Singapore Property Mortgage Gap

by | Dec 28, 2025 | Uncategorized | 0 comments

Executive Summary

Singapore faces a property wealth divide driven not primarily by mortgage rate differentials (unlike the US), but by property price appreciation timing and punitive regulatory barriers that lock homeowners in place. Those who bought before 2021 have built extraordinary wealth through appreciation, while post-2022 buyers overpaid at peak prices or remain priced out entirely. This creates a frozen market with reduced mobility and increasing wealth inequality based purely on purchase timing—not income or merit.

CASE STUDIES

Case Study 1: The 2019 HDB Winner vs The 2025 First-Timer

Mr. and Mrs. Tan (2019 Buyers – “Winners”)

  • Purchase: 4-room Sengkang HDB flat, $380,000 (2019)
  • Loan: HDB loan at 2.6% fixed rate
  • Down payment: $95,000 (25%)
  • Monthly payment: $1,150
  • Current value: $560,000 (2025)
  • Equity built: $270,000 ($180,000 unrealized gains + $90,000 paid down)
  • Real housing cost: Decreasing due to inflation eroding fixed payments
  • Wealth position: Net worth increased by $180,000+ through property appreciation alone

Mr. and Mrs. Lee (2025 First-Timers – “Losers”)

  • Purchase: Same 4-room Sengkang HDB flat, $560,000 (2025)
  • Loan: HDB loan at 2.6% (same rate!)
  • Down payment: $140,000 (25% of higher price)
  • Monthly payment: $1,700
  • Current equity: $140,000 (just their down payment)
  • Wealth position: Starting $180,000+ behind the Tans, despite identical income levels
  • Monthly burden: $550 more per month for the same flat

Critical Insight: The problem isn’t mortgage rates—both pay 2.6%. The problem is paying 47% more ($180,000 extra) for an identical asset with zero additional value. The Lees need $45,000 more in down payment and pay $6,600 more annually, purely due to timing.

Case Study 2: The 2020 Private Property Winner vs The 2022 Peak Buyer

Ms. Chen (2020 Buyer – “Winner”)

  • Purchase: $1.5M condominium in River Valley (RCR), 2020
  • Loan: Bank loan at 1.6% (during ultra-low rate period)
  • Down payment: $375,000
  • Initial monthly payment: $3,800
  • Current rate after refinancing: 2.5% (2025)
  • Current monthly payment: $4,200 (manageable increase)
  • Current value: $1.95M (30% appreciation)
  • Equity position: $825,000 ($450,000 gain + $375,000 initial equity)
  • Outcome: Built $450,000 in wealth while monthly payments stayed manageable

Mr. Kumar (2022 Peak Buyer – “Loser”)

  • Purchase: Similar $1.95M condominium in River Valley (RCR), 2022
  • Loan: Bank loan at 3.8% (peak rates)
  • Down payment: $487,500
  • Monthly payment: $7,100
  • After refinancing to 2.5% (2025): $6,200
  • Current value: $1.92M (prices declined slightly from 2022 peak)
  • Equity position: $457,500 (barely above his down payment)
  • Monthly burden: $2,000 more than Chen was paying in 2020
  • Outcome: Overpaid by $450,000, underwater in real terms after accounting for transaction costs

Critical Insight: Kumar paid peak prices just as rates were rising. Despite refinancing, he’s locked into a property worth less than what he paid, with minimal equity. Chen timed the market perfectly—low prices AND low rates—and built life-changing wealth.

