Interesting article that highlighted some key success factors for Singapore’s public housing. However, being concise the article have omitted several other critical factors that made public housing such a success in Singapore. One is the strong economy that created good jobs for the people allowing so many to have the income to own their owned (whether private or public). Next is deliberate policy of home ownership the benefits of which is well known. Another is pricing for affordability but also for sustainability. So public housing is affordable and cheaper that private housing but not so cheap as the bankrupt the State. Public housing currently takes up only 2-4% of Singapore’s annual budget. How much should be public housing and how much private would depend on the circumstances of each country but it is only with a strong public housing programme that any country can hope to allow their people to own homes especially those in the lower middle and lower income groups. The recent IPS survey has again highlighted the great work public housing has done in integrating the country across ethnic and income groups.
Pl let me elaborate on the comments above. Without much resources, most developing countries would heed the advice of economist Steve Mayo anyway and leave housing to the private sector. Private developers would then cater to perhaps the top 50% of the population where the profits are to be made leaving the rest of the population housed in urban slums and shanty towns. Even a developed country with a mature economy like the US can only manage a home ownership of about 60+%. Also, the private sector would not be able to plan and develop on an comprehensive and integrated manner and each private development would be gated and on its own.
For Singapore to be able to succeed on such a scale for housing requires several key success factors. The first is to have a strong economy going on for a very prolonged period. This boosted the income not just for the upper segments but also for the lower middle and lower income groups. It allowed these groups to own their own homes. A rapidly rising income also meant that the government can siphon more of their incomes into the national savings fund, the CPF. This then allowed the government to tap on the fund for most of its funding needs for housing and infrastructure. A strong economy also allowed the government to collect revenues to fund its spending including subsidies for housing without having to dip into the proceeds from the sale of land as in many other countries. Next, in the first 25 years, the government was not hesitant to use the land acquisition Act to acquire up to 30% of the country’s land for public housing and other uses despite the high political cost of doing so. Then there is home ownership as a deliberate policy and so the lower income group received a high subsidy to enable them to do so. Beyond nation building, home ownership would boost the self-esteem and psychology of this group contributing to better management and maintenance of the housing estates. Pricing of public housing while affordable is sustainable. While much subsidies are given to the lowest group there are little or no subsidies for the higher incomes. So spending on housing is limited to about 2-4% of the national budget.
It is because public housing covers more than 80% of the population that we can plan and design on such a scale to given us the vibrant towns and neighbourhoods with all their ancillary facilities. Public housing that caters to the higher income also contributed to this vibrancy in the housing estates. This in turn contribute to the success of public housing in Singapore. It also made possible the integration of different ethnic and income groups and the promotion of extended living in the country. The latest IPS survey again highlighted what public housing has done to integrate the different groups together to build a cohesive nation.
As the article rightly pointed out a successful public housing programme requires a government’s strong political commitment. It would also require the government to be capable of igniting the economy.”
-Mr Chionh Chye Khye
Fellow, Centre for Liveable Cities