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     Key challenges facing public housing in Singapore

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¡°Public Housing: Homes, Communities, Nation¡±

It is my honour and pleasure to be invited here to speak to such a distinguished audience today. You are the key policy makers and leaders in the public and private sectors from about 30 different countries. You have come to the Lee Kuan Yew School of Public Policy to learn with and from one another the art and science of good governance, in order to make ¡°prudent, wise and effective decisions that are in the public interest¡±. When Kishore asked me to choose a topic for my talk, I asked myself: What would be of interest to an audience like this? How do I add value to the time we will spend together?

2 There is a Chinese phrase that says there are four basic needs in our daily life: yi, shi, zhu, xing (clothes to wear, food to eat, a roof over our heads, and some means of transport). Even in today¡¯s world, satisfying these basic needs remain a challenge for many governments. Indeed, this was so for Singapore when we first became independent. Today, I would like to tell you how we overcame one of these challenges, housing, how it has played a major role in building communities and the nation, and what lessons we can draw from it. In sharing our experience, I am mindful that this is viewed from a Singapore perspective. You will have to view it from your own perspective and unique circumstance.

3 For Singaporeans, public housing provides more than just a roof over our heads. Our housing estates are where eight out of 10 Singaporeans live and interact with their fellow citizens. Public housing in Singapore is part of our collective experience. By providing homes for our people and ensuring that our communities grow cohesively, public housing plays an important role in our efforts to build a nation.

The Beginning: History of Public Housing

4 Let me start from the beginning. Singapore gained self-government from Britain in 1959. Like all young countries, we were faced with many problems.

5 One of the most pressing challenges was an acute housing shortage. The majority of Singaporeans were living in crowded squatter colonies, which lacked proper sanitation and were fire hazards. The population was growing rapidly, with immigration adding further stress on the housing shortage. The squatter colonies expanded rapidly threatening to overcome the city with each passing day.

6 The Government¡¯s immediate priority was to build as many flats as possible in the quickest time possible to solve this crisis. The Housing and Development Board or HDB as it is affectionately called today, was set up in 1960 to tackle the problem.

7 The first HDB Chairman was Mr Lim Kim San. In the first five years of its existence, the HDB built 50,000 flats. This was a remarkable feat, considering that the previous colonial Government had taken 30 years to build 23,000 flats. Within 10 years, the housing shortage was largely solved.

8 Mr Lim Kim San passed away last month. Although he has many other contributions, Singaporeans will best remember him as the architect of public housing, which is one of the pillars of modern Singapore.

Public Housing Today

9 Today, 46 years after HDB was established, there are almost 900,000 flats across Singapore, which house 85% of Singaporeans. They come in different shapes and sizes to suit the different income and lifestyle requirements of Singaporeans. There are one and two room flats for lower income families, Studio Apartments for the elderly, three and four room flats for the middle income, and larger five room and Executive flats for higher income households and extended families who want to stay together.

10 Today, nine in 10 Singaporeans own their own homes, compared to less than 10% 40 years ago. We have probably the highest home ownership rate in the world.

11 The flats are made affordable, with generous government subsidies on both the selling price of the flat as well as the loans to pay for it. Typically, a family needs to pay less than 20% of their household income to service the loans.

12 To keep pace with Singapore¡¯s development, HDB has improved the quality of public housing over the years. New HDB precincts today are built with landscaped greenery, multi-storey car parks, playgrounds and fitness corners. There is easy access to MRT stations, neighbourhood shopping centres, schools, and recreational and entertainment facilities.

13 Older estates are constantly upgraded so that residents in these estates are not left behind, and they too can enjoy facilities comparable to those in our newer estates. We are currently in the midst of a massive nation-wide programme to retrofit HDB blocks with lifts that stop on every floor. This is to serve the needs of a rapidly ageing population.

Building Homes, Communities, A Nation

14 But right from the beginning, we realised that public housing was not just about providing a physical roof over our head. Singapore was a young nation, with people coming from many lands to settle here. We had to get them to sink roots here, and to develop a sense of belonging to the community and to the nation. Our nation building and community bonding objectives have shaped the design and development of our public housing programme over the years.