Case Study 3: The HDB Million-Dollar Upgrader vs The Frozen Millennial

Mrs. Lim (Upgrader from HDB – “Winner”)

  • Original HDB: Bought Tiong Bahru 5-room flat for $420,000 in 2017
  • Sold in 2024: $1.15M (174% gain = $730,000 profit)
  • Upgrade purchase: $1.8M Queenstown condominium
  • Down payment: $730,000 from HDB sale + $180,000 savings = $910,000
  • Loan needed: $890,000 at 2.5%
  • Monthly payment: $2,800
  • ABSD: $0 (sold HDB first, so buying first property as private owner)
  • Outcome: Massive wealth creation through HDB appreciation, comfortable upgrade

Ms. Wong (Millennial Renter – “Loser”)

  • Age: 32, working professional
  • Income: $8,000/month (above BTO income ceiling of $7,000 for 2-room flex)
  • Savings: $180,000
  • Rental cost: $2,800/month for 3-bedroom condo room
  • Challenge:
    • Cannot buy BTO (income too high for most)
    • Cannot afford $560,000 resale HDB (need $140,000 down + $1,700/month)
    • Private property starts at $1.2M+ (need $300,000 down + $3,500/month)
  • Stuck: Watching home prices rise while building no equity
  • Outcome: Priced out, accumulating no property wealth despite good income

Critical Insight: Mrs. Lim rode the appreciation wave and built generational wealth. Ms. Wong, through no fault of her own, entered the job market after prices had already surged. Her “good” income actually disqualifies her from affordable housing while not being enough for private property. She’s trapped in perpetual renting.

Case Study 4: The Foreign Buyer “Victim” of ABSD

Mr. Anderson (American Executive – Pre-2023)

  • Purchase: $2.5M Orchard condo in 2021
  • ABSD: 30% = $750,000
  • Total outlay: $1.375M down payment (30% ABSD + 25% down)
  • Outcome: Expensive but manageable for wealth preservation

Mr. Peterson (American Executive – Post-2023)

  • Purchase: Similar $2.5M condo in 2024
  • ABSD: 60% = $1.5M
  • Total outlay: $2.125M down payment (60% ABSD + 25% down)
  • Outcome: Effectively frozen out—needs to deploy $1.5M purely in tax
  • Market impact: Foreign demand collapsed, removing a buyer segment

MARKET OUTLOOK (2025-2027)

Short-Term Outlook (2025)

Price Projections:

  • Private residential: +3-4% annual growth (moderate)
  • HDB resale: +5-7% growth (stronger demand)
  • Landed properties: +1-3% (premium segment stabilizing)

Key Drivers:

  1. Interest rate environment: Mortgage rates declining to 2.5-2.75% range, supporting sentiment
  2. Economic resilience: GDP growth projected at 1-3%, stable employment at 2% unemployment
  3. Supply constraints: Developer participation in land tenders remains cautious (2-3 bidders vs historical 10)
  4. Upgrader demand: Over 100,000 HDB flats reached MOP between 2019-2023, creating massive upgrader pool

Transaction Volume Projections:

  • New home sales: 9,000-10,000 units (highest since 2021)
  • HDB resale: 28,000-29,000 transactions
  • Private resale: 14,000-15,000 transactions

Medium-Term Outlook (2026-2027)

Structural Trends:

  1. The “Upgrader’s Market” Dominance
    • HDB upgraders are now the primary engine of private property demand
    • These buyers are driven by life-stage changes, not speculation
    • They have substantial equity from HDB appreciation (average $200,000-400,000)
    • Demand is relatively interest-rate insensitive due to strong equity positions
  2. Demographic Pressure
    • Average 27,000 marriages annually → new household formation
    • Average 20,000 new households formed yearly
    • Growing cohort of households earning $20,000+/month seeking private property
    • Aging population creating demand for downsizing and right-sizing
  3. Supply-Side Constraints
    • Land scarcity intensifying (1H 2025 GLS: only 8,505 private units)
    • Construction costs remain elevated (labor, materials)
    • Developer margins compressed → maintaining higher selling prices
    • Selective market entry by developers (cautious bidding)

Price Trajectory:

  • 2026: +2-4% private, +4-6% HDB
  • 2027: +2-3% private, +3-5% HDB
  • Cumulative 3-year gain: 7-11% (roughly tracking inflation + modest real appreciation)

Key Risk Factors:

  • Global trade tensions (Trump tariffs, US-China relations)
  • Geopolitical instability affecting Singapore’s external-facing economy
  • Potential economic slowdown reducing upgrader demand
  • Government policy changes (further cooling measures or relaxation)

