Environmental Scanning: Housing Prepared By: Suffyan Othman Brief

Main Issues 1. Lack of rental flats for those who are in the low income bracket (under $1500) 2. High demand for Built to Order (BTO) flats, outstripping supply capabilities 3. Resulting high cost of housing
Background

During the recent general elections, the issue of housing and its affordability was prevalent. The electorate was dissatisfied with the direction the government was taking with public housing and the ever increasing cost. The change in Minister for National Development post-general elections from Mah Bow Tan to Khaw Boon Wan also affects decision making for public housing and there are a slew of new directives in this regard. For the Malay Muslim community, a large proportion are earning in the lower percentile of monthly income and housing takes up a large part of their wages. There is also the issue of Keluarga Pantai whereby people lost their houses and had to stay in tents on the beach as shelter.

Current Situation

Changes in Housing Landscape 1. 2. 3. 4. Increase in income ceiling from $8000 to $10000 Increased supply in private housing Increasing the number of rental flats and in more diversified locations Decreasing demand for private housing

Policy: Recent Housing Policy Changes

1. Revision of Minimum Occupation Period for resale flats from 1 or 2.5 years to 3 years 2. Allowance of 2nd HDB concessionary loan for HDB upgraders 3. CPF housing grants for Singapore Permanent Residents if Singapore Citizen is within the family nucleus

Implications for MM Community

Malay Muslim demographics most affected by the issues 1. Divorce cases especially for the wife 2. Those with low income (more than $1500) 3. Engaged or newly married couples with low start-up capital

Policy Implications

Young couples High demand for Build to Order (BTO) flats far outstripping the supply. In May 2011, there were about 14000 applications for 4000 units. More than half of the applicants were first timers who applied under the Fiance-Fiancee Scheme and the median age stands at 27. For other first timers (those who are already married) their median age is 34. Demand for the BTOs average about 40, 000 a year but industry can only cope with half that. There are plans to increase production from 22,000 to 25,000. There are also not enough BTOs built in mature estates and young couples find it hard to live close to their parents. Young couples will not be able to access the housing grant given to those who live in close proximity to their parents. This also limits the choices of the couples. There is a long waiting time for the application and receiving of the flats. There is also a monthly launch of BTO flats which limits the choices for flats and where home buyers just jump at the chance to buy one instead of properly assessing their need and abilities. Couples do not qualify for BTOs if couples monthly income is more than $8, 000. They are likely to face problem of insufficient capital or cash to cover for Cash over Valuation (COV) to buy resale flats. They also face greater competition from SPRs who make up 20% of resale home buyers, using last months statistics (May 2011). There is an increasingly high cost for the purchasing of the flats, where even 3 room flats cost over $200,000. Changes in SPR regulations will increase the demand for BTOs, driving the prices up. The proposal for the increase in income cap to $10, 000 would also have the same effect. High prices for private housing would also push potential buyers towards HDB and also BTOs if they qualify, having the same effect. There is also a decrease in private property buyers who are moving towards HDB flats in the resale market and prospective private property buyers to HDB flats due to the increased income cap.
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For young couples from the Malay Muslim community, they would face similar issues to the rest of the community of low start-up capital. Hence, the prior issues discussed are applicable to not only the community at large but the Malay Muslim community as well. However there is an additional issue whereby only a small percentage of the Malay Muslim Community of about 27.8% work as Associate Executives & Technicians and above. Hence they are more likely to earn a lower wage. This is can be seen by the communitys lower median income with an income gap of $929 from the national median. This will in turn drive up the cost of less costly housing, and making it less affordable for them. Sandwiched low income families Sandwiched low income families are classified as households earning below $3000 per month but above the $1500 income bracket which disqualifies them from the HDB rental flat scheme. This makes up about 20.8% of Malay Muslim households.With the prior issue facing the young couples, the high cost of housing similarly affects them especially those who are in the income bracket of $1500 to $1999. This is because of both their smaller disposable income and their lesser CPF contributions. With even the lowest price of BTO flats at $200, 000, their monthly CPF contribution is not enough to pay for their monthly housing loan and would require a cash top-up. This will cut into the households disposable income and also prevent them from saving for their retirement through their CPF as they will have to pay for a considerable period of 20 to 30 years. The Special Housing Grant while helping to lower the starting price is also insufficient to fully remedy this issue. The limitations placed on flat types will also place a strain especially if the household requires a larger flat due to the number of household dependents. Special Housing Grant is graduated to allow families with lower income to enjoy a higher grant. The amount of SHG you are eligible and the flat type you can buy will depend on your average gross monthly household income assessed over a one-year period immediately before the flat application.

