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Singapore Housing Policy, the ultimate best practice?

10/10/2010 00:00

Fifty years ago, the self-government of Singapore created the Housing and Development Board (HDB). When the country became fully independent in 1965 the first Prime Minister, Lee Kuan Yew, saw dilapidated housing and slums, which were widespread at the time as the most visible mark of under-development.

He also had the vision of quality housing playing a key role in nation-building, giving an identity to a city-state where various communities had to learn to live and work together. HDB was the instrument required to promote public housing on a large scale, to make good use of public subsidies and deliver adequate housing for all citizens.[1]

Singapore is today a most advanced Asian Tiger, a well-organized and prosperous “first world” country and global city. Its GNI per capita is close to 35,000 USD (on par with Italy). Its exports have grown at an average rate of nearly 10 per cent in the last 20 years and have reached USD 300 billion. Its unemployment rate stands at a low 2.2 per cent, its fertility rate at a very low 1.2 per cent, (a serious problem of ageing population), its urbanization rate at 100 per cent (a record and a chance). Singapore counts 5 million inhabitants (citizens 3.2 m, permanent residents 0.5 m, foreign workers 1.3 m). Residents live in well-designed and comfortable housing estates (known as HDB Towns, 26 so far), generally in high-rise buildings (between 12 and 21 storeys, and sometimes up to 40 or even 50 storeys) with community facilities, green spaces and easy access to mass transport lines (buses and metros).

In 50 years HDB, one of the largest public developers in the world, has produced more than 900.000 flats that house 82 per cent of the resident population (i.e. more than 3 million persons). The vast majority (95  per cent) of these units have been sold at subsidized prices to middle-income families, whose monthly incomes should be below 5,700 USD (8,000 S$) in 2010. The historical evolution has been as follows: 11,000 units built per year in the 1960s, 24,000 in the 1970s, 30,000 in the 1980s, 26,000 in the 1990s. In the last decade, production has gone down as the demand is largely met.

Impressed by HDB performance, visitors usually raise two types of questions. The first category relates to the design and livability of the towns created by HDB, particularly to the vertical building pattern which is a trademark of Singapore. The second is about the allocation of public money to reduce selling prices, the share of national budget devoted to housing and the subsidy strategy which constitutes the backbone of HDB success.

On the issue of vertical housing, the government has no shame, quite the opposite. The main argument is the need for a small island (710 to maintain high building densities if it wants to preserve its natural environment.

In fact, despite all the high-rise developments, urban densities remain relatively low in Singapore (compared to Hong Kong for example). They average 100 units/ha and could be achieved in other ways, through more compact estates of lower heights. It appears that the systematic high-rise option is not a mere consequence of the high-density search. Rather it seems to reflect the cultural aspirations of the leaders, as well as the population, to live in a “first world” environment: a world where sky-scrapers are combined with extensive services, where community bonding goes hand-in-hand with modern technologies, where strong family values are translated in generational proximity (vertical and horizontal).

Critics would add: where efficiency comes first, and pleasure second. Singaporeans are indeed proud of their buildings, of their modern infrastructure, but also of their shared Asian values, even if those values have no visible impact on the architecture of their towns. Indeed most housing estates in Singapore are better designed (with standardized apartment types) and better maintained than their equivalents in the Western world. But they have a similar look.

It may be considered that physical verticality is becoming a typical Asian value, opposite to the western villas and maisonettes which constitute a symbol of social individualism and of the division of public spaces. Vertical Singapore, Hong Kong and Shanghai probably represent the future of Asian cities. In most surveys[2] Singaporeans respond that they prefer to live in the highest floors which provide better views and some breeze, and where probably one has somehow the feeling of “dominating the world”. In a recent household survey (2008) 96 per cent of residents expressed satisfaction with the quality of their flats. Since the 1990s, HDB has moved beyond housing per se towards creating quality living environments and spatial identities.  Landmark buildings, landscaping, open spaces and special architectural features have been included to achieve a visual identity for each town.

