GOVERNMENT PRIORITIES: A LOOK AT SIX KEY AREAS

Housing: Reshaping heartland in a big way

Many flats in mature HDB estates built in the 1970s and early 1980s will start to hit the halfway mark of their 99-year leases over the next 10 years or so. The Government is likely to tear down old flats to make way for new ones under the Selective
Many flats in mature HDB estates built in the 1970s and early 1980s will start to hit the halfway mark of their 99-year leases over the next 10 years or so. The Government is likely to tear down old flats to make way for new ones under the Selective En Bloc Redevelopment Scheme. ST PHOTO: KUA CHEE SIONG
Mr Lawrence Wong has said that one of his priorities is to continue ensuring that housing remains affordable.
Mr Lawrence Wong has said that one of his priorities is to continue ensuring that housing remains affordable.

It might seem that new National Development Minister Lawrence Wong has a pretty simple job ahead: Staying on the course his predecessor set.

After all, the most pressing challenge for public housing - ramping up supply to meet pent-up demand - has largely been met.

Under former national development minister Khaw Boon Wan, the Housing Board launched more than 100,000 public housing units.

The Government has also put in place cooling measures, managing to tame a red-hot property market that, at one point, seemed to be spiralling out of control.

But for Mr Wong, his bigger task lies down the road, and it is a mammoth one: starting the process to reshape the HDB landscape.

BIGGEST CHALLENGE

Improving our HDB towns built in the 70s and 80s to meet changing needs will also be my focus.

NATIONAL DEVELOPMENT MINISTER LAWRENCE WONG

This is because, over the next 10 years or so, flats in many mature estates, such as Toa Payoh and Bedok, which were built in the 1970s and early 1980s, will start to hit the halfway mark of their 99-year leases.

NEW MINISTER'S PRIORITIES

In his first blog post, titled Continue The Tradition; Build The Future, Mr Wong made it quite clear that he has several priorities.

One is to continue ensuring that housing remains affordable and central to the lives of Singaporeans.

His first task on this front is to ensure that the housing market achieves a "soft landing".

This means the housing market should continue to decline, but slowly and gradually, without big shocks that could hurt people with big mortgages.

Soon after the Sept 11 General Election, property analysts started to call for the cooling measures to be lifted to boost the flagging property market.

But it is unlikely he will want to move on this too soon, especially since there are external forces, such as rising interest rates, which could have a severe impact on the property market.

He said as much in comments to the media earlier this month: "The price adjustments that we've seen so far have been moderate compared to the increase in prices that took place very quickly in the past few years. It's still not time yet to unwind the cooling measures. We don't want to risk a premature market rebound."

Then there will be some policies which will need further tweaking, as well as new ones which had been announced just prior to the GE.

These include the Fresh Start Housing Scheme, which gives a bigger financial subsidy to younger, lower-middle income families.

This was introduced during the National Day Rally by Prime Minister Lee Hsien Loong this year, and Mr Wong will have to see the implementation through.

There is also the move, started by Mr Khaw, to combine the existing two-room flat scheme and studio apartment (SA) scheme under the two-room Flexi Scheme.

IMPROVING HDB 'OLD TOWNS'

As for reshaping the HDB landscape, Mr Wong hinted at it in the blog post when he wrote: "Improving our HDB towns built in the 70s and 80s to meet changing needs will also be my focus, so that Singapore remains an endearing home for everyone, always."

The question is, what will the Government do with the flats that reach the halfway point on their 99-year leases? This is the typical age of flats which get redeveloped into new ones.

There is the option of leaving the flats to age naturally and run down their lease, in which case the initial investment by the flat owner will become zero.

Politically, however, allowing this to happen might be tricky, even if the leases will have another 50 years to run.

It is quite unlikely that the Government will allow large numbers of flat owners to be left without homes when their leases run out.

This is almost unthinkable as home ownership is a key pillar of Singapore's political and social culture.

The more likely thing to happen is that the Government will start to ramp up the Selective En Bloc Redevelopment Scheme (Sers), introduced by then Prime Minister Goh Chok Tong in 1995.

This allows the Government to tear down old blocks of flats to make way for new ones. Residents will be rehoused by the Government in nearby estates and given compensation for their homes.

In the past 20 years since Sers was announced, 72 sites have been completed, as at February this year, while another seven are in progress.

Given the scale of the project, with thousands of flats that would need to be torn down and rebuilt, logistics and planning become paramount.

In other words, Mr Wong's biggest challenge will be to ensure that he starts to plan for this huge task which will take years, if not decades, to complete.

But this also means that he will be given a unique opportunity to reshape the HDB heartland in a big way.

A version of this article appeared in the print edition of The Sunday Times on October 25, 2015, with the headline 'Housing: Reshaping heartland in a big way'. Print Edition | Subscribe