SINGAPORE — For prospective homebuyers who believe that scoring a unit at the future Greater Southern Waterfront housing development would be akin to striking a lottery, think again.

The Government is working out a new pricing model for the mega waterfront development project, in order to mitigate the so-called “lottery effect” of obtaining a subsidised flat in a prime area, Minister for National Development Lawrence Wong said on Thursday (Sept 19).

Prime Minister Lee Hsien Loong had announced at the National Day Rally last month that the land on which Keppel Club sits will be redeveloped to build 9,000 public and private housing units, as part of wider city rejuvenation plans for Singapore’s southern coastline.

THE ‘LOTTERY EFFECT’ — WHAT IS IT?

Following the announcement, property experts told TODAY that they expect premium prices for property in the area given its attractive location, and that a good price gauge for public housing flats would be to compare those at Pinnacle@Duxton.

Completed in 2009, the Tanjong Pagar development made history when five resale units sold for S$1 million or more in 2015, at between two and three times their launch prices.

Similarly, one analyst told TODAY that securing an HDB flat at the waterfront location would be like striking a lottery, prompting a TODAY reader to suggest that HDB come up with new rules such as a longer minimum occupation period to curb profiteering.

Mr Wong had said as far back as 2016 that the Government was looking at ways to tighten sale conditions of future HDB flats at the Greater Southern Waterfront and the new Central Business District in Jurong precisely to curb such a “lottery effect”.

New measures could include a shorter lease than the standard 99 years, a higher resale levy or a longer MOP than the current five years.

‘NEW MODEL OF PUBLIC HOUSING’

Speaking to CNA938’s Arnold Gay and Yasmin Jonkers on Thursday, Mr Wong said that the Government is still studying the best way to price future homes in the area.

“If you have public housing in such a prime area and if you were to sell it at today’s public housing prices, it will be a very large subsidy. Whoever gets the flats there, by ballot, will be very happy. But it will be a bit of a ‘lottery effect’. Those who don’t get that flat will be very envious,” said Mr Wong.

“On the other hand, if we were to keep the subsidy the same, then the price of those flats will be very high and out of reach. So we have to work out a new model for public housing in the Southern Waterfront. That’s something we are working on,” he added.

NEW INCOME CEILING AND GRANTS FOR HDBS

During the interview, Mr Wong also spoke about the new housing grant, which comes with a higher wage ceiling, announced recently.

Under the Enhanced Central Provident Fund (CPF) Housing Grant — which is for households with incomes of up to S$9,000 — first-time flat buyers, be they families or singles under the Joint Singles Scheme, could receive subsidies of between S$5,000 and S$80,000.

The household income cap will go up from S$12,000 to S$14,000 for families looking to buy a Build-to-Order (BTO) flat. This increased cap will also apply to HDB housing loans. 

Those looking to buy an Executive Condominium will also benefit from a higher income cap, up from S$14,000 to S$16,000. For singles aged 35 and above the new income ceiling will be S$7,000, up from S$6,000.

THE REASON FOR THE MEASURES

Mr Wong said that the aim was to “provide a better balance between new and resale (flats) in terms of grants”, so that the percentage of people buying those properties “will stabilise going forward”.

Currently, about 75 per cent of HDB buyers opt for new flats, compared with 25 per cent for resale flats, he said.

"I expect with the incentive structure now adjusted, the 75 per cent figure will likely come down in the coming years," Mr Wong said.

On why the income ceilings were raised, he said it was to accommodate rising wage levels.

“As incomes rise, a few of them at the margins will then exceed the income ceiling and then they would no longer have the chance,” Mr Wong said.

“So we monitor the income ceiling all the time and as incomes rise, we will adjust the income ceilings accordingly so that about eight in 10 or more than eight in 10 Singaporeans will be eligible to buy public housing in Singapore.”