Singapore-style sustainable, managed housing-based wealth-building in US
July 17, 2020 12:21 AM   Subscribe

Why Singapore Has One of the Highest Home Ownership Rates - "Singapore's affordable housing program worked so well that some of its subsidized apartments now resell for more than $700,000." (via)
[A] decision made more than half a century ago... gave Singaporeans, rich and poor, a direct stake in the country’s prosperity, one that led to a nation with one of the highest rates of home ownership in the world and yet where more than 80% of the population live in government-built flats.
Millennials Can't Afford Homes After Exiting the Basement - "The U.S. needs to increase homeownership for the young and the wealth it creates."
Some countries have done a better job than the U.S. of using housing to build and transfer wealth across generations. One of these is Singapore. Although most of Singapore’s housing is government-built and is technically government-owned, the government allows occupants to buy and sell 99-year leases that essentially function as title deeds. Homeownership, therefore, is near-universal. The government also gives out subsidies to help young families buy starter homes. Because the government manages the supply of new homes, it can ensure that young people earn a decent return by the time they retire.

The U.S. could adapt this system to promote mass homeownership and wealth creation for millennials and later generations. The government could build and sell new housing, especially in inner-ring suburbs, potentially using eminent domain to keep construction costs low. Young people -- especially young families -- could get down-payment assistance to buy their first home. By carefully managing the amount of new housing construction, the government could make sure that home prices appreciated enough to provide people with a decent return over their lifetime, but not too much to price younger people out of the market.

Each generation would thus get to enjoy what the WW II generation and boomers enjoyed -- the security and personal freedom of owning a home at a young age, coupled with the knowledge that their wealth would appreciate over time. And because down-payment assistance would be funded by progressive taxation, the system would redistribute wealth to those who weren’t born with rich parents.

The alternative -- letting young Americans reach middle age without a stake in the U.S. economic system -- is both sad and frightening to contemplate because it could lead not just to ennui but to unrest. A housing system built loosely on the Singaporean model would allow today’s young people to enjoy the same life progression as their parents and grandparents, preserving the American dream in perpetuity.
thread: "Singapore does what the U.S. did with the G.I. Bill and the construction of the suburbs -- but it does it for every generation, not just one or two generations like we did."

also btw...
posted by kliuless (15 comments total) 15 users marked this as a favorite
 
AHAHAHAHAHAHAHAHAHAH sure.

I directly benefited from this system but it is not one that allows non-rich young people to enjoy the same life progression - marriage is definitely delayed because people have to save up to get a tiny flat first. The common joke is that you propose by asking if they want to make a down payment with you. If you're single, a single parent, or living with an abusive family, then it becomes a very difficult ladder to access - deliberately.

That said, the apartments themselves are pretty great because Town Councils do a good job keeping them in shape. There are shady neighbourhoods (Yishun memes represent!) but overall, a bad neighbourhood here is comparatively a safe and clean place anywhere else in the world.
posted by dorothyisunderwood at 12:56 AM on July 17, 2020 [24 favorites]


Okay - Marine Parade was for a long time the PAP's strongest held ward with the Prime Minister representing it for a long time, so it is like a super super nice place to live. It's also fairly accessible to town with a car. Queenstown was a crappy district until an expressway got built and it was suddenly 10 minutes from town and prices exploded. The MRT (subway) line has an enormous impact on time. We live in a tiny island 35 by 50km approximately yet if you take public transport or even during prime hours drive to work, your commute from one side to another easily stretches over an hour.

Those black and white colonials btw were for years managed by a sleepy government rental section and hugely underpriced for the market, so they were an absolute steal to rent. My parents had one, and I lived in a couple as rentals because they were so cheap in square footage, although they all had waiting lists. They got converted to market prices a few years ago unfortunately. So cheap!

The thing where they say how many years are left is tied to CPF savings (mandatory pension everyone pays into) that you can use towards a mortgage, BUT only on properties that have at least 60 or something years left. There are slightly different rules for the elderly and some exceptions, but in general, all 99-year properties (the variation on freehold we have here) start to age out 30 years in and new construction becomes more profitable to replace these 30-40 year old buildings.

In theory, that should happen with our public housing stock, but the government has so far replaced them with buy-ins to new stock for people whose flats are getting knocked down. If our population shrinks and they don't need as many flats, well that becomes a whole new pickle, but so far, only cash-rich people buy older flats because of the mortgage limit.

