Sixty years ago, when Singapore emerged as an independent nation, three out of four residents lived in cramped, dirty slums with ramshackle tin-walled houses.
Today Singapore is a rich and modern city, where approximately half of its 6 million inhabitants live in apartments in well-built skyscrapers built by the Government.. These subsidized apartments are often light and airy, and challenge most perceptions about public housing projects. Most are owned by their occupants, a testament to their affordability.
But in the last 15 years, prices on the secondary market have skyrocketed 80 percent. Until the beginning of May, 54 of these apartments had sold for more than 1.35 million Singapore dollars, or $1 million. There is demand for them because they are spacious, in good locations and cheaper than private condominiums.
While these million-dollar apartments represent a small fraction of all transactions, they have amplified concerns about the affordability of housing in one of the most expensive cities in the world.
Last year, the Government introduced more grants to help first-time buyers and families buy homes in the secondary market. Lawrence Wong, the current Prime Minister, then acknowledged that some Singaporeans wanted to buy resale apartments as their first home, but found the prices too high.
In addition, new rules that will come into force in the second half of this year would impose an income cap for buyers in the secondary market, in line with the restrictions the Government has for buyers of new apartments.
The Government usually proposes new projects and then holds a lottery among potential buyers. These apartments are called “build-to-order” (BTO) and demand often outstrips supply. Successful applicants then choose the location and apartment size at the proposed sites.
Depending on household income, families who qualify as first-time buyers can get housing subsidies of up to S$80,000, or about US$60,000. A two-bedroom apartment sold by the Government on the west side of Singapore costs about 202,000 Singapore dollars ($150,000) before subsidies.
The government has used public housing incentives to encourage family formation and racial integration. It imposes strict rules on who can apply for BTO flats: married or engaged heterosexual Singaporean couples; couples with children; couples who want to live with their parents; and orphaned brothers.
Starting in the second half of this year, single people over 35 years old will be able to buy one-bedroom apartments in any location. Previously, they were only allowed to buy in a dozen developments with fewer amenities.
In 1989, the government enacted a policy requiring each block or neighborhood to establish boundaries for each of the city’s major ethnic groups—Chinese, Malays, and Indians—to prevent the formation of racial enclaves.
Tharman Shanmugaratnam, the current President, said in 2015 that “the natural functioning of society” would have led to “mistrust, unrest, intolerance and what we see in abundance in many countries around the world today.
“Singapore’s most intrusive social policy has turned out to be the most important,” he added.
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