Long-Term Structural Outlook (Beyond 2027)

The “Frozen Market” Phenomenon:

The Singapore property market is evolving into a structurally frozen state characterized by:

  1. Reduced Turnover Velocity
    • Homeowners staying in properties longer (11.8 years vs 6.5 years historically)
    • Premium locations showing even longer holding periods (LA: 19.4 years; Singapore mature estates: 15+ years)
    • Multiple friction points: ABSD, SSD, property gains, high replacement costs
  2. Wealth Concentration
    • Early buyers (pre-2021) own appreciating assets with fixed/low costs
    • New entrants face dramatically higher barriers to wealth-building
    • Property wealth gap widening between cohorts
    • Intergenerational wealth transfer becoming more important
  3. Market Segmentation
    • “Haves”: Those with property wealth, building more wealth passively
    • “Have-nots”: Locked out or entering at unfavorable prices
    • Middle cohort: 2022-2023 buyers underwater or barely breaking even

SOLUTIONS FRAMEWORK

Immediate Solutions (Individual Level)

For Current High-Rate Mortgage Holders (2022-2023 Buyers)

1. Aggressive Refinancing Strategy

Action Plan:
✓ Monitor mortgage rates monthly
✓ Refinance when savings > penalty costs (typically when rate difference >0.5%)
✓ Use mortgage comparison platforms (MoneySmart, PropertyGuru Finance)
✓ Consider repricing with same bank (faster, cheaper than full refinance)
✓ Negotiate for free legal/valuation fees

Timing Optimization:
- Current optimal window: Now (rates at 2.5-2.75% vs 4%+ in 2022)
- Potential savings: $500-800/month on $1M loan
- Annual savings: $6,000-9,600

2. Accelerated Principal Reduction

If cash flow permits:
✓ Make additional principal payments to reduce loan quantum
✓ Reduces interest paid over loan tenure
✓ Builds equity faster
✓ Improves LTV ratio for future refinancing
✓ Priority: Pay down highest-rate loans first

Example: Extra $500/month on $1M, 2.5%, 25-year loan
- Saves $47,000 in interest
- Shortens loan by 3.5 years

3. Income Optimization

✓ Maximize CPF contributions for housing
✓ Utilize CPF OA fully before cash
✓ Consider skills upgrading for salary increase
✓ Side income streams to cover mortgage differential
✓ Budget ruthlessly to maintain mortgage payments

For Prospective Buyers (Current Renters)

Strategic Framework: “Wait, Save, Position”

1. Financial Readiness Assessment

Calculate your breaking point:
- Can you afford 30% down payment? (HDB: 25% of $550K = $138K)
- Can you service mortgage + maintenance comfortably? (30% of income max)
- Do you have 6-12 months emergency fund AFTER down payment?
- Is your income stable and likely to grow?

If NO to any → Continue renting
If YES to all → Begin active search

2. Rent vs Buy Analysis (Real Numbers)

Renting Scenario:
Monthly rent: $2,800
Opportunity cost: $180,000 @ 3% invested = $450/month returns
Total monthly: $2,350 net (rent minus investment returns)

Buying Scenario (4-room HDB $560,000):
Monthly mortgage: $1,700
Maintenance/property tax: $150
Opportunity cost on down payment: $350 (could invest $140K elsewhere)
Total monthly: $2,200

Net difference: $150/month CHEAPER to buy
BUT: Consider transaction costs, lack of flexibility, market risk

3. Strategic Timing Considerations

WAIT if:
✓ You expect prices to correct (unlikely in Singapore)
✓ You need to build larger down payment
✓ Your income is about to increase significantly
✓ You're uncertain about staying in Singapore long-term
✓ Better opportunities coming (new BTO launches in desired area)

BUY NOW if:
✓ You're financially ready (stable income, sufficient down payment)
✓ Found suitable property at fair valuation
✓ Prices are rising faster than you can save
✓ Life-stage appropriate (marriage, family, stability)
✓ Mortgage rates are favorable (currently yes—2.5-2.75% is good)

