Study on Homeownership, Affordability, and Intergenerational Wealth

February 2026

Executive Summary

Singapore represents a paradoxical achievement in global housing policy: the nation maintains one of the world’s highest homeownership rates at 90.8% while simultaneously experiencing an intensifying affordability crisis. Over 80% of residents live in Housing Development Board (HDB) flats, a public housing system internationally recognized for transforming a former third-world nation into a developed economy while providing widespread housing security.

However, 2025 data reveals fundamental tensions within this model. HDB resale prices increased 5.6% while private residential prices rose 3.4%, significantly outpacing income growth. The proliferation of million-dollar HDB flats—1,243 transactions in the first nine months of 2025 alone—signals a transformation of public housing from affordable social provision to wealth accumulation vehicles. With a median multiple of 4.2, Singapore ranks in the ‘seriously unaffordable’ category despite ranking 17th globally in comparative affordability.

This case study examines the structural mechanisms sustaining Singapore’s housing system, analyzes current affordability challenges, evaluates policy responses, and assesses broader socioeconomic implications. The analysis demonstrates how a system designed for equitable wealth distribution increasingly generates intergenerational inequality, raising fundamental questions about the sustainability of the Housing Development Board model in its current form.

1. Historical Context and Systemic Architecture

1.1 Origins of the HDB System

The Housing Development Board emerged in 1960 as successor to the Singapore Improvement Trust, addressing severe housing shortages and squatter settlements following independence. Lee Kuan Yew’s government conceptualized public housing not merely as social welfare but as nation-building infrastructure, creating ‘a home at cost or below cost’ while fostering social stability through property ownership.

By 1965, more than 50,000 flats had been constructed, housing 23% of Singapore’s population. The Housing and Home Ownership Scheme, introduced in 1964, enabled Singaporeans to purchase rather than rent public housing, fundamentally distinguishing Singapore’s approach from traditional public housing models in Europe and North America.

1.2 Structural Mechanisms

The Housing Development Board system operates through integrated policy mechanisms that distinguish it from conventional housing markets:

1.2.1 Land Acquisition and Control

The Land Acquisition Act (1966) empowered the government to compulsorily acquire land at prevailing market values, creating a sustainable land bank while preventing private windfall profits from infrastructure investments. State ownership of approximately 90% of land provides absolute control over urban planning, land allocation, and development timing. HDB acquires land at substantially below-market prices, enabling construction of subsidized housing at scales unachievable through private mechanisms.

1.2.2 99-Year Leasehold Structure

HDB flats operate as 99-year leaseholds on government land rather than freehold ownership, reducing upfront acquisition costs while maintaining state control over long-term land use. This structure introduces temporal dynamics absent from freehold systems, with flats experiencing accelerating depreciation below 40 remaining lease years, creating divergent asset classes based on lease duration.

1.2.3 Central Provident Fund Integration

The Central Provident Fund, Singapore’s mandatory social security system, provides the financial architecture enabling mass homeownership. Introduced in 1955, the CPF requires both employers and employees to contribute to individual accounts. For citizens and permanent residents aged 55 and below, standard contribution rates total 37% of wages (20% employee, 17% employer), subject to a monthly ceiling of S$8,000.

The CPF Ordinary Account finances housing purchases at preferential rates. The loan rate has remained stable at 2.6% since 1993, consistently below commercial rates. This mechanism simultaneously provides government funding for HDB construction and enables residents to purchase homes through accumulated mandatory savings. Critically, CPF contributions can service mortgages but not rental payments, structurally incentivizing ownership over renting and suppressing rental market development.

1.3 Policy Evolution and Market Dynamics

The transformation from basic housing provision to wealth accumulation vehicle occurred gradually. The government permitted resale of HDB flats to enable household upgrading as families expanded. A resale flat commands higher prices than new Build-To-Order flats due to location in mature estates with established amenities, immediate availability, and accumulated locational value. This created the ‘two bites of the cherry’ phenomenon: households purchase subsidized BTO flats, appreciate equity gains during the Minimum Occupation Period, then sell at market prices to finance larger upgraded units while capturing substantial profits.