Statistics

Malay Muslim Households Type of Dwelling - 1 & 2 Room HDB flats - 3 Room HDB flats - 4 Room HDB flats - 5 Room & Exec HDB flats - Condo & Private flats - Landed Properties Household Size - 1 Person - 2 Persons - 3 Persons - 4 Persons - 5 Persons - 6 Persons - 7 Persons - 8 or more Persons

8.7% (10,592) 22% (26, 677) 39.2% (47, 543) 26.9% (32, 650) 1.9% (2, 266) 0.9% (1, 146)

6.5% 13% 16.2% 21.2% 20% 12.8% 5.8% 4.5%

Malay Resident Households by Household Size and Type of Dwelling

12,000 10,000 8,000 6,000 4,000 2,000 -

1 Person 5 Persons

2 Persons 6 Persons

3 Persons 7 Persons

4 Persons 8 or More Persons

Malay Resident Households by Household Size & Type of Dwelling

12,000

10,000

8,000

6,000

4,000

2,000

1- and 2-Room Flats 3-Room Flats 4-Room Flats 5-Room and Executive Flats

1 Person

2 Persons

3 Persons

4 Persons

5 Persons

6 Persons

7 Persons

8 or More Persons

Appendix A -From Housing Development Board website

Average Monthly Household Income* Not more than $1,500

SHG

Flat Types Eligible For With SHG 2-room standard flats in the nonmature estates under BTO/SBF 2-room or 3-room standard flats in the non-mature estates under BTO/Sale of Balance Flat 3-room standard flats in the nonmature estates under BTO/SBF

$20,000

$1,501 to $1,750 $1,751 - $2,000 $2,001 - $2,250

$15,000 $10,000 $5,000

* Based on average of 12 months Average Monthly Household Income Additional CPF Housing Grant (before 6 Feb 09) $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 Enhanced Additional CPF Housing Grant (from 6 Feb 09) ** $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $ 5,000
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$1,500 or less $1,501 - $2,000 $2,001 - $2,500 $2,501 - $3,000 $3,001 - $3,500 $3,501 - $4,000 $4,001 - $4,500 $4,501 - $5,000

References http://www.scribd.com/doc/54199235/Keluarga-pantai-Pemerintah-sangkal-laporan-Al-Jazeera-BeritaHarian http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_680775.html http://mndsingapore.wordpress.com/ http://www.channelnewsasia.com/stories/singaporelocalnews/view/1132140/1/.html http://www.straitstimes.com/STForum/Story/STIStory_682027.html http://www.straitstimes.com/STForum/Story/STIStory_682452.html http://www.temasekreview.com/2011/06/30/hdb-urged-to-drop-dbss-scheme/ http://www.channelnewsasia.com/stories/singaporelocalnews/view/1140817/1/.html http://cyberita.asia1.com.sg/msingapura/story/0,6879,192678,00.html? http://www.channelnewsasia.com/stories/singaporelocalnews/view/1141421/1/.html http://theonlinecitizen.com/2011/06/hdb-431000-cpf-%E2%80%93-but-homeless-soon/ http://theonlinecitizen.com/2011/06/focus-on-hdb-part-1-the-more-the-merrier/ http://theonlinecitizen.com/2011/06/focus-on-hdb-part2-more-mature-estates/ http://theonlinecitizen.com/2011/06/focus-on-hdb-part-3-shorter-queue-for-hdb-rental-flats-really/