The prices of new flats will become almost 30 per cent cheaper to keep the Singapore dream of home ownership alive, National Development Minister Khaw Boon Wan pledged yesterday.
The ambitious goal makes clear the Government's commitment to "restoring and maintaining" the affordability of flats for first-time home buyers, he told Parliament.
Hinting at a fundamental redesign of public housing, Mr Khaw said that he wants new flat prices in non-mature estates at around "four years of salary" - what they were before the property bull run of the last six years began.
That is, new homes in non-mature estates will be priced at four times the annual median income of flat applicants.
This would mean a sharp drop from current prices, which are about 5.5 years of salary.
Referring to young first-timers, the minister declared that "their Singapore dream of owning their own homes, like their parents', is safe".
He already broke with HDB convention in 2011 by delinking Build-to-Order (BTO) prices from the rising resale market when he took over the housing portfolio.
This meant that while the resale market has risen 12.5 per cent since, prices of new flats launched have stayed stable. Since 2007, when the current property upswing began, the resale price index has spiked 95.8 per cent.
Yesterday, Mr Khaw made clear that he would be going much further than price stabilisation.
Bringing down BTO prices in non-mature estates will be partly through market cooling measures, and "partly by seeing if an alternative housing option can be designed", he said.
He did not elaborate, but analysts said the remark portended major policy changes - perhaps shorter flat leases or different classes of new flats.
In a budget debate speech chock-full of policy announcements, Mr Khaw answered calls from MPs to meet the housing needs of groups that have been on the sidelines in the first half of his term. He had something for everyone, from singles and divorcees to second-timers and young couples waiting for their new flats to be built.
Fulfilling a promise Prime Minister Lee Hsien Loong made in last year's National Day Rally, he announced that singles aged 35 years old and above will be able to buy new two-room flats from July.
The first batch will likely be in Sengkang, but only those earning $5,000 and less a month will be eligible, he said, as they face the most financial difficulty in getting housing.
Lower-income families looking to buy their second new flat will now get double the chance: 30 per cent of two- and three-room flats in non-mature estates will now be for second-timers, up from 15 per cent. Of this 30 per cent, 5 per cent will be reserved for divorcees or the widowed who have young children.
The new scheme for young families waiting for their new flats to rent subsidised flats from the HDB in the interim will also now be extended to young, childless couples. SLP head of research Nicholas Mak said that Mr Khaw's plan to slash BTO prices would reverberate through the entire property market. Demand may drain from the resale market to the new, cheaper flats.
But with construction costs rising and curbs on foreign workers, he feared the Government might fail to meet its promised supply.
Teacher Lim Yan Han, 24, welcomed Mr Khaw's message but said the proof of the pudding was in the eating. She and her engineer boyfriend have failed in four ballots for new flats, three in mature estates, and one in non-mature. "It is already so competitive. I'm worried that lower prices will mean more people competing for flats."
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