2. Current State Analysis: The Affordability Crisis

2.1 Price Trajectory and Market Dynamics

HDB resale prices demonstrated sustained growth through 2025, extending to 22 consecutive quarters of increases since Q2 2020. However, quarterly growth rates decelerated from 1.6% in Q1 2025 to 0.4% in Q3 2025, suggesting market stabilization rather than correction. The HDB Resale Price Index reached 209.7 by September 2025, representing 4.8% year-on-year growth.

2.1.1 The Million-Dollar HDB Phenomenon

The proliferation of million-dollar public housing flats represents the most visible manifestation of affordability challenges. From the first million-dollar transaction in 2012 at Queenstown’s Mei Ling Street, the trajectory accelerated dramatically:

Year	Transactions	% of Total Market
2012	2	<0.01%
2022	369	1.4%
2023	470	2.1%
2024	1,035	4.0%
2025 (proj.)	1,500+	6.4%

September 2025 established a record with 172 million-dollar transactions in a single month, representing 7.9% of all resale activity. Mature estates dominated: Toa Payoh (37 transactions), Queenstown (18), and Bukit Merah (18). The phenomenon extended to non-mature estates, with a Woodlands executive flat transacting at S$1.12 million. The highest recorded sale—a five-room flat at SkyTerrace @ Dawson, Queenstown—reached S$1.659 million with approximately 90 years remaining on lease.

2.1.2 Supply Constraints and Market Pressures

Structural supply constraints amplify price pressures. The number of flats reaching their five-year Minimum Occupation Period—and thus eligible for resale—declined for the third consecutive year from 30,920 units in 2022 to a projected 6,974 units in 2025, the lowest since 2014. This scarcity concentrates demand among available units, particularly in mature estates with established amenities and superior connectivity.

Private property downgraders contribute significantly to premium HDB demand. Following the 15-month wait-out period imposed in September 2022, former condominium owners return to the HDB market with substantial cash reserves and higher purchasing power. While this cohort’s proportion in million-dollar transactions declined from 34% in early 2022 to 12% by late 2024, their absolute numbers remain significant given overall transaction growth.

2.2 Affordability Metrics and International Comparisons

The 2025 Demographia International Housing Affordability Report ranked Singapore 17th globally, a relatively favorable position among major cities. However, the median multiple of 4.2 for HDB resale flats places Singapore in the ‘seriously unaffordable’ category (median multiple above 4.0 indicates severe affordability constraints). This classification persists despite extensive subsidies, preferential CPF financing, and government intervention.

For context, Hong Kong maintained its position as the world’s least affordable market with a median multiple of 14.4. Private property in Singapore exhibits even more extreme affordability challenges, with luxury condominiums averaging S$1,880.78 per square foot, fundamentally inaccessible to median-income households.

2.2.1 The Mortgage Interest Rate Paradox

The 2025 interest rate environment revealed counterintuitive dynamics. Following Federal Reserve rate cuts, Singapore’s mortgage rates trended lower throughout the year. The three-month Singapore Overnight Rate Average (SORA) declined from 2023-2024 peaks to approximately 1.25% by November 2025. Commercial banks offered fixed-rate mortgages below 2.5%, substantially improving theoretical affordability calculations and reducing monthly payment burdens.

However, lower borrowing costs stimulated demand rather than reducing prices. Increased purchasing power translated into higher bid prices for available units. The net effect: buyers could afford slightly elevated monthly payments, but confronted higher absolute prices that largely offset interest rate benefits. This dynamic illustrates fundamental limitations of monetary policy interventions in supply-constrained markets with structural scarcity.

3. Policy Responses and Government Interventions

3.1 Supply-Side Interventions

The government maintains aggressive Build-To-Order expansion as the primary policy response. HDB plans to launch 19,600 BTO flats in 2026 across three exercises (February, June, October), maintaining momentum toward delivering 55,000 units from 2025-2027. The February 2026 exercise offered 9,012 units (4,692 BTO, 4,320 Sale of Balance Flats), with approximately 80% of BTO flats featuring waiting times under four years.

3.1.1 Shorter Waiting Time Initiatives

Shorter Waiting Time flats represent targeted innovation. One-fifth of 2026 supply (4,000+ units) features completion timelines under three years. The February 2026 exercise included three SWT projects: Tampines Bliss (1 year 11 months—the fastest since SWT introduction in 2018), Tampines Nova (2 years 8 months), and Sembawang Deck (2 years 9 months).

