I felt the need to do so, as the Editor of property portal 99.co.
What Gan said in Parliament
Gan, who was recently re-elected in Ang Mo Kio as part of a five-man team, appealed for the removal of the $14,000 household income ceiling for first-time BTO buyers during his speech in Parliament on 31 August.
He said it would be great if “each and every Singaporean (can) have the chance to get their own BTO flat if they so desire”, calling BTO flats an integral part of the Singapore Dream. (By the way, this is a misreading of the Singapore Dream, which is for every Singaporean to own a home, not a spanking new home.)
To back his argument, Gan spoke of his interactions with young couples who had told him how frustrated they were at not qualifying for the BTO flats, because their salaries had increased beyond the income cap.
“Even though they can afford resale flats and private apartments, they still prefer BTO,” said Gan.
“In today’s environment, with less job security and more market uncertainty, their desire to be more thrifty is commendable and should be supported,” he added.
Gan also called upon the HDB to build bigger flats, but let’s focus on the gist of his speech: Calling for the removal of the BTO income ceiling.
Why Gan’s proposal makes no sense
There’s a lack of logic in every statement that Gan made in his Parliament speech.
On top of that, there is a overwhelming bias in him saying that a new flat is intrinsically better than a resale flat. This is a counterproductive (and even dangerous) viewpoint to hold.
According to housing policy in any country, not just for Singapore, the reasons why new public housing is built are primarily (1) because the population is growing and (2) to replace ageing public housing stock.
Policies for public housing are also shaped so that the lower income segment of the population will get the most access to subsidised housing, and this is the case with Singapore. For example, lower-income households can receive higher grants, which makes homes more affordable but doesn’t improve their chances of getting a home per se.
When it comes to actually getting a subsidised BTO flat, lower-income Singaporeans—who may happen to be most in need of a home and have the fewest housing options—still have to endure the competitive balloting process for BTO flats, because the demand far outstrips supply.
Without measures such as the income ceiling, their chances would be even lower.
The argument for building more BTO flats in tandem with removing the income ceiling is even more ludicrous. Imagine going to a bakery with a row of perfectly edible loaves of bread on display, and then insisting that the baker make a new one from scratch in front of your eyes, just because you prefer Baked-to-Order.
If HDB were to build new flats for every couple, then let’s perhaps rename Singapore to Construction Site. Or maybe give those couples a shovel and pail so they can start to demolish older flats, cost-free, to recoup more land.
Our founding Prime Minister, the late Lee Kuan Yew, once said that governing Singapore is “not a game of cards.” Essentially, he is talking about maturity in thought and not yielding to frivolous and even damaging ideas. Doling up new BTO homes to Singaporeans just because they feel entitled to them is exactly the dross we should call out and denounce.
What’s even worse was that Gan had brought up the Singapore Dream in his speech.
Note that the housing aspect of the Singapore Dream, as espoused by Lee Kuan Yew, is homeownership for all, which became the enduring objective of the Housing & Development Board (HDB).
To twist the definition of the Singapore Dream by putting BTO flats on a pedestal and then conjuring some sort of emotional blackmail in the form of unfulfilled aspirations of young couples, Gan has demeaned the decades of care and thought that our public servants have put behind our housing policy.
Now, let’s make things clear once and for all.
BTO flats, which are sold at a discount to market value, are specifically targeted at lower and middle-income families. The income ceiling is just one of the eligibility rules put in place to maximise the opportunity for this group of Singaporeans to own homes and have a secure roof over their heads.
The current $14,000 income ceiling for BTO flats, I’d argue, is slightly on the high side, seeing that the median household income in Singapore stands at $9,293, according to 2019 figures.
To further enable lower-income households to own a HDB flat without unfair competition, 3-room flats in non-mature estates typically have an income ceiling of $7,000.
And here’s what removing the income ceiling would do. It would completely squeeze out the lower and lower-middle income flat applicants, further reduce their already not-very-high chance of getting a flat, and hurl even more obstacles in their attempt to get ahead in life and attain a greater sense of security (from a starting point that’s more challenging than most of us realise).
Young Singaporean couples, particularly the ones who’ve spoken to Gan Thiam Huat, must learn to be content with their relatively abundant lot. If a couple is earning more than $14,000 and ridicules the prospect of living in a HDB flat they can afford just because it isn’t new, perhaps they should just live with their parents forever.
What are your views of removing the BTO income ceiling? Share your thoughts in the comments section below.
