A Comprehensive Case Study

January 2026

Executive Summary

Singapore’s housing market represents one of the world’s most successful yet increasingly complex public housing systems. With over 80% of residents living in Housing Development Board (HDB) flats and home ownership rates at 88%, Singapore has achieved remarkable housing security. However, affordability challenges are intensifying as property prices continue to outpace income growth.

In 2025, private residential prices rose 3.4%, while HDB resale prices increased by approximately 5.6%. Million-dollar HDB flats have become increasingly common, with 1,243 such transactions recorded in the first nine months of 2025. The median multiple of 4.2 places Singapore in the ‘seriously unaffordable’ category by international standards, despite ranking 17th globally in housing affordability.

This case study examines the current affordability crisis, market outlook for 2026-2027, government solutions, and the broader economic and social impacts of housing policy in the city-state.

1. Current Housing Affordability Challenge

1.1 The Two-Tier Market System

Singapore operates a unique dual housing system that has been central to its development model since independence in 1965:

Public Housing (HDB):

• Serves over 80% of the population with approximately 1 million flats
• Built-to-Order (BTO) flats sold at subsidized prices below market rates
• Typically 99-year leases on government-owned land
• Enhanced CPF Housing Grants of up to S$80,000 for first-time buyers
• Median HDB flat: S$408,000 (4.6 times median income)

Private Housing:

• Condominiums and landed properties for higher-income residents
• Average condo price: S$1,989,082 (median S$1,780,000)
• Price gap: Private properties cost 190-239% more than HDB flats
• No government subsidies; subject to Additional Buyer’s Stamp Duty (ABSD)

1.2 Key Affordability Metrics (2025)

Metric	HDB Resale	Private Property
Median Multiple	4.2	14.6
Annual Price Growth (2025)	5.6%	3.4%
Median Price	S$408,000	S$1,780,000
Million-Dollar Transactions	1,243 (6% of total)	Majority

Despite these challenges, Singapore ranks relatively well internationally. The median multiple of 4.2 for HDB flats compares favorably to Hong Kong (14.4), though it still falls in the ‘seriously unaffordable’ category according to Demographia’s classification.

1.3 The Paradox: Lower Rates, Higher Prices

The 2025 housing market demonstrated a critical paradox: while mortgage rates declined significantly—with the Singapore Overnight Rate Average (SORA) falling to around 1.25% in November 2025 and some banks offering fixed-rate mortgages below 2.5%—property prices continued their upward trajectory.

This counterintuitive outcome reflects the dual nature of interest rate reductions in Singapore’s context. Lower borrowing costs improved affordability calculations on paper, reducing monthly payment burdens for buyers. However, they simultaneously stimulated demand by bringing more buyers into the market and increasing purchasing power. With supply constrained by limited land and lengthy development timelines, increased demand translated directly into sustained price pressure rather than affordability gains.

The net effect: buyers could afford slightly higher monthly payments, but faced elevated absolute prices that largely offset the interest rate benefit.

2. Market Outlook 2026-2027

2.1 Price Projections

Property consultancies project continued but moderated price growth for 2026:

Market Segment	Projected 2026 Growth
Private Residential	2% – 5%
HDB Resale	3% – 4.5%
Landed Properties	Continued strength

The outlook reflects cautious optimism tempered by persistent challenges including limited supply, rising construction costs, and structural demand pressures.

2.2 Supply-Demand Dynamics

Supply Constraints:

• Only 5,300 new private units completed in 2025, rising to 7,600 in 2026—well below the 10-year average of 12,000 units annually
• 26 private projects launched in 2025, dropping to just 17 in 2026
• Total new supply expected to fall nearly 30%, from 11,400 units to roughly 8,100 units

Demand Drivers:

• Average of 20,000 new households formed annually over the past five years
• 13,484 HDB flats reaching Minimum Occupation Period in 2026 (up from 8,000 in 2025), increasing resale supply
• Growing pool of upgraders with household incomes exceeding S$20,000 monthly
• Permanent residents and former private homeowners supporting HDB demand

2.3 Geographic Shifts: Return to the Heartlands

A significant trend for 2026 is the pivot away from Core Central Region (CCR) developments. In 2025, approximately 23% of new launches occurred in the CCR—an unusually high concentration. For 2026, an estimated 65% of new launches will be in the Outside Central Region (OCR), with locations including Tengah, Tampines, Bayshore, and Sembawang.