SWT flats begin construction nine months to one year pre-launch, enabling accelerated delivery. This approach aims to capture time-sensitive buyers who might otherwise enter the resale market, potentially moderating resale demand and stabilizing prices. However, SWT units constitute a small proportion of overall supply, limiting systemic impact.

3.1.2 Classification Framework and Equity Measures

The October 2024 classification system replaced the binary mature/non-mature distinction with location-attribute-based categories: Standard (most budget-friendly), Plus (mature estates with good amenities), and Prime (highly sought locations). This framework attempts to address the ‘lottery effect’ whereby BTO allocations in premium locations generate windfall gains divorced from buyer contribution or merit.

Plus and Prime flats receive additional subsidies to maintain affordability but incur corresponding restrictions: 10-year Minimum Occupation Period (versus 5 years for Standard), income ceilings for resale buyers, and subsidy recovery mechanisms. Upon resale after the MOP, owners must return to HDB a percentage of the resale or valuation price (whichever higher), with rates proportional to subsidy magnitude—12-14% for Prime locations.

3.2 Demand-Side Cooling Measures

Four rounds of property cooling measures since 2021 target speculative demand and cross-market dynamics:

Additional Buyer’s Stamp Duty (ABSD): Foreign purchasers face 60% ABSD (effectively limiting foreign transactions to 1.4% of market), while Singaporeans purchasing second properties pay 20% (increased from 17%).
15-Month Wait-Out Period: Implemented September 2022, prevents private property sellers from immediately purchasing non-subsidized HDB resale flats. Successfully reduced private downgrader proportion in million-dollar transactions from 34% to 12%.
Loan-to-Value Ratio Reduction: Decreased from 80% to 75% in August 2023, increasing down payment requirements to cool speculation while inadvertently raising barriers for first-time buyers with limited cash reserves.
Total Debt Servicing Ratio (TDSR): Caps monthly debt repayments at 55% of gross income, constraining over-leveraging while limiting purchasing power for younger households with lower incomes but strong future earnings potential.

3.3 Financial Assistance and Grants

The Enhanced CPF Housing Grant (EHG) provides up to S$120,000 for eligible first-time families, substantially reducing upfront costs. A 3-room flat in Sembawang can be purchased for as low as S$156,000 after grants, while a 4-room Tampines flat starts from S$224,000 post-subsidy. These interventions ensure median-income households can access homeownership, though they simultaneously support price levels by increasing effective demand.

The Fresh Start Housing Scheme, extended in February 2026 to eligible first-time families with children in public rental flats, enables purchase of 2-room Flexi or 3-room Standard flats on shorter leases with full EHG eligibility. This addresses intergenerational poverty by providing pathways from rental to ownership.

Government statistics indicate 80% of first-time flat buyers can finance purchases entirely through CPF contributions without cash outlays. However, this metric reflects only successful purchasers, excluding those deterred by down payment requirements, loan qualification criteria, or affordability concerns—a form of survivorship bias obscuring genuine accessibility constraints.

4. Socioeconomic Implications and Distributional Effects

4.1 Wealth Distribution and Inequality

Singapore’s housing system demonstrates exceptional wealth distribution compared to global norms. Homeownership among the bottom 10% of residents reaches 84%, and 87% for the bottom 20%—figures unmatched in developed economies. HDB flat appreciation has enabled lower-income households to accumulate significant equity, theoretically supporting retirement security and intergenerational wealth transfer.

However, this aggregate success masks emerging stratification. The critical paradox: public subsidies designed for social redistribution increasingly generate inequality. The transformation occurs through multiple mechanisms:

4.1.1 Timing-Based Wealth Divergence

Entry timing into homeownership creates permanent wealth differentials. Households purchasing flats in the 1980s-1990s benefited from lower absolute prices, decades of appreciation, and longer remaining lease durations. Contemporary first-time buyers face elevated entry prices with equivalent appreciation potential only if current price growth continues indefinitely—an increasingly implausible assumption given affordability constraints.