The really expensive flats are a million, but that's for a great easy commute location with a good view and at least 1,000 sq ft. Buying the same thing for that price in a private condo with the same 99 year lease would mean you got like a one room studio somewhere very far away. Housing is just really expensive here for everyone.

"Social protection" in the other article - so if you're broke, we don't really have homeless shelters. People who can't afford a tiny place are put into rental flats with highly subsidized rent to the government, but a huge issue continues to be overcrowding. If you're single, you must have a roommate assigned to you to get one of the flats. It's pretty spartan.
posted by dorothyisunderwood at 1:12 AM on July 17, 2020 [14 favorites]


The MSN piece revives the arguments for Thatcher's Right to Buy programme in the UK. Giving low-income people a "direct stake in the country’s prosperity" and the "security and personal freedom of owning a home" is part of the 1980s narrative that we need a "property-owning democracy" as "home ownership stimulates the attitudes of independence and self-reliance that are the bedrock of a free society" (Heseltine).

Right to Buy gave tenants of social housing the right to buy their homes at heavily-subsidised prices. It was wildly popular with its beneficiaries at the time as a massive transfer of wealth from the state to the working poor, but is heavily criticised for hollowing out the social housing stock. The key difference with Singapore seems to be that in SG, the government continues to own the freehold while selling 99-year leases. In the UK, once a tenant buys their flat, it's gone from the social housing stock for good.

An entertaining footnote in history is that Arthur Scargill, the miners' union leader and Thatcher's number 1 critic, applied to use Right to Buy on his council flat.
posted by Klipspringer at 2:54 AM on July 17, 2020 [10 favorites]


I disagree with Right to Buy on many levels, but it didn't need to be such an unmitigated disaster, if only councils had been encouraged or required to reinvest the proceeds from the sales in new public housing stock, rather than forbidden from doing so.
posted by Dysk at 3:19 AM on July 17, 2020 [15 favorites]


All I can say as a millenial Malaysian with Singaporean and Singaporean PR friends is, the American housing crisis must truly be dire that twitter flopped around and settled on Singapore as your best case study this week. I barely know anyone my age who's managed to actually buy a unit, most seem to be trapped in private rentalhood, while they try to check off the list to be eligible.
posted by cendawanita at 3:58 AM on July 17, 2020 [12 favorites]


HDB has been great... so far. But Singapore is staring at the same difficulty that everyone else is grappling with. HDB is a system that gave the can a good kick down the road.
"Fundamentally, Georgism is the idea that no one really owns the land, and that land rents are both a morally illegitimate and economically inefficient source of wealth."
So... one of the issues we have, is that the government has historically pitched the the HDB flat as an asset - one aspect to the accumulation of wealth. The message has only recently started to shift but is still up against ingrained public perception that "property prices never drop".

Also, private property prices have exploded, and overall property prices with it. Being able to sell your subsidised public housing flat for $700,000 is not an argument in support of affordable housing.

Also x2, not everyone is a "winner" in this scenario... some flats have exploded in value more than others, and as a seller, the story does not end at you selling your flat. You still have to live somewhere, and you have to buy something to replace what you sold.

Also x3, Singapore has a compulsory savings and pension fund called CPF, and one of the few times you can withdraw your CPF before you hit old age is... to buy property. For the people who have rock solid retirement plans in place, they treat their CPF monies as a discount on the property. For the people who are in more precarious positions, using their CPF is the only way they even get to participate in the property market. In both cases, money is being taken out of the retirement fund to fund a property purchase.

The above is an oversimplification and of course I don't pretend to know it all. But one takeaway I have is that the rising tide doesn't obey the laws of physics... it raises the nicest boats first.

It would be great if mindsets changed and people viewed homes as theirs for living and not wealth accumulation. This is far from the case in Singapore.
posted by theony at 4:35 AM on July 17, 2020 [8 favorites]


I don't have much to contribute as a non-Singapore resident but I am really grateful for the Singaporean and Singapore-aware posters in this thread. Thanks y'all.
posted by mdonley at 5:15 AM on July 17, 2020 [11 favorites]


Do the high ownership rates count the 20% of people in Singapore who are migrant workers?
posted by clawsoon at 7:04 AM on July 17, 2020 [8 favorites]


If the bloomberg article got the number from official government statistics, the home ownership stat is actually reported "by household headed by a resident". A resident means a Singapore citizen or permanent resident. So, probably not.
posted by theony at 8:55 AM on July 17, 2020 [3 favorites]


Dysk, apparentlyThatcher's Right to Buy scheme was designed initially, so that all proceeds from the sale of council houses would go directly into building more council housing stock. But that part was dropped, almost immediately, much to the irritation of Lord Heseltine, the designer of the policy.

