Singapore’s housing strategy: Balancing affordability and market dynamics

5 min read

In the dynamic landscape of Singapore’s housing market, balancing affordability with market forces has been a significant challenge. Minister Desmond Lee is at the heart of addressing these challenges, whose recent comments and policies shed light on the government’s approach to ensuring that housing remains accessible and affordable for Singaporeans.

BTO pricing and affordability

The strategy behind the BTO pricing

singapore housing affordability
Image credit: nic chi

In an environment where construction costs have surged by nearly 30%, the Singapore government has uniquely priced its Build-To-Order (BTO) flats. Contrary to conventional market-driven pricing strategies, BTO prices in Singapore are based on affordability outcomes, ensuring that price increases do not directly mirror the rising costs.

Affordability measures

The government employs the Mortgage Servicing Ratio (MSR) as a key tool in ensuring affordability. In non-mature estates (NMEs), MSRs are typically maintained at or below 25%. In mature estates (MEs), where locations are more diverse, MSRs can exceed this threshold. This nuanced approach is accompanied by the application of substantial market discounts, making BTO flats affordable across different income levels.

Take a look at our very own MSR calculator!

Support for first-time buyers

A cornerstone of Singapore’s housing affordability strategy is the support extended to first-time buyers. Through the Enhanced CPF Housing Grants (EHG), eligible first-timers can receive up to S$80,000 in grants, with additional assistance provided to lower-income households.

Market measures and interest rates

Response to rising interest rates

singapore housing affordability
Image credit: Ambrose Chua

In response to a significant increase in market interest rates, the government has tightened the maximum amount that can be borrowed for home loans. This includes the introduction of higher interest rate floors for both banks and HDB loans, a move designed to reflect the likelihood of rising interest rates and ensure long-term loan serviceability.

Loan-to-Value (LTV) limit adjustments

The Loan-to-Value (LTV) limit for HDB loans has been lowered from 85% to 80%. This measure aims to encourage prudent borrowing and reduce the risk of future difficulties in servicing home loans amidst uncertain economic conditions and rising interest rates.

Impact on foreigners and and resale market

Foreign ownership restrictions

Singapore maintains strict regulations regarding foreign ownership of HDB flats. Foreigners are not allowed to buy these flats and contribute only minimally to the overall demand for private residential property.

Resale market dynamics

singapore housing affordability
Image credit: Rach Teo

Despite the increasing number of million-dollar resale flats, they constitute less than 1% of all HDB resale transactions. The government has implemented cooling measures, including a 15-month wait-out period for private residential property owners wishing to purchase a non-subsidised HDB resale flat, to moderate the demand in the HDB resale market.

Additional reading: HDB resale grants: How much can you get? (2024)

Overall housing affordability

The government’s prioritisation of affordability

Housing is a key national priority in Singapore. The government has consistently worked to keep public housing both accessible and affordable. This includes providing various subsidies and setting aside a significant quota of BTO flats specifically for first-time families.

Mortgage servicing ratio and loan management

The Mortgage Servicing Ratio (MSR) in Singapore remains below international benchmarks, indicating that more first-time buyers can manage their housing loans with little to no cash outlay. This approach ensures that the dream of owning a home remains within reach for the majority of Singaporeans.


Singapore’s multifaceted approach to housing affordability underlines the government’s commitment to ensuring that housing remains accessible to all citizens. Amidst rising costs and economic uncertainties, this balanced strategy continues to serve as a cornerstone in maintaining the stability and inclusivity of Singapore’s housing market.

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About Azhann Rosmin

Azhann Rosmin is a writer who has 6 years of professional forte. He specialises in writing about real estate and lifestyle topics. His coverage mostly focuses on HDBs, condos, BTOs, and landed houses while also favouring topics of food, nightlife, and technology. He has worked in multiple writing positions that include cryptocurrency, fintech, e-commerce, fashion, and cosmetics. Azhann graduated with a bachelor's degree in Applied Linguistics and also writes poetry.

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