This shift has important implications for affordability. OCR projects can offer family-sized three-bedroom units in the S$1.6-2.1 million range—within the ‘affordability sweet spot’ for many upgraders—compared to CCR developments where the same budget often yields only two-bedroom or compact three-bedroom units.

2.4 Economic Context

Singapore’s economic outlook provides mixed signals for housing affordability:

• GDP growth forecast: 2.2% for 2026 (down from 2.5% in 2025)
• Core inflation projected at 0.5-1.5% for 2026
• SORA rates expected to continue declining, potentially stabilizing around 1.0% in 2026
• Wage growth projected at 4-5% in nominal terms
• Construction costs expected to rise 5-7% in FY2026, creating a floor under new development pricing

If wage growth outpaces property price increases, real affordability could gradually improve. However, global uncertainties including potential recession risks and trade tensions remain significant headwinds.

3. Government Solutions and Policy Framework

3.1 The HDB Model: A Global Reference

Singapore’s Housing Development Board, established in 1960, has become an internationally recognized model for large-scale public housing. The system addresses affordability through multiple integrated mechanisms that work in concert to maintain accessibility while building household wealth.

Historical Achievement:

• Built 21,000 flats in first three years (1960-1963), resolving acute housing crisis
• Over 1 million flats completed since 1961
• Home ownership increased from 29% (1970) to 88% (1990), currently at 88%
• Average of nearly 20,000 units completed annually from 2011-2020

3.2 Core Affordability Mechanisms

3.2.1 Land Policy

The government’s land acquisition program, formalized in the 1966 Land Acquisition Act, gave authorities broad powers to acquire land at prevailing market values before density increases. This prevented windfall profits to private landowners from public infrastructure investments and created a sustainable land bank for continuous development.

• HDB flats are 99-year leases on government-owned land, reducing upfront costs
• Shorter-term leases available for elderly citizens to further reduce prices
• Government controls land supply through strategic releases, managing price appreciation

3.2.2 CPF Integration

The Central Provident Fund (CPF), Singapore’s mandatory savings system, was integrated with housing policy in 1968. This innovation allowed Singaporeans to use retirement savings for home purchases, creating a self-reinforcing cycle of asset ownership and long-term wealth accumulation.

• CPF Ordinary Account savings can cover downpayments and monthly mortgage installments
• Most flat buyers service mortgage loans using CPF with little or no cash outlay
• In 2022, over 80% of new homeowners used less than 25% of income to service loans

3.2.3 Subsidized BTO Pricing

HDB applies a structured pricing methodology designed to ensure affordability while maintaining quality:

• Market value established considering location, attributes, and prevailing conditions
• Significant market discounts applied to reach selling prices
• Mortgage Servicing Ratio benchmark of 25% ensures affordability across income levels
• In 2022, 98% of 4-room flats in non-mature estates priced below S$400,000
• House Price-to-Income ratio maintained at 4-5x (vs. 9-13x in London, LA, Sydney; 18x+ in Hong Kong)

3.2.4 Housing Grants

Enhanced CPF Housing Grant provides up to S$80,000 for eligible first-time buyers, with larger amounts for lower-income households. Additional grants target specific groups including families with children, elderly citizens, and those purchasing in non-mature estates.

3.3 Recent Policy Initiatives (2024-2026)

3.3.1 Supply Expansion

• 55,000 BTO flats to be launched between 2025-2027 (increased from earlier projections)
• Over 25,000 private residential units through Government Land Sales (GLS) programme 2025-2027
• H1 2026 GLS programme largest since 2017, yielding up to 11,000 homes

This aggressive supply strategy directly addresses the fundamental supply-demand imbalance that drove double-digit price increases in 2021-2022 (13.3% and 8.6% respectively). The moderation to 3.4% growth in 2025 suggests the policy is beginning to take effect.

