THE Singapore Housing Development Board’s (HDB) model has always been regarded as the most successful affordable housing programme, where nearly 80% of the population live in government-built public flats that are sold below market value and with about nine in 10 owning their homes.
At the risk of oversimplification, such astonishing success is attributed to the establishment of an integrated approach to housing, from planning and design, through land assembly and construction, to management and maintenance.
Besides, the capability of building below-market-value public flats is deemed as the result of using latest construction technology that enables fast supply of mass housing to meet ever-increasing demand.
However, the long-term and strong political commitment is the real key of success, among others. In Singapore, public housing is not just a social welfare programme providing shelter for those who are unserved by private housing, but is also a national development strategy by which socio-economic change is exercised on the majority of the population.
To note, HDB flats are built and sold at subsidised prices by the government. The cumulative government grants provided to HDB since its establishment in 1960 until 2022 amounted to S$42.972 billion (RM128.9 billion). Given that the amount collected from the sale of HDB flats in every financial year is less than the total development cost, HDB has been consistently facing deficits.
For example, in Financial Year 2021/2022, HDB incurred a net deficit of S$4.367 billion, which was 86% higher than the S$2.32 billion deficit incurred in FY20/21, and was the highest ever deficit recorded since the inception of public housing. Of this deficit, S$3.85 billion was incurred for the home ownership segment, almost double the S$1.953 billion deficit recorded in FY20/21, stemming from the gross loss on the development and sale of flats to eligible buyers under the various home ownership schemes, as well as the disbursement of housing grants to eligible households of new and resale flats.
This substantial deficit was covered by government grant, which was S$4.4 billion in FY21/22, an 88% increase from S$2.346 billion in FY20/21. Apparently, the high level of government support through continual public subsidies to HDB is vital to ensure that public housing remains affordable, accessible and inclusive in Singapore.
This, contrasts with Malaysia, where the private sector has been playing a critical role in building price-controlled social houses – low-cost, low-medium cost, medium cost and rumah mampu milik (affordable home) – where a quota is imposed across the board nationwide.
According to the National Housing Policy 2018-2025, every private housing development is required to dedicate 30% of its project to affordable housing. This requirement has been in place since 1981, and is intended to be reviewed recently, to ensure that affordable housing is provided for all mega projects developed.
Inevitably, “cross-subsidisation” from the free-market housing products will continue to be the biggest unaddressed issue, and is expected to aggravate the already distorted housing market.
This article is contributed by Dr Foo Chee Hung, manager of product research & development MKH Bhd.
Source: The Sun Daily
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