If you liked this article, check out I Survived Homelessness in Singapore for Eight Months, this is my story and You busted the HDB income ceiling. Now What?
[The views of the editor in this article are entirely his own and do not represent the view or position of 99.co.]
About Kyle Leung
Content Marketing Manager @ 99.co
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I think the MP is entirely right and it is your ideas that are ludicrous.
BTOs are the most value for money housing in Singapore. It is because Singaporeans overspend on housing that retirement adequacy is a challenge.
Why should people pay more for a second hand apartment with a shorter lease when they can get a new apartment for a lower price? It is the economically rational thing to do.
Competition for BTO flats can be ameliorated by ramping up building of BTOs. It is not a natural state of things that supply is lower than demand, this is a choice made by the government. If we can build Airport facilities ahead of demand like T5, we can do the same for BTOs.
If housing is affordable, it will also encourage couples to have more children and help solve one of the most pressing challenges we have.
Think you are just thinking selfishly that your site won’t sell BTOs and business will go down.
I am afraid I agree with John above. Your arguments lack any substance or grounding and I struggle to find a place to start rebutting your points. In fact, the whole article is a political rant except for the second last paragraph where you make 1 point (the last sentence is an opinion derived from the point):
“And here’s what removing the income ceiling would do. It would completely squeeze out the lower and lower-middle income flat applicants, further reduce their already not-very-high chance of getting a flat”.
This statement is untrue and bears similarities to the many sweeping statements across the article (e.g. “There’s a lack of logic in every statement that Gan made in his Parliament speech.”). Whilst removing the income ceiling will increase the demand for BTO flats, this problem can be resolved by similarly increasing the supply of such flats (as John helpfully mentioned).
I recognise that there may be other constraints and issues in building more BTO units to keep up with the demand, but those are issues which you have completely failed to engage in. For example, one possible solution could be a more incremental approach by the government (for example, by gradually increasing the income ceiling as supply increases with the goal of matching supply with demand and removing the ceiling) which I assume is already the approach considering how the income ceiling as been raised at a few occasions over the past decade.
Regardless, it is disheartening to see that an article like yours which resembles a casual political rant can be so easily placed on a respected property website. At least respect your readers and try to be abit more objective la…
Alternatively, allow BTOs but at non-subsidised prices for those that are in the higher income range.
Similarly, resale flats has housing grants for those below the $14k household income.
The approximate same level of housing grants (for resale) can be added back to the BTOs for households above the income cap.
In the long term, the grants will also be calibrated and balanced out to make more sense so that the price differential between a BTO and resale flats price is not that wide.
The reason why people want to buy a baked-to-order bread at the bakery is because the freshly baked loaf is $2 while the same loaf 5 hours old loaf on display is selling for $4.
Here is the problem, people whom applied for BTO majority aren’t low income. BTO has become a tool to make money. How many property agent use the phrase to leverage once up 5 years of MOP without cash to upgrade to private property?
I think its high time that either open up BTO to all Singaporean if not make longer MOP ruling, so people buying BTO cannot simply profit from it as an investment tool. However, having said that the ruling should still be flexible to allow BTO to be sold if the buyer chooses to but to be sold in the resale market at the same value as the BTO. This will provide true housing needs people to have access to not only newly built BTO but also resale ones, this will keep prices far stable than the current polices.
For those who wishes to sell at standard resale market value simply have to just hold till the MOP is over, too bad for the earlier buyers and happy for the later buyers over the resale BTO property. Nothing is fair that is life.
Lastly I’ll reiterate BTO HDB should be for stay and not a investment tool!
Now is like a new Apple Ipad cost $500 and a refurbished or 2nd hand ipad cost $800.
Obviously everyone wants to get the new one.
And after that you can sell in the 2nd hand shop for $800…
And of course if you restrict higher income people from getting the new ipad, the cost of 2nd ipads will be pushed higher…
So, because people earn more, they should spend more and buy more expensive houses? They cannot choose to live humbly?
BTO flats should be made available to all, but maybe subsidies can be fine tuned with all the data that we have.
Jobs are no longer forever, just because a couple earn more now, it doesn’t mean they earn more forever.
I think as editor of a popular property Web portal, your views are heavily flawed.
i agree to remove income ceiling for singappre household. a lot of new citizen gotten new BTO flag. Our young Adult who served NS but income more than $14k is not given a fair chance compare to New Citizen who has not contributed as much.