There is a fascinating radio documentary about it here, which seems super relevant to this example from Singapore as well. (Mostly fascinating to me because it is presented by someone who sets out to prove that the Right to Buy scheme did enable upward social mobility in families like his, but... well I won't spoil the ending!)
posted by EllaEm at 10:17 AM on July 17, 2020 [3 favorites]


your commute from one side to another easily stretches over an hour.

This is not an unusual commute in the US, so I guess one advantage Singapore has is that most housing it can build is roughly substitutable? You can get to any Singapore job from it, although it might be tiring and slow? An advantage well-used, then.

But I still don’t see how they’ve fixed the dilemma between housing as an investment for people currently housed, and housing as a skyrocketing expense for people not yet housed. When they describe publicly built and maintained flats being sold for massive private profit as an economic success I don’t get it. ( It is a social success compared to public investments being under maintained and losing both use and investment value, which I’m used to in the US.)
posted by clew at 10:44 AM on July 17, 2020


I don't think I"ve seen a less self-aware headline. It's impressive.
posted by effugas at 9:41 PM on July 17, 2020 [1 favorite]


The main link seems to assume that home ownership in and of itself is a desirable outcome - even going so far as to employ the "direct stake in the country's prosperity" line that is a shibboleth for economic thinkers who think they are really good at tic-tac-toe.

I think having a market economy is a good thing. It's a simple way to align the desires, talents, and efforts of the individual with those of society at large. In order for it to work effectively though, people must be able to fail gracefully and gently, and not be removed from the market/economy/society. They need a path back in to participation. Similarly, no one should be able to succeed so completely that they are immune to market forces - or worse, get to change the rules to favor themselves. There should be rewards for success, and failure should require reflection and change, but the more people participating in the market economy, the better.

The part that confuses people is that there is not magic algorithm or set of rules to make this work. You need to establish goals, establish metrics to determine if you are meeting those goals, and then constantly re-evaluate both your goals and metrics. You will never get it right. You will only do better or worse.

...and there will always be people looking exploit the inefficiencies in any system you come up with, so you must be explicitly vigilant about that, and patch the holes as they come up.

Getting back to the topic: People tend to like home ownership because it provides stability and (potentially) wealth. In the USA, it is a common source of generational wealth. This is a great thing if you have it, because it provides the soft-landing cushion that can keep you in the mix during bad times: Something that the USA economy otherwise doesn't provide for.

I don't think this is the most effective or efficient system, though - in the USA or Singapore. I think a system of communal, national land ownership with long-term leases to land users would be better: More efficient, more equitable, and would greatly reduce the cost of living nationwide.

Again, this would require a system of specific goals and metrics that regularly shift over time. Leases must be long enough to encourage land improvements like new apartment buildings in cities. Regulations must also make it difficult for leaseholders to exploit tenants. It's all of our land, and we want to make sure it benefits all of us. There's not secret recipe for this. It will change over time.

But imagine: "Landlord" would become a service industry job, not merely a rentier. "Land Barons" would become extinct.

...and this is a completely economic argument. There are even better humanitarian arguments for similar ideas. It just frustrates me that the dum-dum "Free Marketeers" who believe in a form of economic Darwinism don't understand that they're leaving money on the table. We can be kind and equitable and all enjoy a better standard of living.

But increased home ownership is - to me at least - a red herring.
posted by Anoplura at 6:59 PM on July 19, 2020


I'm pretty sure I've seen research unpicking the non-cash value of homeownership, and finding that a lot of it seemed to come from expecting to be in one place for a while. That is, people who expected to buy and sell their house often didn't gain or provide social advantages, but people with protected rental tenancies did. Can't remember much more about it.
posted by clew at 9:26 PM on July 21, 2020


The Limits of the Singapore Housing Model - "Haila argues that 'Singapore has solved the housing problem' but this certainly isn't true for those shut out from the HDB system. But the system does allow most citizens the opportunity to both enter the housing market at a reasonable price and sell at a reasonable return... Singapore has put development and redevelopment of its land to work to maintain the availability and affordability of flats for the people the system is designed to serve."
posted by kliuless at 1:49 AM on August 8, 2020


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