4. Alternative Pathways

Pathway A: Resale HDB (Immediate Occupation)
Pros: Move in immediately, established neighborhoods, mature amenities
Cons: Higher prices, older buildings, less subsidy
Best for: Those who need housing now, value location over newness

Pathway B: BTO (Maximum Subsidy)
Pros: Heavily subsidized, brand new, customizable
Cons: 4-6 year wait, limited location choice, balloting uncertainty
Best for: Young couples with time, willing to wait for savings

Pathway C: Executive Condominium (Middle Ground)
Pros: Private facilities at HDB prices, appreciation potential
Cons: 5-year MOP, resale restrictions, limited supply
Best for: Those "sandwiched"—income too high for BTO, can't afford full private

Pathway D: Continue Renting + Invest Difference
Pros: Flexibility, potential higher returns, no property risk
Cons: No property wealth accumulation, no CPF housing usage
Best for: Expats, transient professionals, those bearish on property

For Those Priced Out (The “Locked Out” Cohort)

1. Immediate Coping Strategies

✓ Accept renting as a valid long-term option (change mindset)
✓ Maximize CPF OA growth for future housing (earning 2.5-4% risk-free)
✓ Invest rental savings in diversified portfolio (equities, REITs, bonds)
✓ Build emergency fund (12+ months)
✓ Focus on career advancement and income growth
✓ Consider non-traditional housing: co-living, HDB room rental, staying with parents longer

2. Long-Term Wealth Building (Without Property)

The "Property-Free" Portfolio Strategy:

Assumptions:
- Rent: $2,800/month
- Saved down payment: $180,000
- Monthly savings (vs owning): $500

Investment Allocation:
- $180,000 lump sum → Diversified portfolio (60/40 stocks/bonds)
- $500/month ongoing → Dollar-cost averaging into index funds/REITs

Projected 10-year outcome:
- Lump sum @ 6% annual: $322,000
- Monthly @ 6% annual: $82,000
- Total: $404,000

Compare to homeownership:
- Property appreciation: Moderate (2-3% annually on $560K = $130K-180K)
- Equity built: ~$140,000 (principal paid down)
- Total: $270K-320K

Difference: $80K-130K in favor of investing (before accounting for flexibility value)

3. Alternative Housing Strategies

Strategy 1: Inter-generational Living
- Stay with parents longer, contribute to household
- Save aggressively (3-5 years)
- Enter market with substantial down payment (30-40%)
- Reduced loan quantum = lower monthly burden

Strategy 2: Couples Strategy
- Rent separately while dating ($1,500 each)
- Get married → Apply for BTO together
- Wait 4-6 years while renting
- Move into subsidized new home with substantial savings

Strategy 3: Sandbox Strategy (Build wealth elsewhere first)
- Focus on career and income growth (25-32 years old)
- Maximize portable wealth (CPF, cash savings, investments)
- Enter property market later with much larger down payment
- Buy at mid-career with 40-50% down payment → minimal loan burden

Short-Term Solutions (Government Policy – 1-2 Years)

1. Targeted ABSD Relief for Right-Sizing

Problem: Current ABSD structure discourages people from selling and moving, reducing market liquidity.

Solution: “Life-Stage ABSD Exemption”

Exemption Criteria:
✓ Singapore citizens aged 55+
✓ Downsizing to smaller/cheaper property (at least 30% reduction in value)
✓ Selling existing property before buying new one
✓ One-time exemption only

Impact:
- Encourages older Singaporeans to right-size
- Frees up larger HDB flats and condos for families
- Increases market supply and transaction velocity
- Minimal revenue impact (targets small cohort)
- Reduces social pressure on elderly to maintain large properties

2. Graduated Seller’s Stamp Duty (SSD) Relief

Problem: Current SSD structure (4-year holding period, up to 16% tax) severely restricts mobility for job relocations, family changes, financial hardship.