4.1.2 The Lease Decay Problem

The 99-year leasehold structure generates systematic intergenerational inequality. Flats experience accelerating depreciation below 40 remaining lease years, transforming previously valuable assets into potential liabilities. Analysis projects that over the next 20-30 years, massive intergenerational wealth transfers will create divergent outcomes:

Prime/Young-Lease Inheritors: Receive million-dollar assets in desirable locations with 70+ years remaining, enabling immediate liquidity, upgrading, or investment.
Mid-Lease Inheritors: Acquire moderately valuable flats with 40-70 years remaining, maintaining utility but constrained appreciation potential.
Old-Lease Inheritors: Inherit depreciating assets with sub-40-year leases, facing accelerating value erosion and potential maintenance liabilities exceeding residual equity.
No Inheritance: Individuals without family homeownership enter the property ladder without inherited equity advantages, perpetuating disadvantage across generations.

This creates a ‘housing birth lottery’—life outcomes increasingly determined by parental housing assets’ location and lease duration rather than individual merit or effort.

4.1.3 The Pinnacle Paradox

The Pinnacle @ Duxton exemplifies systemic contradictions. This 50-story development in Tanjong Pagar features premium HDB flats that effectively doubled in value from original subsidized prices. Resale transactions exceeding S$1 million generate outsized profits for leaseholders—young professionals with high-income parents increasingly queue for premium BTO allocations intending to sell after the five-year MOP, using public subsidies as wealth multiplication vehicles. Public resources ostensibly supporting social housing increasingly facilitate private capital accumulation among already-advantaged cohorts.

4.2 Impact on Life Trajectories and Social Mobility

4.2.1 Delayed Household Formation

Housing affordability constraints delay marriage and family formation. BTO waiting times of 3-4 years, combined with financial preparation periods, push homeownership into late twenties or early thirties. Singapore’s total fertility rate reached 0.97 in 2023—significantly below replacement level and among the lowest globally. While causality remains complex, housing costs and delayed household formation contribute materially to demographic challenges.

4.2.2 Career and Educational Decisions

Housing costs influence career choices and risk tolerance. Young professionals prioritize stable, high-paying employment over entrepreneurial ventures, creative careers, or socially valuable but lower-compensated professions. This constrains economic dynamism, innovation, and social sector development. The imperative to accumulate down payments and service mortgages reduces flexibility for career transitions, further education, or extended caregiving responsibilities.

4.2.3 Geographic Mobility and Labor Market Efficiency

While Singapore’s geographic compactness limits spatial mismatch issues common in larger nations, housing asset concentration reduces labor mobility in other forms. Homeowners with substantial equity in aging flats face ‘mobility lock’—reluctance to sell depreciating assets to relocate for employment opportunities, particularly international assignments that might enhance career trajectories but sacrifice accumulated housing equity.

4.3 Retirement Security and CPF Adequacy

The CPF-housing nexus creates fundamental retirement adequacy challenges. Using CPF Ordinary Account savings for housing purchases reduces retirement accumulation. Upon property sale, CPF withdrawals plus accrued interest must be refunded to the Retirement Account, but the opportunity cost of foregone compound interest over 25-30 years represents substantial wealth loss.

Retirees increasingly depend on housing assets for retirement security. The Lease Buyback Scheme allows elderly homeowners to sell remaining lease years back to HDB while retaining lifelong occupancy, converting home equity into CPF Life annuity income. However, flats with short remaining leases generate limited buyback proceeds. Silver Housing Bonus provides additional support, but systematic retirement adequacy concerns persist, particularly for households that exhausted CPF savings on housing without building supplementary retirement assets.

4.4 Political Economy Considerations

Housing operates as political infrastructure for the People’s Action Party. During election cycles, the government emphasizes housing program success and promises estate upgrading to incentivize support. The majority’s homeownership stake creates conservative constituencies resistant to policies that might reduce property values—a political-economic feedback loop constraining reform options.

This dynamic explains policy paralysis around aggressive affordability interventions. Substantial price reductions would harm existing homeowners’ wealth while benefiting potential future buyers—a politically untenable redistribution given current homeowners vastly outnumber aspiring purchasers. The government thus pursues gradual stabilization rather than correction, accepting reduced affordability for new entrants as the price for preserving incumbent wealth.

