Singapore Housing Development Board

AFFORDABLE HOUSING FINANCING AND DELIVERY IN SINGAPORE

Ms Sia Tze Ming Deputy Director, Property Pricing Housing & Development Board, Singapore “Constructing and Financing Affordable Housing across Asia” 2nd – 3rd April 2019

© 2019 Housing & Development Board 1 Outline 01 Overview of Public Housing 02 Delivering Affordable and Accessible Homes 03 Housing Finance and Central Provident Fund 04 Building Vibrant Towns And Cohesive Communities 05 Conclusion

Land area: 724.2 km2

Total: 5.64 million Residents: 3.99 million

Singapore had budget surpluses in most

GDP: USD$361.05 billion years since 1988 Inflation: +0.4% Unemployment: 2.2% Per Capita: USD$64,030

GDP per Consumer capita (US$) price index 60,000 600 Over The Years 40,000 400

20,000 200

0 0 1980 1985 1990 1995 2000 2005 2010 2015 Source: DOS (as at 2018) 01 © 2019 Housing & Development Board Overview of Public Housing 4 Government & Legislation . Centralised, Single level of Government . Address issues based on national-level Key Legislation considerations . High degree of coordination amongst Housing & Development Agencies Act . Political Stability

. Enable continuity in policy implementation Central . Facilitate implementation of necessary Land Provident Acquisition Fund policies, even if unpopular Act (Amendment) Act 1968 . Work closely with people towards a shared purpose 01 © 2019 Housing & Development Board Overview of Public Housing 5 5 years

50,000  HDB built 50,000 flats within 5 years  Housing shortage 1960 : resolved within 10 years HDB formed  Sole Agency, Multiple to address Roles

housing Housing & Housing Town shortage Development Authority Planner Act Master Financier Developer 01 © 2019 Housing & Development Board Overview of Public Housing 6 Land Acquisition Land Acquisition . 1920: Land Acquisition Act Ordinance 1966 :

. Replaced with Land Acquisition Act . Complemented by resettlement policies

 Enabled resettlement of squatters General view of the earthworks at  Freed-up vast tracts of land the Bukit Ho Swee fire site for public use at low cost 01 © 2019 Housing & Development Board Overview of Public Housing 7 Home Ownership Model

1964: INTRODUCTION OF “HOME OWNERSHIP FOR THE PEOPLE” SCHEME

Provide a stake in the country

Provide an asset and Build strong work ethics a store of value

1964 2018 1,449,411 units – 100% PUBLIC PRIVATE 23% of 81% of resident resident HOUSING HOUSING population live in population live in 1,047,350 – 72% 402,061 – 28% HDB flats HDB flats

Waterway Woodcress

New Resale Flats Flats (from HDB) Sell flat in open Primary target group: market after meeting Open to wider pool: the minimum . First-time citizen occupation period . High income earners home buyers . Citizen home buyers . Permanent residents Mechanism . Private property owners* . Build-to-Order (BTO) system; flexibility in location & timing Mechanism . Subsidised price . Price negotiated between

* Subject to disposal of private property within 6 months after resale flat purchase buyer and seller 01 © 2019 Housing & Development Board Overview of Public Housing 11 Eligibility Conditions & Policies NEW FLATS BOUGHT DIRECT FROM HDB

Eligibility Criteria •Singapore citizens •Families (aged 21 and above) / singles (aged 35 and above) •Household monthly income not more than S$12,000 (family) / S$6,000 (single) •Not own private residential property Owner Occupation •One flat per household •No resale or renting out during first 5 years of ownership 01 © 2019 Housing & Development Board Overview of Public Housing 12 Affordable & Accessible Homes

SUFFICIENT SUPPLY SUBSIDIES & GRANTS FINANCIAL PRUDENCE New flats in different sizes Generous subsidies & Generous subsidies & and locations concessionary housing concessionary housing loans loans

310 Sembawang 629 Sufficient Woodlands 2,118 supply Punggol 574 Choa Chu Kang 3,688 Good Yishun Geographical 1,620 1,518 Tengah Sengkang 3,625 Spread Tampines

RENTAL FLATS

2-room Flat 3-room Flat 4-room Flat 36-45 sqm 65 sqm 90 sqm

EXEC PRIVATE CONDOS PROPERTY

5-room Flat 3Gen Flat

NEW FLATS RESALE FLATS

(Sold at a discount) (market price)

Special CPF Housing Grant CPF Housing Grant ($40,000 or $50,000) +

($5,000 to $40,000, tiered Proximity Housing Grant ($20,000 or $30,000) by income)

