Affordable housing: Singapore’s path to home ownership for all

Singapore is one of the most expensive cities in the world. But 80 percent of the population own their own homes. Because the largest real estate entrepreneur is the state. How does he ensure affordable housing for everyone?

The key to affordable housing in one of the most expensive cities in the world has three letters: HDB. That’s a lot more than the acronym for the Housing and Development Board. It is one of the questions of life in Singapore – whether in private conversations or on official questionnaires: Do you live in an HDB, i.e. a state-financed apartment, or in private property? HDB are condominiums that the state makes accessible to socially disadvantaged families through subsidized prices and cheap financing, so that today 80 percent of all Singaporeans own their own home – one of the highest quotas in the world.

housing for hundreds of thousands

The “Housing and Development Board” was founded in the early 1960s shortly before Singapore gained independence from Great Britain. The rapidly growing commercial city on the Indian Ocean was faced with the problem of creating affordable housing for hundreds of thousands of immigrants very quickly. State founder Lee Kuan Jew was convinced that people treat their homes more carefully when they own them than when they are just renters.

“We will set an example because this country belongs to all of us,” he said. “We built this country from nothing. It was a mud hole here, a swamp. Today it’s a modern city. In ten years it will be a metropolis,” said Lee Kuan Jew.

High increases in value

The first 2,000 homes were sold in 1964 for $4,900 each. Today they are worth at least a quarter of a million. Four-bedroom apartments that cost $337,000 each in 2009 were selling for $880,000 ten years later. Housing Minister Lawrenz Wong states that the prices for HDB have risen rapidly, but so have incomes.

In the 1970s, for example, his parents still had to pay half of their family income for the mortgage on their HDB apartment. “Today, families spend just 25 percent of their income on financing, which is much less than my parents had to pay back then,” says Lawrenz Wong.

State renovation every 30 years

Many buyers of HDB apartments have become rich, says the housing minister. “People can sell their home at any time and they can keep the profit,” he says. “In contrast to private real estate, HDBs are fundamentally renovated, modernized and upgraded by the state every 30 years. Young families who buy their first small HDB in their 20s later use the profits to buy a larger apartment, and as pensioners you finance the sale Your age.”

The contrast to the private housing market could hardly be greater. Some of the world’s most expensive apartments are on offer in Singapore – megalofts in architecturally bold buildings for sometimes more than 50 million dollars.

Clear HDB rules

The buyer of an HDB acquires it on a 99-year leasehold basis. He must not own any other housing and must not exceed a certain income.

But some people stay in the HDB long after they have become wealthy, like the millionaire Cheng Chuan Loo, who recently made headlines in Singapore for this reason. “The mortgage burden on an HDB is a fraction of that on a private property. The peace of mind it gives you is priceless.”

Modern HDB residential complexes are airy high-rise buildings with green courtyards, almost mini-cities with playgrounds, medical practices, cookshops, shopping malls, kindergartens and meeting places. Every HDB facility has a bunker in case of war.

The government also ensures ethnic mixing. There is a key to allocating housing to Singapore’s three main ethnic groups – Chinese, Malays and Indians – to avoid creating ghettos. And of course the HDB also fit into the overall urban planning concept of public transport and green spaces: no Singaporean – according to the rules – should have to walk more than ten minutes to the nearest park. Turbo capitalism and a planned economy are not contradictory in Singapore.