Home Ownership: Creating a Nation of Stakeholders

15 The cornerstone of Singapore¡¯s public housing programme is our home ownership policy. Started in 1964, the Home Ownership for the People Scheme aimed to give Singaporeans a tangible stake in the country and its future.

16 Minister Mentor Lee Kuan Yew gave the rationale for this policy in his memoirs: ¡°I had seen the contrast between low-cost rental flats, badly misused and poorly maintained, and those of house-proud owners, and was convinced that if every family owned its home, the country would be more stable¡­ I believe this sense of ownership was vital for our new society which had no deep roots in a common historical experience.¡±

17 The home ownership flat provides the incentive for Singaporeans to work hard to own a flat, and to defend it. National Service (NS), the conscription of able-bodied male citizens to serve in Singapore¡¯s military defence, would not be possible if Singaporeans did not feel that they had such a tangible stake to defend.

18 To help Singaporean families own their flats, each household is eligible for various public housing subsidies. Those buying a flat for the first time can choose to buy a new flat from HDB at a subsidised price, or buy a resale flat and enjoy a government subsidy of up to $40,000. Lower income families are given an Additional Housing Grant of up to $20,000. This offsets up to 30% of the cost of a two-room flat (approx. $65,000). To finance their flat purchase, the Government also offers a mortgage loan at a subsidised interest rate. To facilitate social mobility, flat owners who are buying a bigger flat from their current flat can get a second subsidised loan.

19 Besides contributing to the stability of the country, home ownership has provided Singaporeans with an asset and a store of value. In a recent survey, each HDB household was estimated to have an average housing equity worth about $154,0001.

20 This asset is closely linked to the economic development of Singapore. It motivates Singaporeans to work hard so that their flat can grow in value, and they can upgrade to a better home. Most importantly, the possibility of upward social mobility provides hope to people. Anyone who works hard can, with some help, improve his life and that of his family.

Building Communities & the Singaporean Identity

21 Public housing also plays an important role in building up the Singaporean identity and social cohesion. HDB policies promote the mixing of households of different races and income groups in our estates. There are racial quotas to ensure a balanced mix of households of different ethnic groups in each HDB block. Each precinct is built with flats of different sizes so that households of different income and social profiles live together. Common spaces and shared facilities such as playgrounds and fitness corners facilitate interaction among neighbours. Residents participate in managing their own HDB estate through local Town Councils, Citizens¡¯ Consultative Committees or Residents¡¯ Committees.

22 As the vast majority of Singaporeans live in HDB flats, the common experience of HDB living has become an emotional reference point. We are able to identify with one another through the shared experience of eating in the neighbourhood hawker centres, shopping at the neighbourhood shops and wet markets, or schooling at the neighbourhood kindergartens and schools. Each HDB town is in a way, a microcosm of Singapore, our people and our way of life.

Strong Government & People¡¯s Support for Public Housing

23 With the support of the people, the Government has invested heavily in the public housing programme. Today, close to 3% of the Government¡¯s annual budget, or about S$900 million in FY 2006, goes into public housing.

24 The success of the public housing programme can be attributed to two important policies. One: the land acquisition policy; and two: Central Provident Fund (CPF), the compulsory savings scheme.

25 In the early years, in order to assemble sufficient land at a reasonable cost, the Government had to acquire private land for the development of new public housing. Landowners were understandably aggrieved, but came to accept it when they saw that their land was being put to good use, in the national interest.

26 The CPF, a compulsory savings scheme whereby up to 33% of a worker¡¯s salary is set aside by the employer and employee, has enabled Singaporeans to fund the purchase of their homes. Over 70% of Singaporean HDB flat owners today are able to service their housing loans from their CPF account without the need for cash top-up. The Government also borrows funds from the CPF Board to offer housing loans to flat-buyers at concessionary rates.