Load of bullshit in some comment.
“So, because people earn more, they should spend more and buy more expensive houses? They cannot choose to live humbly?”
If you want to live humbly then why have a working lifestyle that isn’t humble. A humble family earn only what they need. Also you can live humbly while paying more for your housing. Spending more has nothing to do with you being humble. Being materialistic does. Resale flats are neither luxury housing. They just cost more for all the reasons said above. Anyways the lifestyle now is minimalistic. It can be achieve in any house. If u want to pay less because u don’t want to waste your money in housing then find a resale flat with lesser lease period remaining or get a low income job so that u get entitled to the humble BTO hdb. If you are rich there is no reason why you should pay less and enjoy subsidiaries. Subsidiaries are meant for those who are struggling with low income and those who are single parents. End of the day of u are well off then why u complain about paying alittle extra for housing. What are you saving up so much for if you want a humble lifestyle… best part your cpf helps to cover most of the cost which reaps the benefits of the 4% interest. I have no idea whats the rich people problem. You just want more and more cash in hand . Why not just stay in your parents home? You wont cuz you know u can make profit out of BTO.
My solution would be a gradient in the subsidies instead of a ceiling. In that way rich people can buy their humble bto buy paying more. And they can use it to make profit after 5 years. While those struggling to survive in this country can get the simple housing. Or if not then make BTO only exclusive to the rich and make the resale flat price cheaper for the low income family tk buy. After all a bread that is outside for long should loose its value compared to the baked to order one that comes fresh out of the oven. Resale hdb be looking old fashioned and have tones of problem like gas that is not coming from pipes and windows that are so high up.
Let’s face it, all the wealthy young couple that I know only want to BTO in order to resell in 5 years and make money out of it. It is honestly sad and doesn’t serve singapore.
I am sure if there was a rule that for any family income of 10k and higher, you cannot resale for the next 20years or if you do you lose any profit higher than 2% for inflation that you would make, a lot less people would want to BTO suddenly.
Why not think out of the box to allow the rest of our true blue Singaporeans earning more than $14K to own a BTO at a premium? This premium can then be used as the subsidy for the lower income? As such self sustaining manner, govy do not need to provide any subsidize. This aligns with our current HDB robin hood mindset of robbing the rich to give to the poor… Public vs private pricing huge difference is not the only reason which irks true blue Singaporeans but rather the standard of living. Due to COVID and also with more kids coming along, we need more spaces to work from home and for our kids to roam freely without bumping in tight private spaces…
If this goes through, be prepared for a significant decline in value for current HDB flats owners. There will be a significant decline in resale demand. As of now, older flats are already suffering! Our MP have told us that the value of HDB will be worth NIL by the end of lease. Even for new flat owners, HDB flats will not be an investment but likely a liability instead when we sell. The dream of earning by end of MOP is not likely to happen… why buy a 5 year old flat and pay a premium when you can buy it new?
So if this goes through, will you still want to buy the HDB flat that you know will have a poor resale market?
I agree with your article, and think it would be imperative that BTO flats should only be eligible to Singaporeans who fulfill the income ceiling. HDB is a public agency, and BTO flats are meant to serve the greater needs of the public. In this case, to protect the homeownership right of Singaporeans who earn a lower wage.
For those who exceed the income ceiling need to consider the needs, and income situation of Singaporeans who earn lesser than them, who have lesser financial flexibility when it comes to expensive purchases such as a home.
That’s the mark of a gracious society who thinks for others, and not just about themselves.
The basic intent of public housing is to provide a roof above the heads of Singaporean.
To provide a home for our children to grow.
There is a reason for having income ceiling. It is to ensure lower Income group will have greater chance to own an affordable home.
The more able and wealthy should have a social responsibility to give way to their fellow Singaporean who are not as successful yet.
Our first generation leader set the blueprint right for a cohesive, tolerant and understanding society. A caring society that looked out for each other.
The basic rules and laws ought to be pondered for better understanding of the intent behind such rules and laws.
The law of supply and demand dictates price.
Opening the floodgates to the rich and wealthy to buy a hdb flat for not a need but for an emotional satisfaction or as of right ought to be re-examined.
What motivated the MP to make such a statement is baffling.
We are fortunate to have capable and able Ministers who will be in a better position to educate the reality to the suggestion.
No one has monopoly over compassion but we should not become a society void of compassion.