In term of housing finance, the Singaporean policy can be analyzed as an anti-Bretton Woods model. Far from all World Bank prescriptions, it relies on heavy subsidies which are not specifically targeted to low-income groups.    

These subsidies could be compared to an indirect salary as they increase the purchasing power of the beneficiaries by up to 20 per cent. From 1960 to 2008 the cumulative Government grants amounted to USD 14 billion. This is considerable and on the increase in recent years, reaching up to USD 50,000 per unit. Unfortunately as the overall government grant is used to finance not only housing development, but also the operating and capital expenditure of HDB, it is impossible to compute precisely the grant received per unit of HDB flat.

Interestingly subsidies are not allocated at the start of the fiscal year but on a monthly basis to cover HDB operating deficit. Of course subsidies also boost the construction industry and therefore have an impact on both the supply and demand sides of the housing sector. The annual amount allocated to the sector (USD 1.3 billion in 2008/09) represents about 4.5 per cent of the total government budget.  

Housing has been a driving force of the economy, particularly in the 1980s and 1990s. The end result today is remarkable. Of course money had to be available and therefore the Singaporean model cannot be easily applied to Least Developed Countries. But it can inspire a number of emerging economies which are trying to join the “first world” wagon.

Singapore had the advantage of its small size and of its simple and flat governance structure. More than a city-state, it is primarily an international metropolis that benefits everyday from the globalization of the world economy.

Its public housing experience could be useful to many emerging cities, provided they have the power to mobilize and allocate resources without too much interference from higher authorities. The People’s Republic of China has understood this lesson and decentralized many responsibilities to city-level bodies during the last 30 years. A radical compulsory land acquisition policy has also been a key factor of regulation and control of the land market in the city-state.

Three additional remarks must be made.

On one hand, HDB has promoted since 1982 maximum home-ownership, mainly to ensure societal and political stability. Its rental stock is limited, amounting to about 50.000 units; it targets low-income families and the elderly. This strategy is appropriate in view of the size of the country and the easily available public transport options. It would not be suitable to larger countries with younger populations and fluctuating or volatile labour markets, which require more rental opportunities.

On the other hand, the HDB resale market is quite dynamic (30,000 units per year) as households can sell their flats after five years at market prices and then de facto pocket the initial subsidy (the median resale price of a 4-room flat amounted to USD 230,000 in 2010). Finally the management of HDB estates fall under the responsibility of town councils, which charge modest monthly fees to all families for maintenance and improvement purposes. In the meantime, HDB undertakes renovation or redevelopment schemes of its estates on a regular basis.

The public housing production system of Singapore is therefore comprehensive. It covers all necessary steps, from land-use planning (in collaboration with the Urban Redevelopment Authority, i.e. the national urban planning agency) and aggressive land-acquisition, to design and construction (by private enterprises, at an average cost of USD 1,000 per sq.m), allocation (with ethnic quotas), sale (housing loans at 2.6% interest rate), estate management and renewal, and possible resale on the open market. With its 4.900 employees HDB is clearly the central actor and driver of this system. Its operations are sometimes spectacular[3], often forward-looking and always demand-driven.

World experience shows that all successful housing policies have been based on dynamic, innovative and well-managed housing developers. Singapore is a case in point, a symbol of the importance of political will and resolute continuity. It won the World Habitat Award as early as in 1992, a few years before the launch of UN-HABITAT’s Best Practice Programme.

HDB certainly deserves the Habitat Scroll of Honour which it received in October 2010 for its 50th anniversary. It is now looking forward to the inauguration of its one-millionth apartment.


This article was published in Urban World in January 2011 

[1] A United Nations expert, Albert Winsemius, played an important role as Chief Economic Advisor to the Prime Minister from 1961 to 1984. He provided policy recommendations on industrial development and encouraged government investment in large-scale public housing programmes.

[2] See Yuen B., 2007, Squatters No More: Singapore Social Housing, in Global Urban Development Magazine


[3] Such as the recent 50-storey Pinnacle@Duxton of 1.848 apartments in seven towering blocks linked by two sky-bridges.