International comparisons reveal similar dynamics. Research on OECD countries demonstrates that rising housing prices correlate with increased skepticism toward welfare state intervention, as homeowners view property equity as private insurance rendering government safety nets less necessary. Conversely, declining housing prices correlate with greater support for government intervention. Singapore’s exceptionally high homeownership rate amplifies these political economy effects.

5. Outlook and Future Scenarios

5.1 Near-Term Market Projections (2026-2027)

Property consultancies project continued modest price increases in 2026, with HDB resale prices anticipated to rise 1-1.5% per quarter assuming no additional cooling measures. Private property market forecasts suggest 3-4% annual appreciation. Several factors support gradual improvement:

Interest Rate Trajectory: Further Federal Reserve rate cuts may reduce Singapore mortgage rates below 2%, improving monthly affordability calculations.
Supply Expansion: 13,484 flats reach MOP in 2026 (up from approximately 8,000 in 2025), increasing resale supply and potentially moderating demand pressure.
Income Growth: Nominal wage increases of 4-5% may gradually improve affordability if price growth remains below income growth.
Geographic Diversification: 65% of 2026 new launches in Outside Central Region locations (Tengah, Tampines, Bayshore, Sembawang) offer family-sized units in the S$1.6-2.1 million range—within affordability parameters for many upgraders.

However, significant headwinds persist. GDP growth forecasts decline to 2.2% for 2026 (from 2.5% in 2025), with global recession risks and trade tensions creating macroeconomic uncertainty. Construction costs remain elevated, limiting developers’ pricing flexibility. Most critically, structural housing shortages of several hundred thousand units mean supply-demand imbalances continue exerting upward price pressure regardless of demand management interventions.

5.2 Long-Term Structural Trajectories

5.2.1 Scenario A: Status Quo Continuation

Under incremental policy adjustments without structural reforms:

Wealth concentration accelerates in prime-flat families with substantial inherited equity advantages.
‘Mobility locks’ emerge as mid/older-lease inheritors remain in depreciating assets to avoid losing housing security.
Political discourse intensifies as citizens with depreciating assets experience relative deprivation compared to prime-location holders.
Inter-estate resentment grows, with potential for foreigner-blaming rhetoric as social pressures mount.
First million-dollar transactions exceed S$2 million as scarcity premiums compound in prime locations.

5.2.2 Scenario B: Managed Transition

Under proactive structural reforms:

Clear Voluntary Early Redevelopment Scheme (VERS) or lease renewal frameworks providing predictable timelines, transparent eligibility criteria, and adequate compensation.
Expanded friction-free right-sizing mechanisms with guaranteed move-in timelines for older-flat sellers, reducing mobility barriers.
Transparent BTO pricing logic addressing subsidy distribution inequities while maintaining accessibility.
Standardized, accessible, stigma-free Lease Buyback Schemes converting aging housing equity into retirement income.

This trajectory moderates inequality without eliminating it entirely, maintains social cohesion through transparent frameworks, and prevents runaway wealth divergence while preserving homeownership as wealth-building mechanism for broad population segments.

5.3 Policy Recommendations

Evidence-based policy prescriptions addressing structural challenges:

5.3.1 Supply-Side Reforms

Maintain aggressive BTO supply targets while reducing approval and construction timelines through regulatory streamlining.
Expand Shorter Waiting Time programs to constitute 30-40% of annual supply rather than 20%, directly competing with resale market urgency.
Develop systematic frameworks for aging estate redevelopment, converting lease decay into regeneration opportunities while maintaining resident housing security.

5.3.2 Demand Management

Implement progressive property taxes on multiple holdings to discourage speculative accumulation while exempting primary residences.
Consider means-tested resale purchase restrictions preventing high-income households from displacing median-income buyers in mature estates.
Maintain but refine cooling measures, ensuring they address speculation without excessively constraining legitimate demand.

5.3.3 Intergenerational Equity Mechanisms

Establish transparent lease renewal frameworks providing certainty for long-term planning while preventing lottery-based windfalls or catastrophic wealth destruction.
Expand grants for first-time buyers from non-homeowning families, partially offsetting inherited advantages through public transfers.
Develop financial products enabling voluntary CPF housing refunds during working years, allowing households to balance housing equity accumulation with retirement savings optimization.