Additional CPF Housing Grant Concessionary Loan @ ($5,000 to $40,000, tiered by income 2.6%* * Pegged at 0.1% above CPF Ordinary Account interest rate 02 © 2019 Housing & Development Board Delivering Affordable and Accessible Homes 16 Encourage Financial Prudence

. Introduced credit assessment in Apr 1997 to instil financial prudence . Buyers obtain an HDB Loan Eligibility Letter (HLE), or a Letter of Offer from financial institutions, before they commit to buy a flat  To facilitate budgeting for flat purchase  To encourage “buying within your means”

Mortgage Financing Conditions for Borrowers • Mortgage servicing ratio / Total Debt-Servicing Ratio caps • Maximum loan tenure • Maximum loan-to-value

02 © 2019 Housing & Development Board Delivering Affordable and Accessible Homes 17 Central Provident Fund Central Provident Fund Singapore’s social security savings plan (Amendment) Employee’s Employer’s Act 1968 CPF Savings contribution contribution 6%

8% 20% 17% 2337%%

Special Medisave Ordinary 6% Account 8% Account 23% Account

For old age and For hospitalisation For buying a home, paying for investment in expenses and CPF insurance, investment and retirement–related approved medical education financial product insurance

Time For Accumulation of Downpayment • Most First –timer households can save for the downpayment in CPF within 3 years Mortgage Servicing Ratio (MSR) CPF ORDINARY • Ratio of monthly mortgage instalment to household income 23% ACCOUNT New Flat Applicants’ Monthly Instalment Housing Net Price Flat Type Price in Median H/H Mortgage MSR Payable By Grants (Less Grants) 2018 Income Instalment Cash 2-room $122,000 $75,000 $40,000 $1,800 $158 9% $0 3-room $202,000 $65,000 $131,000 $2,700 $530 20% $0 4-room $306,000 $45,000 $251,000 $4,900 $1,046 21% $0 5-room $405,000 $0 $377,000 $6,800 $1,654 24% $90

Mortgage instalment Pay using monthly CPF contribution with minimal cash top-up Less than a quarter of monthly household income Below international benchmark of affordable housing (30-35%)

03 © 2019 Housing & Development Board Housing Finance and Central Provident Fund 19 Town Planning Tengah New Town Great Places for the Community Concept Plan [ reviewed 10 yearly ] • Strategic, integrated long term land use & transport plan guiding Singapore’s development over 50 years • Population Projections Master Plan [ reviewed 5 yearly ] • Statutory and medium term; guiding over 10 – 15 years Neighbourhood • Permissible land use and densities Centres HDB Town Plan • Comprehensive Town Plans with self-sufficient amenities &

• Active role in managing design and construction • Construction carried out by private sector contractors, procured through open tenders • Evolution of design and building technology over the years

189,000

158,000

131,000 120,000 110,000 99,000 97,000

63,000 61,000 54,000 55,000

24,000

1960 - 1966 - 1971 - 1976 - 1981 - 1986 - 1991 - 1996 - 2001 - 2006 - 2011 - 2016 - 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2017

. Bring older HDB estates closer to standards of newer ones . Maintain functionality and liveability of HDB estates

Selective Home Improvement Lift Upgrading Neighbourhood Remaking Our En bloc Redevelopment Programme Programme Renewal Programme Heartland Scheme 04 © 2019 Housing & Development Board Building Vibrant Towns And Cohesive Communities 23 Cohesive Communities

Multi-racial High-rise

Multi-cultural High-density Society living

Social harmony and integration is key

Conscious effort to build social cohesiveness Physical Public Housing Community Design Policies Building

1. Housing Development . Financing of Capital Expenditure Loan/Mortgage Financing Loan/Grant to cover annual deficit . Bond issuance Government 2 2. Repayment . Government loans 3. Bonds/Bank Loan Capital Market/ . Financing of Mortgage Loans to 4 4. Repayment Financial Institutions Flat Purchasers

. Government loans 5. Payment of flat purchase and monthly mortgage repayment using . Financing of Annual Net deficits Eligible flat buyers Central Provident Fund (CPF) under the Public savings/cash . Government grant Housing Schemes 6 6. Mortgage Loan (eligible buyers)

7 7. Capital Expenditure

1950s 1960s 1980s

Punggol Waterway Terrace The Pinnacle@Duxton

2000s

Forward Access to looking, Financing Strong Land and responsive through use Continuous commitment Long-term policies with of Central renewal and from land use focus on Provident rejuvenation government planning Home- Fund (CPF) ownership

$ Continuing economic growth and full employment Prioritising of programmes as resources are limited Meeting the needs of changing demographics, e.g. ageing population Ensuring a stable and sustainable public housing market Ensuring housing remains affordable to both Government and the people