How Singapore Fixed Its Housing Problem

After Singapore obtained its independence from Brittan in 1959 the country’s population grew exuberantly. Almost tripping in population from 1959 to 1980. Because of Singapore’s small amount of land (50 square miles) and underdeveloped housing infrastructures at the time many new immigrants were sleeping in the streets with growing racial tension between Malaysians and Chinese. Because of the massive migration of people to the island country, housing the new immigrants became a growing problem.

In 1960, the Singapore government set up the housing and development project, otherwise known as the HDP. This project was a social service that aimed to build housing for the people of Singapore. After a large fire wiped out an entire district in 1961, the HDP managed to build housing for thousands of people in less than two years, winning over public opinion and enabling funding for future developments.

For the HDB to work the government required certain types of taxes from the people of Singapore. The people are required to save part of their salaries in a state-managed Fund called the Central Provident Fund. This fund can be used for two things: helping Singaporeans with retirement and providing incentives for Singaporeans to become homeowners.

The Singaporean Government will then use the money in the fund to pay for construction of apartment complexes. What I find particularly interesting about the HDB is that the social service is not designed specifically for the poor. The HDB builds many different types of apartments and sells them for various prices. For example, the HDB builds high-density public housing for the poor and also builds complex apartment condominiums that have gyms and swimming pools. This is one of the only government organized housing projects in the world designed for everyone.

Today the HDB has designed over 1 million apartments throughout Singapore. Today more than 80% of Singapore’s population lived in public housing built by the HDB, up from only 9% in 1960. The homeownership rate has also increased rapidly because of Singapore’s rising economy.

One main reason why I think the HDB was such a financial success in Singapore is that building houses for everybody, not just the poor, can create a stronger economic incentive then providing housing for only the poor. The public housing the government creates is not free but is on average 30% lower than the private housing market in Singapore. Proving a fancy government-built apartment for people to live in can motivate the lower class to work harder, and live a better life. Also, Singapore has done more than just public housing to incentivize the poor to work.

I definitely think Singapore’s housing projects have helped stimulate its economy, but that doesn’t necessarily mean that the government service is justified. With the government controlling almost the entire housing market this threatens the private housing market, also providing little incentive for innovation. The HDP takes away the freedom for the Singaporean people to conduct business in the housing industry.

Ultimately it's up to the Singaporean people to decide if public housing is a social service they want. I have yet to investigate the community consensus of the HDP, but from what the data shows, the HDP is successful in providing public housing.