Solution: “Hardship SSD Waiver Program”

Waiver Categories:
✓ Job relocation >50km away (supporting economic mobility)
✓ Family expansion (need larger home for newborn/elderly parents)
✓ Divorce/separation (family restructuring)
✓ Medical hardship (cannot manage stairs, need accessible housing)
✓ Financial distress (job loss, income reduction >30%)

Application Process:
- Submit supporting documentation to HDB/IRAS
- Processing within 30 days
- One-time waiver per citizen
- Still subject to ABSD on purchase (prevents speculation)

Impact:
- Reduces "trapped" homeowners forced to stay in unsuitable properties
- Increases market liquidity
- Supports life-stage flexibility
- Maintains anti-speculation intent (ABSD still applies)

3. Enhanced CPF Housing Grant (Immediate Expansion)

Current: Up to $120,000 for first-timer families

Problem: Down payment requirement (25% of $560K = $140K) still unaffordable for many despite grants.

Solution: “Tiered CPF Housing Boost”

Income-Based Top-Up:
- Household income $4,000-6,000: Additional $40,000 grant (total $160,000)
- Household income $6,001-8,000: Additional $20,000 grant (total $140,000)
- Household income $8,001-10,000: Current $120,000 (no change)

Location-Based Adjustment:
- Non-mature estates: +$20,000 (encourage decentralization)
- Mature estates: Current rates (maintain balance)

Outcome:
- Lower-income families can afford down payment more easily
- Encourages home ownership in developing towns
- Supports GLS supply in newer areas
- Progressive support scaling with need

Medium-Term Solutions (Government Policy – 2-4 Years)

1. Progressive ABSD Structure Reform

Current Problem: Flat ABSD rates (20% for 2nd property for citizens) discourage:

  • Elderly from keeping extra property for children
  • Middle-class from investing for retirement income
  • Property market liquidity

Solution: “Tiered ABSD Based on Holding Period & Intent”

Structure:
┌─────────────────────┬──────────┬──────────┬──────────┐
│ Property Type       │ Current  │ Year 1-3 │ Year 4+  │
├─────────────────────┼──────────┼──────────┼──────────┤
│ 2nd property        │ 20%      │ 20%      │ 10%      │
│ 3rd property        │ 30%      │ 30%      │ 15%      │
│ Rented out (proven) │ -        │ 15%      │ 5%       │
└─────────────────────┴──────────┴──────────┴──────────┘

Key Features:
✓ ABSD reduces after 3 years (discourages flipping, rewards long-term hold)
✓ Further reduction if property rented out (supports rental supply)
✓ Must prove rental income via tax returns (prevents abuse)
✓ Foreign buyer rate remains at 60% (maintain differential)

Impact:
- Encourages long-term investment over speculation
- Increases rental supply (landlords incentivized)
- Maintains revenue in short-term (first 3 years)
- Improves market liquidity for genuine buyers/sellers

2. Rental Market Formalization & Incentives

Problem: Limited affordable rental supply, informal market, landlord-tenant disputes

Solution: “National Rental Scheme (NRS)”

Three-Pronged Approach:

A. Tax Incentives for Landlords
- 50% reduction in ABSD if property rented for 5+ years continuously
- Rental income tax capped at 15% (vs current marginal rates 22-24%)
- Accelerated depreciation on property for tax purposes
- Minimum standards: Safety, habitability, fair contracts

B. Tenant Protections
- Standard lease agreements (HDB-style for private)
- Rental deposit capped at 2 months
- Dispute resolution tribunal (small claims-style)
- Rent control in specific scenarios (vulnerable tenants, public housing)

C. Public-Private Rental Partnership
- Government co-invests in rental properties with private owners
- Shared ownership: Owner 70%, Government 30%
- Government guarantees tenant quality and rent payment
- Owner gets ABSD relief + stable income
- Government gets affordable rental supply for citizens

Impact:
- Dramatically increases rental supply (thousands of units)
- Makes renting a viable long-term option (reduces pressure on buying)
- Formalizes rental market (better tenant protections)
- Creates steady income stream for retirees (property as retirement asset)

3. “Flex-Tenure” HDB Scheme

Problem: 99-year leasehold anxiety, lease decay affecting resale values, elderly unable to monetize aging flats