Lessons from the Singapore¡¯s Experience

27 I have sketched the outline of Singapore¡¯s public housing programme. Let me now summarise what I believe are the key lessons from our experience. There are five lessons:
a. Importance of home ownership
b. Comprehensive town planning and design
c. Continuous renewal and rejuvenation of towns
d. Focus on building communities
e. Forward-looking and responsive housing policies

Lesson 1: Importance of Home Ownership

28 When HDB was formed in 1960, the original intention was to build flats for rental. However, soon after, the Government decided to help residents to buy over their flats.

29 By owning their flats, HDB residents are more likely to take care of their property and their environment. This in turn helps to preserve their asset value. More importantly, owning a home has given the vast majority of Singaporeans a tangible stake in the country, something to protect and defend. The home ownership scheme has therefore contributed significantly to our nation-building effort.

Lesson 2: Comprehensive Town Planning and Design

30 HDB estates are fully integrated and self-contained towns with the full range of commercial, educational, recreational, transport and other communal facilities. These facilities and infrastructure are planned for way in advance.

31 HDB residents not only live in their HDB flats. Their children also go to schools in the neighbourhood. They can catch up with friends at nearby coffee shops or stroll with their families in the neighbourhood parks. This encourages residents to interact and live as active communities.

32 HDB towns are also connected to other parts of the island, by mass transit rail services, complemented by ready access to bus services and major highways.

Lesson 3: Continuous Renewal & Rejuvenation of Towns

33 Public housing has often been associated with slums and poor social conditions. This in turn breeds neglect, fear and despondency. That is why we have taken a lot of trouble to maintain our HDB estates in good condition, to prevent them from degenerating into slums. There are various programmes to renew and rejuvenate existing towns to bring the physical environments of older HDB precincts and flats to the standards of new estates e.g. providing lifts on every floor, and building new facilities like playgrounds, parks and fitness corners. Old blocks are also replaced by new developments where possible. This helps to slow down the outflow of younger residents from older estates, and sometimes even reverses the flow. Such physical upgrading policies also help to preserve and enhance the value of older HDB flats.

Lesson 4: Focus on Building Communities

34 The fourth lesson from Singapore¡¯s public housing is our focus on building communities. When you walk around our HDB estates, you will notice that each one is like a ¡°mini-Singapore¡±, with people from various socio-economic backgrounds, different races, religions and cultures, all living together . This did not happen by chance, but was the result of a conscious effort, through the way we design our public housing and formulate our policies.

35 At the physical level, we design HDB blocks to provide many opportunities for residents to meet and interact, such as at the void deck, fitness corners or children¡¯s playground. We also have a mix of different flat types within each block and on each floor to minimise social stratification. Landmarks, landscaping and special architectural features help to demarcate boundaries and create a stronger sense of identity for each neighbourhood and town.

36 At a social level, our public housing policies foster family ties. For example, those buying a new flat to stay near their parents or children enjoy priority allocation over other applicants.

37 We also carefully manage the ethnic balance in our housing estates through the Ethnic Integration Policy (EIP). The EIP was implemented in 1989 to promote racial harmony in HDB estates by preventing the formation of racial enclaves. Under the EIP, the ethnic proportions in each neighbourhood and block are subject to quotas, to ensure a balanced mix of residents of different races.

38 Although the EIP has caused some difficulties for those who wish to sell their flats in the secondary market, Singaporeans accept that it is for the greater good. There are too many examples around the world today of racial tensions and conflicts which had their roots in the racially segregated ghettoes and slums of their cities. Once racial enclaves are formed, people of different races do not have opportunities to interact, and mistrust and misunderstandings flare up easily.

39 A recent article in the New York Times talked about how British Muslims are feeling a sense of alienation, of being torn between competing identities. This problem of non-integration is also experienced in other European countries, sometimes with dire consequences. According to some reports, the riots in Paris last year was due to the frustration felt by African immigrants, who had settled down in large numbers in certain low-cost public housing areas of Paris. They felt disconnected, physically and emotionally from the mainstream. We have followed a deliberate policy of integration, to build a multi-racial framework, in our HDB estates, our schools and our work places. Our conscious shaping of public housing programme has enabled us to maintain racial harmony and social cohesion, despite the diversity of our population. This has been critical to Singapore¡¯s national development.