3.3.2 New Classification Framework

Implemented October 2024, this framework replaces the binary mature/non-mature estate system with classification by locational attributes. The change allows HDB to continue building in attractive locations while maintaining affordability and ensuring fair subsidy distribution.

• Singles can now purchase 2-room Flexi flats in any location (previously restricted to non-mature estates)
• Enhanced support for first-timer families through new priority categories

3.3.3 Cooling Measures

To manage speculation and maintain genuine owner-occupier focus:

• Additional Buyer’s Stamp Duty (ABSD) of 60% for foreigners (effectively limiting foreign demand to 1.4% of transactions in 2025)
• Extended Seller’s Stamp Duty (SSD) measures, contributing to 49% year-on-year drop in subsale activity
• Prime/Plus BTO flat designations with resale restrictions and clawback provisions
• Total Debt Servicing Ratio (TDSR) limits capping monthly debt repayments at 55% of income

3.3.4 Transparency Requirements

New 2026 regulations mandate developers to clearly disclose:

• Structural walls on floor plans to clarify renovation flexibility
• Ventilation shafts and waste chutes to help buyers assess unit quality
• Lift locations and access routes for noise and privacy assessment

4. Economic and Social Impact

4.1 Wealth Creation and Inequality

Singapore’s housing system has been remarkably successful at distributing wealth across income levels. Home ownership among the bottom 10% of residents stands at 84%, and 87% for the bottom 20%—figures that are exceptional by global standards.

The appreciation of HDB flats has allowed even lower-income households to accumulate significant assets. Properties purchased for S$350,000 in 2020 are now worth S$550,000, creating S$200,000 in equity gains that can fund upgrading, retirement, or intergenerational wealth transfers.

However, the system creates challenges:

• Widening wealth gap between homeowners and those unable to enter the market
• Generational inequality as younger buyers face higher entry costs
• Tension between affordability for new buyers and wealth preservation for existing owners

4.2 Economic Stability and Consumer Spending

Housing wealth significantly impacts Singapore’s economy through the wealth effect. Home equity appreciation encourages consumer spending, which accounts for over two-thirds of economic activity. The system provides:

• Economic stability through broad-based asset ownership
• Political stability as homeowners have ‘a stake in nation-building’
• Retirement security through housing equity that can be monetized or passed to children
• Counter-cyclical buffer during economic downturns as housing wealth maintains consumption

Mortgages represent 72.7% of total household debt, with the majority being HDB and bank loans for owner-occupied properties. This high but manageable debt level reflects the success of the CPF-housing integration in facilitating home ownership without creating systemic financial risk.

4.3 Social Engineering and Integration

Beyond shelter, public housing has been leveraged to achieve broader social objectives:

Ethnic Integration:

The 1989 Ethnic Integration Policy maintains ethnic quotas in HDB blocks, preventing the formation of ethnic enclaves and promoting harmony among Chinese, Malay, and Indian communities. Sales are not approved if they would exceed block quotas.

Family Formation:

• Priority allocation for families with three or more children
• Tax benefits for larger families
• Historical restrictions on singles purchasing (relaxed but with conditions)

Community Development:

• Self-sufficient new towns with integrated commercial, recreational, and social amenities
• Community spaces designed for resident interaction
• Town Councils managed along political constituency lines, linking housing to democratic participation

4.4 Limitations and Criticisms

Despite its achievements, the Singapore model faces several critiques:

Excluded Populations:

Over 300,000 migrant workers live in crowded dormitories with inadequate conditions—up to 80 people sharing a single toilet. This population, essential to Singapore’s economy, has no access to the housing benefits available to citizens and permanent residents. The COVID-19 outbreak among dormitory residents highlighted these inequalities.

Homelessness:

A 2019 nationwide study revealed approximately 1,115 individuals sleeping rough. The government historically avoided acknowledging homelessness, though this has begun to change with initiatives like the Joint Singles Scheme Operator-Run Pilot and the Home Ownership Support Team.

Lease Decay Concerns:

As 99-year leases age, questions arise about long-term value preservation and what happens when leases expire. This creates uncertainty for retirement planning and intergenerational wealth transfer.

