World's best public housing?
Sorry not now
Singapore's public housing - arguably the world's best - looks expensive, maybe a little tattered. By Seah Chiang Nee
In 42 years, the Housing Development Board (HDB) has built homes for 85 per cent of the population and helped to turn a squatter colony into a First World.
Its renowned work is not just bricks and mortars; it has changed and molded lifestyles of millions. What else can it do?
Some two decades ago, as Editor of the Monitor, I instituted several "think tank" groups to discuss public issues in Singapore to improve the newspaper's coverage.
One was public housing. Someone raised the eventual prospect of HDB housing reaching saturation point and an over-supply that could cause a price collapse in the secondary market.
Have we reached this point? No.
These are still pioneering days for Singapore. Its history is just beginning. In 30 years, its population could read six or seven million.
That would call for a doubling of homes over the next quarter century with HDB provided the majority of them. It is still needed to erect (reasonably) cheap housing and refurbish old estates.
But the building pace in future will not match the hectic past (one unit every 45 minutes at its peak)
So why are Singaporeans turning their backs on one of the world's most renowned public housing schemes?
Several reasons. Firstly, a declining birthrate and with almost nine-tenths of the people properly housed The public need for HDB apartments has declined substantially through the past decade.
Secondly, the public taste has changed.
The younger generation does not just want a subsidised flat like their needy parents. It wants one in a choice area comparable to some of the high standards of a private condo.
And thirdly, the sad state of the economy, which is depressing property prices. Since 1996, they have fallen by more than 30 per cent. The weakness is not over, not for a while.
In contrast, the prices of HDB flats, which are largely decided upon by the government, have decreased much less.
As a result the gap between public and private properties has been declining to a state when buyers are beginning to find HDB products unattractive.
It has made up for it by erecting better-designed blocks to meet upgraded expectations, cutting down on bothersome regulations. But pricing disadvantage remains a tough obstacle.
Some people have called for the closure of HDB, but it will not happen because its task of providing "affordable" housing to Singaporeans is never-ending.
The government is now revamping the whole scheme, long admired by foreign governments east and west for giving this city the highest home ownership in the world.
The revamp may bring in a bigger role for private developers. Ten years ago, the long-term plan was to have 70 percent people owning public housing, 30 percent private (current ratio 85:15).
"Private developers can gauge market changes better than the government," said one official.
The famous long queue of applicants for HDB flats has all but disappeared. During its peak, an applicant could wait several years before getting a unit.
Young Singaporeans have developed a love of living in the city centre and refurbished estates with bright lights, exciting shopping and train stations.
This demand is driving many first-time buyers to leave the queue to buy resale units in a choice locality.
As a young reporter, I had watched how HDB living had molded people's lives that got representatives from all over the world to come and study it.
As society developed, the HDB had to cater for different needs of different people, the middle class and the poor. It also had to keep up with advancing design, technology and higher costs.
Today, singles prefer studio flats, as do retired couples whose children have moved out. All have special needs. Many don't like to live in new estates in the suburbs.
Some of these unwanted and empty blocks stand like ghostly giants at night. If the HDB were a private company, it would have to reduce prices.
Despite perky designs and steady deregulation, HDB flats are still disliked for being too uniformed, restrictive and lacking sophisticated facilities that yuppies like.
"No one wants to live in a numbered block - like prison cells," exclaimed an undergraduate.
For S$100,000 to S$150,000 more, professionals would rather buy a private condo with a sophisticated address, a swimming pool and security guards.
Not surprising, the total number of applicants in line has dropped to 11,000 as at February.
At the peak, the figure was 146,000.
If they are not picky, every one of them can have a flat today.
There are 17,500 unsold flats in new towns with a value of S$4.4bil. In addition, HDB is offering 1,900 resale units in popular mature estates.
This is having an indirect impact on the private property market.
Many buyers are "upgraders" who need to sell their HDB apartments in the secondary market before they can go private with top-up financing. This in turn is putting pressure on private condos.
The HDB role is not at its sunset but its future role may be slightly different.
It will probably respond to market pressures for a review which will allow the private sector to play a bigger role in public housing because it is better placed to react to market changes.
The government has announced that a comprehensive examination is under way. It will take one or two years.
Two objectives will be retained: encouraging property ownership and providing good "affordable" housing for the population.
So why not simply lower HDB prices to clear stock?
Poor option. The government, which owns 70 per cent of Singapore's land, is the state's biggest property owner and developer.
If it brings down HDB prices, it will impact the whole property market and wipe out the value of the biggest assets among Singaporeans.
HDB property is responsible for making Singapore a relatively wealthy middle-class society. HDB prices form a psychological price tier of Singapore's housing pyramid.
Any price cut would spill over to the private sector and eventually have an impact on the assets of its citizens.
The depressed conditions have caused a sharp cutback in supply. The government last year built only 8,000 units, compared to 21,000 in 2000 and 37,744 in 1995.
The cloud hanging over the property market is not likely to clear for another two or three years until the backlog clears.
That will see a gradual return of strong run-up of demand and prices. Then - and only then - will the supplier of public housing becomes all-important to the eyes of property buyers.
Seah Chiang Nee
(Photo courtesy of the Straits Times)