HDB policies have it’s merits. It has stood the test of time. Read, ponder and mediate on it to understand. Thank you.
[Why not think out of the box to allow the rest of our true blue Singaporeans earning more than $14K to own a BTO at a premium? ]
Then the high income “young couple” will think that am I dumb to pay more to buy a same flat? might as well buy private property ?
The income ceiling there for a reason.
I like the way how some netizens comment on the editor’s point of view of MP Gan’s parliamentary speech. It’s crazy that housing is such a divided topic in Singapore.
As someone who have suffered because of the income ceiling, I at first felt sad that I cannot buy BTO but when looking to buy resale, were still made available to me.
Tiered housing grants should be considered to segregate even for those below the income ceiling. For instance, single-child family grant, mult-child family grant, etc.
Elongating the MOP period for BTOs is a fantastic ideas but it will require parallel review of MOP for private properties.
What I would like to add is that by HDBs are meant for Singaporeans. If one wants to be nationalistic about it, Singapore PRs should not be allowed to own HDBs (BTOs or resale) in any form or another. Surely that will ensure price hikes from BTOs be reduced.
But comparing consumables to public housing is seriously, outright inconsistent.
Hmm, I think you forgot to point out your own bias here …
The BTO market is in the hands of HDB, no property agent has ever set foot in it. So expanding it means shrinking the opportunities for agents. Hence your first bias.
And even worse, this proposal takes a high end market share off the table – the kind agents hope to sweet talk into buying a crazy overpriced private property instead of a good value resale flat. Keep up the hopes of the agents – must be your second bias.
So, as you are not really bringing up any other substancial economic arguments against expanding the BTO market I fear your biases are your actual concern. Understandable, but should be mentioned none the less.
Cheeers,
Hein
John,
I think we should give some thoughts to some true Singaporean couples who could be earning just over $14K and planning to get married but disappointed when they want to apply a BTO. It is seem impossible for them to do so. They may have brought this matter to their MP.
These are the group of Singaporeans been affected. Put yourself in their shoes.
This is just a test ballon so that rich couples can own new homes for BTO in high value areas.
Lots of old HDB housing are nearing their lease. So once these area are redeveloped, selling them back to the common Singaporeans is seems unfair to the rich.
They need a piece of it.
Them being rich is already unfair. What are you talking???
Good to see balance argument in this article. Am not good in this but i can give a real life story….
Ben & wife work hard and got married 3 years later but due to salary over ceiling, have to purchase a resale which was 30% above BTO price as it as the min. average price over valuation. Due to high purchase price, only can sell at no profit.
Ben’s friend – Den & wife, salary below ceiling, bought BTO direct from HDB and profit at 30% after sold the flat. Den upgraded to Executive Condo with the earning from BTO for down payment and plan to sell it after 5 years at further 20% profit since EC will convert to full condo status.
Until now, Ben, despite earning more, is still trying to save up for his down payment for a private condo and Den is looking instead as he have already save up the down payment from the profit gained.
Agreed to have compassion for low earning group. But the above story seen ironic… maybe young couple shouldn’t work so hard first until they get their BTO first…
Then ask that stupid ben to work in a lower paying job and easy job. Lol
Then ask the stupid ben to work a lower income job then he can go buy. Bto and execute his money making strategy and then after join back to his higher paying job lol.
My thoughts. One major motivation for buying BTO flats is to sell them for a good profitafter MOP. Has anyone noticed that the profit is getting smaller and smaller over the years as more and more Singaporeans become eligible for them? As more and more people become eligible for BTO, there will be less and less people buying resale flats. This means resale flat prices will become lower and lower as demand for them drops. A zero sum game…don’t you see?
Well said. Thats is the problem everyone out there to make profit and buy at a discount. So with the ceiling it saves the lower income people and gives them a chance which was initially taken away from them generations ago based on first come first served basis, too make enough money and live without suffering in this country
I agree with the MP, your views are just your views, dont stir!
“Even though they can afford resale flats and private apartments, they still prefer BTO,” said Gan.
Well, of course, BTO besides being nicely designed flats, they present very good profit potential after their MOP! Doesn’t take a genius to figure it out.
Economic uncertainty impacts all Singaporeans, not just young couples. Is the argument of job security and market uncertainty sufficient to justify the removal of BTO income ceiling? Comparatively, it can be said that the extent of impact is likely to be much harder felt on low income families vs couple with high earning power.
The editor may be blunt in his article but he hits the nail on the head.