The Reasons Behind High Home Ownership in Singapore

Introduction

Home ownership in Singapore has long been a subject of discussion, driven by various economic, political, and social factors. This article explores the reasons why home ownership remains so prevalent in the city-state, focusing on historical policies, current trends, and future considerations.

The primary reason for the high rate of home ownership in Singapore is the affordability of buying a home compared to renting. For instance, a 3-room HDB flat, which traditionally consists of a kitchen, living room, and two bedrooms, typically has a rental cost ranging from SGD 2,300 to 3,000 per month, depending on the area. In contrast, a monthly mortgage payment for the same flat can be significantly lower, often less than SGD 1,000. This makes home ownership an attractive choice for many residents, especially when considering factors such as CPF (Central Provident Fund) assistance.

Historical Context

Deep historical roots underpin Singapore’s commitment to home ownership. The founding father, Prime Minister Lee Kuan Yew, spoke with fervor about the importance of a home-owning society. He believed that homeownership would provide political stability and a sense of ownership over the country's future.

Political Stability

PM Lee Kuan Yew observed that in many capital cities around the world, voters often voted against the incumbent government. To avoid this political instability, he firmly believed that every citizen should have a stake in the country. Making homeownership a priority was seen as a way to ensure stability and unity.

Sense of Ownership

Lee Kuan Yew also highlighted the importance of ownership. He argued that Singapore's new society needed this sense of connectedness and proprietorship. Homeownership was a way to foster a stronger sense of national identity and commitment.

Current Trends and Policy

However, in recent years, there has been a growing trend of increasing renters and the need to address this issue. In 2020, Prime Minister Lee Hsien Loong highlighted the significance of this trend and the necessity to find solutions to increase home ownership.

New and Old Ideas

A mix of old and new ideas has been proposed to enhance the availability and affordability of home ownership. Some of these include:

Allowing the CPF retirement scheme to be used for housing Borrowing up to 90 percent for a mortgage Housing grants of up to SGD 80,000 Access to BTO (Build-to-Order) flats with no downpayment from CPF

Moreover, the government is enhancing the value of HDB (Housing and Development Board) flats by upgrading them and building new flats in prime areas such as the Holland area and the Keppel Bay area overlooking Sentosa.

Conclusion

The high rate of home ownership in Singapore is deeply rooted in strategic policies designed to achieve political stability and a strong sense of ownership. While the current trend of increasing renters serves as a reminder of the ongoing challenge, the opportunities for CPF assistance and enhanced housing policies present a strong case for home ownership. However, it's important to note that these benefits are primarily applicable to citizens and permanent residents.