Solution: “HDB Lease Extension & Buyback Scheme 2.0”

Program Design:

Option A: Lease Top-Up Program
- HDB owners can extend lease by 30 years (back to 99 years)
- Cost: 30% of current property value
- Eligibility: Properties with <60 years remaining lease
- Can use CPF + cash + government subsidies (based on income)
- Increases resale value dramatically

Option B: Enhanced Lease Buyback Scheme
- Government buys back flat at fair value, family retains rights to stay
- Proceeds go to CPF RA (retirement income)
- Family continues living in flat (converted to rental @ subsidized rate)
- Upon death/vacation, flat returned to HDB pool
- Provides liquidity to asset-rich, cash-poor elderly

Option C: Partial Sublease Rights
- Allow HDB owners to sublet UP TO 50% of flat (e.g., 2 rooms in 4-room flat)
- Subject to HDB approval (tenant screening)
- Generate rental income to offset mortgage/living costs
- Increases rental supply in public housing sector
- Monitored via digital platform (prevents abuse)

Impact:
- Reduces lease decay anxiety (major buyer concern)
- Provides retirement liquidity for elderly
- Increases overall housing supply flexibility
- Supports inter-generational living & rental demand

Long-Term Solutions (Structural Reform – 5+ Years)

1. Land Supply & Housing Innovation

Problem: Land scarcity driving prices, conventional housing models reaching limits

Solution: “30-Year Housing Masterplan”

Supply-Side Reforms:

A. Underground & Vertical Expansion
- Mandate 30% of new residential developments incorporate underground living space
- Incentivize 50+ story residential towers (density bonuses)
- Integrated with MRT stations (TOD - Transit-Oriented Development)
- Target: 200,000 additional units by 2040 without new land

B. Southern Waterfront & Long Island Development
- Accelerate Greater Southern Waterfront (2,000 acres)
- Long Island reclamation (800 hectares) for mixed housing
- Target: 150,000 new residential units
- Timeline: Phased delivery 2028-2040
- Mix: 40% public housing, 40% private, 20% EC

C. Industrial Land Conversion
- Repurpose aging industrial estates for residential (e.g., Paya Lebar, Kallang)
- "Live-Work" districts with mixed-use zoning
- Target: 80,000 units from industrial conversion
- Precedent: Tanjong Pagar, Alexandra

D. Smart BTO Allocation
- Dynamic BTO supply based on demand forecasting (AI-driven)
- Shorter 2-3 year completion times (modular construction)
- More frequent launches (quarterly vs bi-annual)
- Target: Eliminate BTO waiting lists by 2030

Total New Supply by 2040: 430,000 units
- Public housing: 250,000
- Private housing: 120,000
- Executive condos: 60,000

2. Alternative Ownership Models

Problem: Binary own-vs-rent model doesn’t serve all life stages, income levels, or preferences

Solution: “Housing Ownership Spectrum”

Model 1: Shared Equity Scheme (SES)
- Government co-owns property with citizen (50/50 or 70/30 split)
- Citizen pays proportional mortgage + maintenance
- Government share converts to full ownership over 20 years (gradual buy-out)
- Upon sale, profits split according to ownership %
- Target: Middle-income sandwich class
- Pilot: 5,000 units in 2026

Model 2: Rent-to-Own Scheme (RTO)
- Rent with option to purchase within 10 years
- 30% of rent payments accumulate as down payment credit
- Locked-in purchase price (protection against appreciation)
- Flexibility to walk away if circumstances change
- Target: Young professionals, uncertain buyers
- Pilot: 3,000 units in 2027

Model 3: Lifetime Tenancy (LT)
- Long-term rental (30-50 years) at below-market rates
- Secure tenancy (can't be evicted except for breach)
- Transferable (can pass to children upon death)
- No capital appreciation, but significant cost savings
- Target: Elderly, lower-income, minimalists
- Pilot: 2,000 units in 2027

