Dissecting the Housing Issue

Disclaimer: The following article is meant to be an informative and analytical exploration. The author’s opinions are her own and (as far as possible) not influenced by any particular party. They are merely observations made post-analysis. 

It’s hard to ignore all the arguments and explanations with regards to the present political situation, so I’ve been doing my fair share of reading and analyzing, since it’s the responsibility of the citizen to actually find out what’s the origin behind each issue, instead of being distracted whenever the wind blows.

Close to my heart is the issue of public housing, especially since I’m at a stage of life where I’m contemplating my future prospects and juggling sums of money in my head.

I’ve always thought that the PAP’s mission to have each and every Singaporean a home owner to be a laudable one. Unlike other countries where their citizens move from rented flat to rented flat, Singaporeans generally do feel that they have a greater stake in the country due to the fact that they own a large material asset (the home) here. Comparatively, a home is a harder thing to discard and throw away than say a car, a job or even friends.

At the heart of the present debate, lies two main concerns:

  1. The definition of Public Housing
  2. The definition of the necessary costs with regards to Public Housing
Since I’m by no means a political/government administration expert, I turned to a few other government websites for help on the definition of Public Housing.
The Australian Government defines it as such:
State and territory governments provide some rental housing, called public housing, for people on low incomes. The rent is often a fixed part of your income. There is a very long waiting list for public housing.
The US Government is perhaps more definitive:
Public housing was established to provide decent and safe rental housing for eligible low-income families, the elderly, and persons with disabilities. Public housing comes in all sizes and types, from scattered single family houses to highrise apartments for elderly families.
but the best comparison would perhaps be Hong Kong, where its housing patterns are very much like Singapore’s:
to maintain a stable environment for the sustainable and healthy development of the private property market, as well as to provide subsidized public housing for people who cannot afford private rental housing.
Taking these definitions into account – have our Public Housing policies met these needs? I took a look at some statistics available at HDB.gov, but regrettably, I am unable to tell if our lower income group (as emphasized by the three separate quotes above) who form the bulk of HDB dwellers can comfortably afford a flat. However, what I did find was the following graph:
Bearing in mind that I have friends who hate graphs and there are people who feel blind after a long work day staring at a computer screen, I took the liberty of marking out certain areas:
Public Housing is for the lower-middle income group. As such, it would make logical sense for the prices of public housing to match their income, not the general income / overall GDP of the country. Certainly, as one looks at the graph, prices of our public housing were relatively stable from 2001-2008. In view of the events that happened (economic boom, economic recession then economic recovery) it seems that our government played its part in these years to stabilize the prices of public housing.

What then, happened from 2008 – 2011 for prices to begin its exponential rise of 75% of the overall price? Judging from this graph, buying a public housing flat will now cost approx 175% of what it cost in 2008 – compared to the relatively stable prices from 2001-2008, it’s a considerably huge rise in cost. And has the income of the lower-middle income group similarly risen in tandem with the rising cost of public housing?
“To continue to grow and prosper while slowing the intake of foreign workers, the same number of Singaporean workers must produce more. Otherwise, there will be a deflating economy, and knock-on effects on jobs and asset values. Instead of many job opportunities and rising asset values, including prices for resale HDB flats, the reverse will happen… fewer jobs, lower salaries, lower asset prices… pay will fall and so will the number of jobs and promotion,”  

Lee Kwan Yew, in his speech to Tanjong Pagar residents
Several factors have been pointed out by the opposition to be the cause of the rising HDB prices:
  1. the allowance for foreigners & PR residents to purchase public housing flats
  2. the matching of HDB flat prices to the retail market
Looking at point 1, which LKY similarly noted in his speech, there are both pros and cons in letting foreigners purchase public housing. At its relatively “cheap” prices compared to private housing, it is an affordable and attractive option for our foreign talent. This allows us to be competitive with our neighbouring countries for foreign talent. However, as opposition WP has pointed out, doing so raises the demand for HDB flats, driving up prices exponentially as the influx of foreign workers increases.

Looking at point 2, the WP and NSP reason that since HDB purchases land from the government at a special subsidized price for residential purposes, this government subsidy should be passed on to citizens – so that flat prices will be cheaper. In comparison, private developers who build condominiums and private housing buy land at a far more expensive price, so it makes sense that their market value is higher and more expensive. As public housing specifically should cater to the lower-middle income group, pegging public housing prices to private housing prices meant for upper middle-higher income groups does not “make sense”.

