Lessons from a conversation with Dr. Sock-Yong Phang, Celia Moh Chair Professor of Economics, Singapore Management University. Supplemented by detail from Policy Innovations for Affordable Housing In Singapore by Dr. Phang. 

My key takeaways from Singapore:

  • Large-scale, publicly funded affordable homeownership is possible! Where there is a will, there is a way. Even so, policies are created and celebrated based on a unique set of circumstances; even winning policies are not easily replicable. 
  • When a government prioritizes affordable housing for all from its inception, affordable housing (and even “public housing”) can become an uncontroversial aspect of a population’s social contract. 
  • Strategic land use policy can proactively combat not-in-my-backyard development attitudes, instead promoting high-density affordable housing in integrated communities. 
  • Scale matters: Singapore’s government-led housing development, mortgage financing, and mortgage savings agency and policies are effective and efficient for a city-state with a population of 5.6 million on a small island, but the same strategies have risks at larger scales. 

What makes Singapore’s story about affordable housing unique?

Singapore’s precision with policymaking and its government’s focus on affordable housing supply is unique; there is significant state control and guidance around housing development strategy in Singapore. Singapore’s Master Plan is created for the entire city-state rather than compartmentalized municipalities, as is common in larger geographies. The government owns more than 90% of the land in Singapore, facilitated by exceptionally strong policies allowing government purchases of private land at below-market rates during a period of rapid economic growth, so the government has great control over their planning decisions. 

The Housing and Development Board (HDB) is Singapore’s government-run housing developer (a 100% state-owned entity) which, for example, developed a remarkable 73% of the new housing stock in Singapore in 2016. HDB’s development decisions are sophisticated enough to adjust with supply and demand. 

An impressive 80% of Singapore residents live in HDB-developed housing. Unlike in the US, there is no negative stigma associated with “public housing” (i.e. housing developed and subsidized by the government).  

Approximately 90% of homeowners in Singapore own homes built by HDB. Singapore prioritizes affordable homeownership rather than rental models. In 2017, only 5.7% of HDB units were reserved for rental rather than homeownership.

  • How does this work? HDB develops housing units on government-owned land and sells units to Singaporeans at affordable prices with 99-year leases. Under this homeownership model, ownership rights are limited by several regulations that would not apply in the private market, such as rules around subletting and resale. Singapore has a required savings account system in place through the Central Provident Fund (CPF), where employees and employers contribute a certain percentage of an employee’s monthly salary (17% for employers and 20% for employees in 2017) that individuals can draw from in specific circumstances: for most households, down payments and mortgage payments are paid through these compulsory savings accounts, which can also be drawn from for specific uses like education, investments, retirement, and medical coverage. To supplement housing costs, HDB acts as a mortgage lender and provides affordable loans at 2.6% rates. CPF and HDB work together to create a stable country-wide homeownership program. 

Singapore’s total population is only 5.6 million and its land mass is only 720 square kilometers (or 278 square miles), which is why the government can sustain their extreme involvement with supply and demand development decisions, large-scale land and zoning policies, and financial savings programs to prioritize affordable homeownership. 

What is the state of affordable housing in Singapore today?

Singapore’s government takes many steps to ensure there is sufficient supply of their government-developed housing. Every quarter, HDB announces new units for purchase so, while there are waiting lists, there is also consistent supply. Though there is a range of housing catering to different income levels.

There is a lot of financial support for young couples to take advantage of HDB homeownership, including housing grants. Ownership options are structured based on a couple’s income level, and are tailored so that couples can reasonably afford to buy their first home from the government, then sell it five years later to upgrade for another HDB purchase or make their next home purchase in the private market. 

The secondary market for the resale of public HDB units is very active. In particular, there is significant demand from permanent residents who are not citizens and aren’t eligible to buy a unit directly from HDB.

Single non-married individuals have to be 35 years or older to apply directly for HDB housing, though this constituency is increasingly getting more rights for homeownership opportunities. (This is one example of how Singapore’s conservative values shape policy.)

Singapore’s policies have been intentional about forcing integration (in direct contrast to the US’s free housing market, which results in income and racial segregation). While there are low-income households in Singapore, there are no low-income neighborhoods. Also, each neighborhood is required to include certain proportions of each of the major ethnic groups to avoid ethnic segregation. The population quotas are regulated by HDB to maintain careful ethnic ratios on a block-by-block and neighborhood level. 

If you could wave a magic wand and change any one policy at any level of government, what would it be and why?

Singapore has carefully crafted policy with affordable housing in mind since its independence, so it’s hard to identify a housing policy that requires an overhaul. HDB was created in 1959 (when Singapore gained self-governance after British colonization) with a priority to build housing for the lowest income groups and reduce chronic overcrowding. Every few years, deliberate changes have been made to housing policies, with an explicit shift in 1964 to include homeownership as part of an expanded mission to support middle income citizens and, later, upper middle income groups. Unlike other countries, where affordable housing is a highly politicized issue, Singaporeans understand the importance of affordable housing for all and that value is part of a de facto social contract. Singapore’s model has been so successful that other governments aim to replicate it (Malaysia, Mexico, China, and Hawaii, for example. See Hawaii State Senator Stanley Chang’s ALOHA Bill!).

There are intentional policies in place to integrate households of different income, race, and religious background, but there is room for improvement to desegregate the rental housing market. Those who cannot afford homeownership reside in blocks of HDB rental units, and become segregated by income. 

What makes you hopeful about housing in Singapore?

Singapore’s government is proactive about planning for the future. Every ten years, Singapore’s land use planners review the land use Concept Plan to anticipate the many developments planned for Singapore’s small land mass. With Singapore’s limited geography, planners have no choice but to build up, tunnel down, and undertake land reclamation, which requires especially careful land use planning. The exercise is taken very seriously, with zoning specialized for airports, various industries, etc. Transportation planning and green spaces are also prioritized. Singapore’s planners adopt a “city in the garden” planning mentality rather than a classic “garden city” vision, which is a key reframing for such a high-density city. 

The Prime Minister gives an annual speech about the state of the economy. He most recently reassured the public that, while Singaporeans are sometimes worried that they’ll run out of space for housing, “No need to worry. We have done our studies and planning. We will have enough space for future generations. Our problem is not finding the space to build enough flats, nor keeping homes affordable for Singaporeans. We know how to do that. Our problem is having enough babies to grow up and live in them!” His conclusion is a comment on Singapore’s aging population as a primary issue, rather than access to affordable housing. 

Singapore’s government (including HDB and CPF segments) are highly efficient and have zero tolerance for corruption. The World Bank’s rating system has recognized Singapore as having particularly low corruption. 

What are effective ways to include the people most impacted by affordable housing issues in government-level decision making?

Housing policies in Singapore have evolved over time, and the government is attentive to citizen feedback. Feedback is given to the government most directly during sessions where Members of Parliament meet citizens, learn about their challenges, then raise those exact issues for discussion in Parliament. For example, for many years, single individuals were not eligible to participate in HDB’s homeownership. After citizens voiced their frustration, laws have changed so they can purchase resale units or apply for new units at age 35. Similarly, single mothers have been left out of housing ownership opportunities. Questions about this issue have been raised, and Singapore’s government has been responsive.