HDB
History’s Phase Two
New daunting challenge: Providing 7.5m population with luxurious, 21st Century housing. By Seah Chiang Nee.
Jan 13, 2008

AFTER building nearly one million flats, Singapore’s public housing builder is faced with a new historical role that could be more daunting than when it started out 47 years ago.

The Housing Development Board (HDB) will have a pivotal part in meeting the goal of becoming a global city of 6.5 million people.

The new apartments will have to be top-class, matching the private sector's in style but cheaper in cost. In recent weeks it launched the future home for Singapore’s heartlanders.

The Board has had a formidable history that started in 1960 with the building of cheap housing for the masses, but as society has become affluent, its work has become more creative.

HDB building record
In 1960, the HDB was launched.
1961-70 = 120,000 units
1971-80 = 240,000 units
1981-90 = 308,000 units
1991-06 (15 years) = 314,356 units
Total: 982,356 units
Estimated public housing for 6.5mil population = 400,000 more units.

The result today: More than 982,000 flats, for about 80% of the 4.68 million population. The future will be tougher for several reasons.

First, it may have to build at least 400,000 new units (a 40% increase) to cope with the expanded population, and there is less land to work on than five decades ago.

Second, the new flats will have to be luxurious and high-tech, rather than the bland first-generation lot that it churned out in the past.

This is to meet the rising demands of a more affluent and sophisticated middle-class, and the talented foreigners that it wants to attract.

The third is to keep costs significantly lower than the private sector's to reflect its social role, a tall order given Singapore’s new era of high cost, especially in land prices.

The New Order took another crucial step last week when the HDB launched its third condo-like project with luxurious fittings that included timber flooring, large bay windows and built-in wardrobes.

The prices, too, are also close to private condos. The top range of a new three-bedroom apartment will go for S$727,000, or about S$520 per sq ft – a far cry from 1985 when a simple no-frills flat would fetch no more than S$79,000.

These top-end public flats are still cheaper than private suburban condos but are fast catching up. “The higher quality is what many young Singaporeans want,” an official explained.

The changing aspirations are reflected in the statistics.

At its height in 1990, HDB flats housed 87% of Singaporeans, but this figure has steadily fallen to 81% by March last year, mainly due to a shift to private housing.

With more money, professionals and businessmen prefer to own private apartments for the luxury and the prestige. Besides, public flats cannot be freely bought and sold.

New HDB units at subsidised rates are only available to citizens whose family earns less than S$8,000 a month.

Better-off Singaporeans and permanent residents (including Malaysians) often buy them in the more expensive resale market.

Mah Bow Tan, Minister for National Development, said: “Within the next 10 years, more of our flats will be 40 to 50 years old.

“This provides us with an excellent opportunity to explore new ideas for our next generation of public housing that will bring HDB living to a higher plane.”

Pushed by rising demand and a strong market (as well as inflation), HDB prices rose by a strong 17.4%.

Despite their higher earnings, most young aspirant homeowners who are starting off in life find the higher prices in the past three years too overwhelming to overcome.

Their best hope is to buy a new government flat – for which there is a shortage, and a long queue.

The HDB is not only about cheaper housing, but a whole way of life. It decides how well Singaporeans live and whether – or when – they can get married or have children.

A shortage is already forcing some Singaporeans who can’t afford a resale flat to postpone marriage.

Since its inception, prices of public housing have been steadily rising to keep pace with economic growth. This has enabled some shrewd Hong Kongers to come and make a neat profit.

For the People’s Action Party (PAP) public housing is also about survival.

If the HDB succeeds in providing cheap, happy homes for the middle class, the votes will flow towards the ruling party; if not, the opposite will happen.

It is a political weapon like in few – if at all – other countries.

This is the why any mass drift towards private housing will be considered as weakening the PAP’s control machinery.

For example, it has used government subsidies (up to 80% of the cost) for HDB owners to refurbish their old flats as an election weapon.

Constituencies that have opposition MPs (only two out of 84) are given the lowest priority. In practice, none has been selected for upgrading all these years.

In the last two general elections, upgrading was offered to secure votes for the government. Constituencies with strong opposition support were promised S$2bil in such financing.

The rising prices are, however, not a general complaint here. Actually you won’t find many Singaporeans cursing it.

It is not hard to understand why. With four out of five people owning HDB flats, the rising values are largely welcome.

With inflation at a 25-year record and people’s money losing value by the month, public housing – despite the higher costs – still makes a good long-term asset.

(This article was published in The Star, Malaysia on Jan 12, 2008)