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