In what context did Mr Lee Kuan Yew say that the value of HDB flats would never drop?

It is important to understand the context in which Mr Lee Kuan Yew made that statement.

Mr Lee Kuan Yew spoke at the Launch of Tanjong Pagar Town Council’s Five-Year Masterplan and Opening of ABC Waters at Alexandra Canal on 19 March 2011.

He spoke to his residents in Tanjong Pagar, a very mature estate with many senior residents, many of whom are also from the lower-income group.

He opened his speech with the following:

“Tanjong Pagar GRC will be transformed in the next five years. The government continually invests in upgrading the homes of its citizens to increase their value for the owners.”

This provides the backdrop for his speech.

Homeownership is a fundamental policy of the PAP Government, the cornerstone of public housing. By the 1980s, the Government had housed 85% of the population.

Through the decades, HDB estates and their residents grew older.

Mr Lee observed that in the late 1980s, younger families began moving out of the older HDB towns for newer and more modern flats.

If this continues, old estates will soon become old and dreary, without vibrancy, and the value of flats in such estates will drop.

Thus began estate renewal. Old HDB estates were rejuvenated. New playgrounds, covered linkways, landscaped gardens and open spaces were built for residents to mingle.

“It is crucial to prevent our estates from becoming urban slums,” Mr Lee said. “We cannot allow public housing to become obsolete,” he said.

“We will regenerate the old estates with new housing… A Home Improvement Programme will refurbish your ageing flats that have spalling concrete and ceiling leaks…. we will have upgrading of lifts so they will stop at every floor, and cars will have drop-off porches. The Neighbourhood Renewal Programme will upgrade the quality of the older estates and increase the value of your older flats,” said Mr Lee.

This is the context of Mr Lee’s statement.

Mr Lee was assuring his constituents that the value of their flats would never go down because their estate had turned into urban slums or obsolete.

The 5-year renewal programme for Tanjong Pagar would bring construction noise and dust that residents would have to bear. He assured them it was for their good as the renewal programme would help maintain or even increase their flats’ value.

Mr Lee talked about estate renewal, the remaking of the heartland, and beautifying the living environment. To what end? To ensure that the value of the HDB flats will never drop due to neglect or becoming old and jaded.

Do you know?

Do you know that a study by the National University of Singapore (NUS) reveals that HDB flats survive depreciation effects better than private non-landed housing when they are 30 years and above?

Reason? They withstand better ageing effects. Thanks to home upgrading and neighbourhood renewal programmes.

This current PAP Government has, promised two home upgrading exercises for the HDB flat – at 30 years of age and 60 years. Such upgrading programmes will help to maintain the value of the apartments. The PAP

The NUS study shows that the rate of price decline for older HDB flats was much slower at 3.0 per cent. In comparison, freehold private homes and leasehold residences depreciated by over 10 per cent and more than 30 per cent, respectively.

Aside from the redevelopment schemes that help retard the decline in prices of older HDB flats, Prof Sumit Agarwal, a study co-author, said that subsidy grants for first-time buyers of resale flats further mitigate the price depreciation as the property ages.

Value of flat tied to Singapore's growth

In another speech made in 2009, Mr Lee Kuan Yew clearly said that the value of our HDB flat is tied to Singapore’s growth and prosperity.

If Singapore prospers, their flat values will appreciate and they will share in the growth.

Lee Kuan Yew, 2009

Conversely speaking, if Singapore does not prosper, if the economy does badly, the value of the HDB flats could go down.

This is the implication of Mr Lee’s remarks.

Sharing in the fruits of the nation's growth

From the 1980s, the Government moved towards a market-based system where each HDB flat is priced differently to reflect its actual value.

By liberalizing the resale market and allowing HDB prices to move in tandem with the economy, we unlocked the value of HDB flats to allow citizens to share in the fruits of the nation’s growth.

Lee Kuan Yew

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