Model 4: Co-operative Housing
- Residents collectively own building via housing co-op
- Buy "shares" in co-op (lower entry cost than full property)
- Collective decision-making on management
- Equity appreciation shared among all members
- Target: Community-oriented, alternative lifestyle seekers
- Pilot: 1,500 units in 2028

Impact:
- Provides housing options across the ownership spectrum
- Reduces pressure on traditional buy-own-sell model
- Serves diverse life stages, incomes, and preferences
- International precedent: Singapore, Sweden (co-ops), UK (shared equity)

3. Wealth Redistribution & Social Safety Nets

Problem: Property wealth gap creating permanent class division, opportunity inequality

Solution: “Inclusive Wealth Framework”

Program 1: National Wealth Fund (NWF) for Non-Property Owners
- Automatic enrollment for citizens who don't own property by age 35
- Government contributes $5,000 annually (up to age 55)
- Citizen can contribute via CPF or cash (matched 1:1 up to $5,000)
- Invested in diversified portfolio (Singapore stocks, REITs, bonds)
- Target: Build $200,000-300,000 by age 55 (alternative to property wealth)
- Usage: Retirement, children's education, healthcare

Program 2: Property Appreciation Tax (PAT) - "Wealth Circulation"
- Tax on property appreciation exceeding inflation +2% annually
- Applied upon sale (not holding)
- Progressive rate:
  - First $200K gain: 0% (primary home protection)
  - $200K-500K gain: 10%
  - $500K+ gain: 15%
- Revenue directed to NWF and housing grants
- Impact: Circulates windfall gains from early buyers to those priced out

Program 3: Inheritance & Estate Planning Reform
- Increase estate tax threshold to $50M (from current exemption)
- Graduated rates: 5-15% on estates over $50M
- Exemption for single primary residence (family home protected)
- Revenue funds public housing, education, healthcare
- Prevents extreme generational wealth concentration

Program 4: Education & Skills Fund (ESF) Expansion
- Double investment in lifelong learning ($10B over 10 years)
- Target: Increase earning potential of lower/middle-income Singaporeans
- Focus areas: Technology, healthcare, green economy, financial literacy
- Outcome: Income growth → Improved housing affordability

Impact:
- Reduces wealth inequality by redistributing windfall gains
- Provides alternative wealth-building for non-property owners
- Invests in human capital (long-term solution to affordability)
- Maintains incentive for property ownership (primary home protected)
- Progressive and targeted approach

IMPACT ANALYSIS

Social Impact

1. Wealth Inequality & Class Division

Current State:

  • Property wealth is the primary driver of wealth accumulation in Singapore
  • Those who bought pre-2021 have built $180,000-500,000 in unrealized gains
  • Those priced out accumulate no property wealth, falling further behind
  • Intergenerational wealth transfer becoming critical determinant of outcomes

Projected Impact (Without Intervention):

2030 Scenario - "The Great Divide"

Upper Class (Property Wealthy):
- Own 1-3 properties acquired pre-2023
- Total property wealth: $2M-10M+
- Passive income from rentals: $3,000-10,000/month
- Can fund children's down payments ($200,000-500,000)
- Retirement secure via property wealth

Middle Class (Single Property Owners):
- Own 1 property (often overpaid in 2022-2023)
- Equity: $200,000-500,000
- High debt servicing (30-40% of income)
- Stretched financially, limited savings
- Retirement partially funded by property

Lower Middle Class (Renters):
- Earn decent income ($6,000-10,000) but priced out
- Rent costs: 30-40% of income
- No property wealth accumulation
- Children face even worse affordability
- Retirement dependent on CPF only

Lower Class (Locked Out):
- Low income (<$4,000) + No family wealth
- Subsidized rental flats or HDB room rental
- Zero wealth accumulation
- Permanent renter class forming
- Inter-generational poverty risk

Measurement Metrics:

  • Gini coefficient (wealth): Currently 0.67 → Projected 0.72 by 2030
  • Property ownership rate: Currently 89% → Projected 82% by 2030
  • Inter-generational mobility index: Declining
  • Social cohesion index: Weakening