Speculative Pressures:

Despite cooling measures, public housing is increasingly perceived as an investment rather than purely shelter. This mindset, encouraged by government statements about flats as appreciating assets, can conflict with affordability objectives.

5. Comparative Analysis and Lessons

5.1 Singapore vs. International Markets

City	Median Multiple	Classification
Hong Kong	14.4	Least affordable globally
Singapore (HDB)	4.2	Seriously unaffordable
San Jose, CA	8.5	Severely unaffordable
Salt Lake City	4.6	Seriously unaffordable
Pittsburgh, PA	3.2	Moderately unaffordable

While Singapore’s 4.2 median multiple places it in the ‘seriously unaffordable’ category, this masks the system’s success. The figure applies primarily to public housing, which serves 80% of residents with substantial subsidies and grants that aren’t captured in raw price-to-income calculations.

5.2 Transferability and Adaptability

International interest in the Singapore model has grown significantly, with jurisdictions from British Columbia to China studying its principles. However, several unique factors enable Singapore’s success:

• Small city-state geography enabling centralized planning and execution
• Government land ownership (state controls over 90% of land)
• Mandatory savings system (CPF) providing financing mechanism
• Strong state capacity and political will sustained over decades
• Acceptance of sweeping government powers in land acquisition and development
• Cultural norms favoring home ownership and long-term wealth accumulation

These factors make wholesale adoption challenging. However, specific elements—aggressive public supply, land value capture, integrated planning, income-based pricing, and mandatory savings integration—offer lessons adaptable to different contexts.

6. Conclusion: Balancing Act for the Future

Singapore’s housing system stands at a crossroads between remarkable achievement and emerging challenges. The nation has accomplished what few others have: providing quality homes to over 80% of residents while maintaining high ownership rates across all income levels and building substantial household wealth.

Yet the 2025-2026 period reveals persistent tensions. Despite aggressive supply expansion and cooling measures, prices continue rising faster than incomes. The paradox of lower mortgage rates driving higher prices illustrates the complexity of affordability in land-scarce Singapore. Million-dollar HDB flats—once unthinkable—have become routine in prime locations.

The government’s challenge mirrors President Trump’s dilemma discussed in the opening article: how to improve affordability for new buyers without damaging the wealth of existing homeowners. Singapore has navigated this more successfully than most markets through carefully calibrated supply management, targeted subsidies, and institutional mechanisms that distribute gains while preventing speculation.

Looking ahead, several factors will determine whether Singapore maintains this balance:

• Supply discipline: Can the government maintain aggressive BTO and GLS programmes to keep pace with structural demand?
• Income growth: Will wage increases outpace property price appreciation, improving real affordability?
• Construction costs: Can rising building expenses be managed without forcing price increases?
• Global headwinds: How will trade tensions, recession risks, and geopolitical uncertainty affect the local market?
• Social sustainability: Can the system remain equitable as wealth gaps widen between homeowners and those priced out?

The 2026 outlook suggests cautious optimism. Price growth is moderating, supply is increasing, and policies are being refined to address emerging issues. The pivot toward OCR developments may help more families access appropriately-sized homes within reach.

Yet fundamental challenges persist. Singapore’s success has been built on treating housing simultaneously as social good and investment asset—a tension that becomes harder to manage as prices rise. The excluded populations—migrant workers, the homeless, those unable to access the HDB system—remind us that even the world’s most successful housing model has limitations.

For other nations grappling with housing crises, Singapore offers both inspiration and cautionary lessons. Its integrated approach—combining land policy, mandatory savings, supply management, and social engineering—demonstrates what sustained political will can achieve. But it also reveals that solving housing affordability requires accepting trade-offs, including significant state intervention, long-term thinking beyond electoral cycles, and willingness to prioritize collective needs over individual property rights.

As Singapore enters 2026, it continues refining a model that, despite imperfections, remains one of humanity’s most ambitious experiments in providing universal housing. The coming years will test whether that model can adapt to maintain both affordability and wealth creation in an increasingly constrained environment.