What it should have been

The Progress Singapore Party's (PSP) proposed "affordable homes scheme", where Build-To-Order (BTO) flats are priced primarily on construction costs, will take Singapore backwards to a time when flats served as just shelter and not an asset, National Development Minister Desmond Lee said on March 7.

- Ng Keng Gene

"They want to go backwards, to the time (when) housing was a shelter and an expense, and did not serve as a store of value and assurance for retirement, where Singaporeans did not have a stake when they leave, according to the affordable homes scheme, just return (the) keys and move on," said Mr Lee, who questioned if this was really what Singaporeans wanted.

Mr Lee said that this will be "a major change from the social compact we have had all these decades", noting that it was in the Housing Board's early years, from 1968 to 1987, that flat prices were fixed to recover costs.

Today, HDB prices BTO flats by determining their market value based on factors such as location and size, and then applies a discount to keep them affordable. It also gives out means-tested grants on top of the market discounts.

These flats are not priced to make a profit, or recover land and construction costs.

Mr Lee was responding to Non-Constituency MP Leong Mun Wai, who compared the cost of buying an HDB flat in 1979 with present-day costs to argue that Singaporeans are worse off now than in the past. Mr Leong made these comments during the debate on the Ministry of Manpower's budget on March 6.

Speaking on March 7, Mr Lee said Mr Leong had been selective with his data by presenting the affordability picture for a minority of Singaporeans in 1979, and by failing to mention flat price increases in 1980 and 1981.