5.3.4 Data Transparency and Policy Evaluation

Publish comprehensive affordability metrics disaggregated by income quintile, age cohort, and family structure.
Track not only successful flat purchasers but also households deterred from applications—measure true accessibility rather than conditional statistics on survivors.
Establish independent housing affordability commission producing regular reports and recommendations, insulating policy evaluation from political pressures.

6. Conclusion: Reconciling Achievement with Challenge

Singapore’s housing system represents both extraordinary achievement and mounting challenge. The transformation from 1960s housing crisis to 90.8% homeownership constitutes genuine development success, providing housing security while building household wealth across income distributions in patterns unmatched globally. The integration of land acquisition, CPF financing, and HDB provision created systematic mechanisms enabling mass homeownership within a single generation.

Yet the system’s maturation reveals fundamental tensions. Policies designed for equitable wealth distribution increasingly generate inequality through timing-based advantages, lease duration disparities, and location-based windfalls. The million-dollar HDB phenomenon—from two transactions in 2012 to over 1,500 in 2025—illustrates public housing’s transformation from social provision to wealth accumulation vehicle, benefiting incumbent owners while constraining new entrant access.

The affordability crisis manifests not through crude homelessness or absolute housing shortage but through subtler mechanisms: delayed household formation, constrained career choices, retirement inadequacy risks, and systematic intergenerational wealth divergence based on inheritance timing and location rather than merit or effort. The median multiple of 4.2 placing Singapore in ‘seriously unaffordable’ territory persists despite aggressive intervention, revealing limitations of demand management in supply-constrained environments with fundamental land scarcity.

Current policy responses—supply expansion, cooling measures, grant enhancements—address symptoms rather than structural causes. The core contradiction remains unresolved: how to improve affordability for new buyers without destroying wealth accumulated by existing homeowners who constitute the political majority. Prime Minister Wong’s assurance that housing remains affordable rings hollow to young Singaporeans confronting seven-figure public housing prices and multi-year waiting periods.

The lease decay challenge looms large. Over coming decades, massive intergenerational wealth transfers will create permanent stratification based on parental housing assets’ location and remaining lease duration. Without transparent frameworks for lease renewal or redevelopment, anxiety mounts among households holding depreciating assets while prime-location holders enjoy continued appreciation.

International comparisons contextualize Singapore’s predicament. The system outperforms most developed nations in homeownership distribution, yet confronts challenges paralleling Hong Kong, Vancouver, and other land-constrained high-demand markets. The American experience detailed in the opening case study—young adult homeownership recovering modestly from crisis lows yet remaining six percentage points below 2004 peaks—illustrates how housing markets can remain permanently dysfunctional even in geographically unconstrained contexts.

Singapore’s advantage lies in systematic government capacity for intervention. Unlike fragmented American governance, Singapore’s centralized policy apparatus can implement comprehensive reforms if political will materializes. The question becomes whether leadership will pursue structural adjustments transcending incremental tinkering—transparent lease frameworks, aggressive supply expansion, progressive taxation on speculative holdings, and explicit intergenerational equity mechanisms.

The stakes extend beyond housing narrowly construed. Fertility rates at 0.97 reflect partially housing-driven household formation delays. Economic dynamism suffers when talent optimization subordinates to mortgage servicing imperatives. Social cohesion erodes when wealth divergence maps onto housing lottery outcomes rather than merit or contribution.

Lee Kuan Yew envisioned public housing as nation-building infrastructure creating shared prosperity and social stability. The system succeeded brilliantly for decades. Whether it can adapt to mature-economy challenges while preserving founding principles remains Singapore’s critical housing question. The original promise—’a home at cost or below cost’—increasingly rings hollow amid million-dollar public housing and rising intergenerational wealth concentration.

The tide rises. But as critics note, not all boats come with it. Singapore’s challenge involves ensuring the housing system—historically its greatest policy achievement—continues serving as social leveler rather than inequality accelerator. The window for structural reform narrows as vested interests solidify and wealth concentration becomes self-reinforcing. Whether Singapore navigates this transition successfully will determine not just housing outcomes but the fundamental character of the society for generations ahead.

Singapore’s Housing System