Experts in 2019 Raised Concerns About Oversupply of HDB Flats; Black Swan Events Can Disrupt Plans: Desmond Lee

SINGAPORE — National Development Minister Desmond Lee addressed concerns in Parliament on Feb. 7 about the challenges of managing housing supply, stating that Singapore must balance building flats while safeguarding fiscal resources for future generations. He emphasized that first-time homebuyers and lower-income households will remain a priority as housing is seen as a “social leveller.”

During the debate, Lee responded to opposition parties’ critiques about under-building flats by explaining that the government is overseeing nearly 100 BTO projects, with 80,000 flats currently under construction. The government’s “high tempo” of construction will continue, with plans to increase this to around 150 projects by 2025. He also highlighted the strain on manpower resources due to various sectors ramping up their projects post-pandemic.

Lee pointed out that demand predictions for flats are complex and not an exact science, as unforeseen events can dramatically shift market dynamics, citing the rapid rise in housing demand during the pandemic. He also cautioned against building too many flats, which could lead to a housing surplus, depress resale flat values, and result in wastage of taxpayers’ money, similar to what happened after the 1997 Asian Financial Crisis.

He further noted that even the Workers’ Party (WP) had raised concerns about an oversupply of flats in their 2019 position paper, which questioned whether HDB would face a vacancy rate problem due to high BTO supply. Lee added that if the government had followed WP’s recommendation to reduce the number of flats built, the current BTO shortage would be even more severe.

The minister reiterated that HDB is transparent about its pricing models, publishing construction costs and revenue figures, and emphasized that the government strives to balance affordability while ensuring future generations are not disadvantaged.

Lee also acknowledged that while current resale prices are high, long-term measures, including cooling mechanisms and policies like the Prime Location Public Housing (PLH) model, are in place to ensure housing remains affordable without undermining market fundamentals.