How could the most economically free country have over 80% of its population living in State-built homes
Housing is one of the most basic things there are in life — or at least it should be. Every citizen needs a place to stay. In the United Nation’s Universal Declaration of Human Rights, adopted in 1948, articles 12 and 25 explicitly acknowledge the fundamental need for adequate living conditions for each and every human being and this includes the principle of no arbitrary interference in anyone’s privacy, family and home. That said, it is common sense to think that public policies focusing on the provision of housing tend to produce low quality constructions for the most socially vulnerable portion of the population, which hardly can afford to buy or rent their homes. Public housing in several countries is also very often associated with high crime rates as well as loud, vandalized and problematic neighborhoods. That is certainly not the case of Singapore.
For 60 years, the Housing & Development Board (HDB), a governmental entity linked to the Ministry of National Development, has been responsible for public housing initiatives in the country. HDB estates are clean, safe, well-maintained, and closely integrated with public transport, supermarkets, amenities, and shopping malls. In one of the world’s most densely populated and urbanized territories, the agency has constructed more than one million apartments spread across all 24 towns in all five regions of the island, covering a little over 80% of the country’s resident population. However, having built these homes throughout the decades does not mean the Singaporean State still owns or manages these properties. In fact, Singaporeans’ homeownership rates are as high as 90.9%, equivalent to former soviet bloc countries such as Romania (96%), Lithuania (90.3%) and Russia (87%). Countries like the US (63.5%) and the UK (63.4%) seem far behind in this regard. But why is that so?
Today’s uncommon real estate scenario in Singapore has a lot to do with how the country has fixed its housing crisis back in the 1960s. Shortly after regaining self-governance in 1959, the nation was struggling to accommodate its growing population. Initially thought to develop renting units to the poor, HDB stimulated hundreds of thousands of people to leave their informal settlements and be reallocated in newly constructed buildings. While trying to solve the housing shortage, the government of Singapore was also attempting to alleviate the tensions between immigrant populations as well as address hygiene and public health problems in slum areas. This bold multi-year housing project ended up following a unique historical path and until 1965, the government-controlled company has successfully delivered 51,000 flats for the rehousing of over 400,000 people — a quarter of the country’s population at the time.
In 1964, HDB also began selling the properties. For that, workers’ Central Provident Fund (Singapore’s State-controlled pension fund) mandatory savings could be used as down payments for the acquisition of apartments as of 1968, which enabled many families to become house owners. This is quite peculiar, because while this city-state is deemed to be the world leader in economic freedom, raking as #1 in the index created by The Wall Street Journal and the Heritage Foundation in 1995, State interventionism appears to be excessive when it comes to housing policies. There is very little space for private actors to take part in this market. This paternalistic trait is also very much reflected on the way the government exerts a sort of social control. For the sake of forming sustainable and cohesive communities, HDB imposes some cultural mix and ethnical quotas harmonization in each building as 40% of the nation’s population is composed by non-natives. Only 3.5 million inhabitants out of the total 5.8 million were born in Singapore. The resident population is predominantly of Chinese (75%) origins, followed by Malays (13%), Indians (9%) and others (3%).
Singaporean residents have the option of buying affordable, simple and functional one- or two-bedroom flats all the way up to five-bedroom apartments in condominiums equipped with swimming pools, gyms with high-quality infrastructures. HDB estates tend to be 20%-30% cheaper than the properties in the hands of the private market, representing a significant housing subsidy for the entire resident population. Application processes are subject to waiting lists and categorize buyers as first- or second-timer families as well as singles and elderly, groups which have very specific housing needs. A five-year minimum occupation period is required upon purchase until the property could eventually be resold. Recently, many technological advancements have been incorporated into HDB’s real estate developments, including prefabricated buildings, observation of environmental concerns (e.g. effective energy, water, and waste management) and investment in urban greenery.
Home to one of the most powerful financial centers of the globe, Singapore is seen by many as a paradise of deregulation and economic liberalism. Nevertheless, this nation sustains a unique model of public housing, which can in many ways sound ambiguous. On the one hand, there is no doubt this “capitalist” ownership-oriented system is designed to make private property flourish on the individual level while also promoting citizen’s free enterprise. On the other hand, everything is made possible by the State’s concentrated political power in the form of a highly centralized system which legislates, builds, promotes, and sells real estate at below market values. This heavy-handed “socialist” model even establishes communal spaces in the first floors of each building and dictates who should live where and how, depending on predefined criteria. Furthermore, over 90% of the country’s land is in fact publicly owned, which means that in practicality individual ownership of flats and apartments are legally subject to a 99-year governmental lease.
In Singapore, individuals cannot own more than one public flat at a time and the State is the one responsible for maintaining, renovating, and upgrading public apartments free of charge. The nature of housing is primarily a place to live rather than an investment. Giving people a space to conduct their lives appears to have had a monumental symbolic impact in the hearts and minds of Singaporeans. The seven-decade monopoly of power by the People’s Action Party (PAP) is largely attributed to this historic fact. One could argue though that authoritarianism and long-lasting democratic deficit are elements that hardly contribute to the consolidation of any nation’s solid foundations.