Prices for governmentbuilt public housing surging
Singapore, with a home ownership rate of 80%, is feeling the heat.
HUNDREDS of public housing apartments in Singapore, one of the world’s most expensive cities, are being sold for over one million Singapore dollars ($NZ1.17 million) as Covidrelated construction delays create a shortage of new units.
At least two units have surpassed the milliondollar mark in US dollars, and the high prices are fuelling talk of new government measures to try to cool thriving property markets.
The Southeast Asian citystate’s public housing system — which sells governmentbuilt apartment units directly to citizens on a 99year lease — has led to over 80% of Singaporeans owning their homes, one of the world’s highest rates.
Many units, known as Housing and Development Board (HDB) flats, are conveniently located near train stations and malls and cater to various socioeconomic groups.
As ownership is transferable to both citizens and permanent residents after five years, a resale market has emerged. Some apartments originally bought for about $S500,000 are now fetching double that, depending on size and location.
The most expensive resale public flat, a spacious 122sq m unit close to train stations and schools and with 92 years’ lease left, sold this year for $S1.418 million.
For decades, Singaporeans have used their HDB flats for extra cash by renting them out or reselling at a profit.
‘‘Milliondollar HDB flats are here to stay, as there will always be people who like to live in central locations or larger spaces but unable to afford private condos,’’ Clarence Long, who brokered a 113sq m public flat sale for $1.4 million in May.
‘‘If you’re looking at private condo of similar size in the same location, the price could easily be $2.5 million,’’ Long said.
Unlike HDB flats, private condos in Singapore typically have security guards and facilities including swimming pools and gyms.
Most firsttime public flat buyers can apply for government housing grants and loans, making them less affected by rising bank interest rates, and keen to exit the rental market that has also soared amid the pandemic.
‘‘The monthly mortgage for my HDB flat is about $3400. This is much cheaper as the rental for a similar flat now will be about $5000,’’ Rajiv Malhotra (45), who bought a 94sqm public flat for $1.08 million last year, said.
The proportion of monthly income used for mortgage payments has for three years remained at about 23% on average for public flat buyers with government loans, the government said late last year.
While milliondollar flats are still less than 2% of total transactions, a record 259 public flats have been sold for $1 million or more last year, official data shows, and there have already been about 230 by August this year.