Admittedly though, doing a sudden, dramatic pegging of prices to median incomes of the lower-middle income group will invariably cause a huge upset in our property market. Just think of it this way. Approx more than 2 million of our 4.5 million population (or even more, I give an arbitrary number) live in HDB flats. What would they think, if post-elections, the value of their houses suddenly dips by 75%? 

Honestly, even though it would be MUCH cheaper for me to buy and move into a new (and maybe better) flat, I’d be pissed that my assets have depreciated so much – which I guess is what MBT refers to when he talks of “asset enhancement” being one of the joyous things about the rising costs of our public housing.

Moreover, as MBT notes, the government operates at a deficit of about S$1 billion in housing and home ownership programmes and S$1 billion in home rejuvenation (lift upgrading and playground building) programmes. So reducing the government’s income from public housing would mean an “illegal raid on the reserves”.
Which then brings us to the next issue. What constitutes as “necessary costs” when it comes to public housing? Are Singaporeans too pampered to envision HDB estates without playgrounds, beautiful hotel-like lifts and prettily painted blocks?

Perhaps the problem lies precisely in our lack of knowledge and voice.

When the Town Council suggests lift upgrading, HDB residents are given a vote. Yes, or no. They aren’t told about other possible alternatives or options: no upgrading or newly painted blocks means a reduction of Town Council fees/a reduced payment to HDB for fewer services incurred etc. Instead of spending S$1 billion on “home rejuvenation”, what about using that sum to reduce the overall costs of HDB flats for the lower-middle income group?

What if upgrading became more transparent and democratic? Like all debatable decisions, it would definitely be a tough one, liable to turn violent and ugly, particularly when people don’t see eye to eye. (Think of the awful en-bloc situations we’ve heard of in the past). So while it is idealistic and visionary to envision a future where citizens get to vote decisively and knowledgeably on issues such as how and where to direct costs, and what necessary costs mean to them, I don’t foresee it to be an easy step to take.

These are pictures of the most basic and oldest public housing in Hong Kong for the lowest income group and the elderly who earn little or no income. To the HK government, necessary costs don’t include lift upgrading and pretty paint. But at what costs to its citizens’ living standards?

NSP suggests a re-adaptation of HDB’s pricing, to resemble more similarly, a rental agreement, (a policy that seems closely related to Australia’s and US’s public rental housing, as previously quoted above) which MBT rejects flatly, as it does not fit at all into the PAP’s mission to have each and every Singaporean own their own home in Singapore. Should the PAP be more flexible? And to what extent will this affect Singaporeans’ opinions and sense of belonging in their country without the factor of home ownership?

Personally, I believe it’s a matter of one’s priorities. There’s no determinable way I see at the moment that can assuredly say one political party’s point of view is greatly superior to the other’s. What I can hope for is that post-elections, the passionate debating of such issues will lead our government to take a close and hard look at how it defines the role of public housing in our society, for our society; and then re-adjust its policies for the welfare of the overall community.

About ruth

whimsical, nutella-obsessed, shopaholic, bookworm. A huge fan of fantasy novels, she sees the magic in everything :) Life is too short to waste time feeling miserable. Serendipity!

Posted on April 30, 2011, in 2011, Home, Life and tagged , , , , , . Bookmark the permalink. 3 Comments.

  1. You don’t own a HDB flat under the current scheme. The contract you sign is a lease from the government, with a 99 year expiry date. You don’t own any part of the HDB estate you are in, including the flat you live in. In contrast, with private condominiums, you actually have partial ownership of the land and facilities of the estate. The NSP isn’t proposing moving to a rental agreement so much as proposing altering the current conditions of renting flats from the government.

    • I agree. & as stated, it’s all about how the government chooses to define public housing. Why spend on all that upgrading when some would rather do without and would prefer cheaper HDB prices instead?

      I’m still shocked at how the govt let HDB prices escalate so terribly in the name of buffering our govt reserves. personally, i’d happily hand over my growth & share package to any low-income family to reduce their burden of housing loans, & i’m sure many singaporeans will be happy to do the same :)

  1. Pingback: Daily SG: 30 Apr 2011 « The Singapore Daily

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