Lesson 5: Forward-looking & Responsive Housing Policies

40 Lesson 5 for Singapore is the need for public housing policies to never be stagnant, but to always be forward-looking. For example, allowing CPF funds to be used to service their housing loans, as well as pay for rejuvenating older HDB estates, has created a virtuous cycle and sustained the success of our public housing programme.

41 In addition, our policies need to move with the times, even as our population changes and its expectations shoot up. HDB started off building functional basic low-cost flats for the masses. After meeting the basic housing needs, it concentrated on building higher quality flats with more varied designs and better finishes. Today, HDB is challenging itself to create homes that will appeal to a new generation of better educated and more sophisticated Singaporeans.

Key Challenges for the Future

42 Let me now discuss the key challenges for Singapore¡¯s public housing programme moving forward, which are:
a. Ageing population
b. Widening income gap
c. More diverse population

Challenge 1: Ageing Population

43 The first challenge is the demographic shift brought about by our ageing population. Between now and 2030, the number of elderly aged 65 years or older will increase dramatically, from 300,000 to 900,000. 1 in 5 Singaporeans will be aged 65 and above by 2030.

44 We will need to provide a wide range of housing options to meet the different financial needs and lifestyle preferences of the elderly, from smaller HDB flats like studio apartments, to private retirement housing with dedicated care facilities.

45 One key concern of the elderly will be retirement adequacy. We have put in place various options to help retirees who are asset-rich but cash-poor monetise their assets for retirement. These include allowing them to sublet their flats to earn extra income or to cash out of their existing flats and move to smaller ones. Banks and financial institutions can also offer reverse mortgage schemes for HDB flats. HDB must continue to look into other options to provide our elderly residents with sufficient financial means to lead fulfilling lives in their retirement years.
We will also have to make adjustments to our physical environment, so that it is elder-friendly. Massive investments will be made to provide lift access on every floor of HDB blocks and to make the environment barrier-free to facilitate mobility. We have also redesigned all new HDB flats to make it easier for the elderly and wheelchair-bound residents to move about.

Challenge 2: Income Divide

46 With globalisation and competition from lower cost countries, the wages of lower-skilled Singaporeans is under pressure. Our second major challenge is keeping public housing affordable to the vast majority of Singaporeans, so that we can continue to bring people of different socio-economic groups closer together.

47 The Government has committed that up to 90% of Singaporeans can afford to buy a basic HDB flat. To fulfil this promise, HDB has resumed the building of smaller flats to provide more affordable housing options for the lower-income group. It has also introduced additional housing subsidies to help them to buy a flat.

48 However, there will always be some lower-income households who cannot afford to buy a flat. For this group, HDB will provide rental flats at a subsidised rate to provide them with a roof over their heads.

Challenge 3: More Diverse Population

49 The last challenge is how to strengthen our social and community ties. As our population becomes more diverse and cosmopolitan, as more Singaporeans live, work or travel overseas, it will become even more important to leverage on public housing to broaden the common space between Singaporeans and promote rootedness to Singapore.
We need to engender a greater sense of ownership among the residents. Over the years, we have relaxed our policies to make public housing more akin to private housing, through the relaxation of some of the rules on sub-letting of flats, loans etc. We need to find ways to deepen this sense of ownership.

50 Singaporeans are also becoming more affluent and better educated. To meet rising aspirations, we have involved private sector architects to design and build HDB projects. This has given rise to several innovations in public housing design. A premium design project, the Pinnacle@ Duxton, with sky bridges on the 26th and 50th stories connecting the 7 blocks of the development, is currently under construction. This project will bring many new and younger residents into Chinatown, and rejuvenate an old part of Singapore.

51 We are also piloting another scheme to allow private developers not only to design and build, but also price and sell the flats to HDB buyers. With additional flexibility to design and price the flats, I hope developers will introduce further innovations in public housing design and development.


52 Over the last 46 years, Singapore has successfully created a home-owning society under our public housing programme. This basis of home ownership, buttressed by strong political commitment, careful planning and community-focused policies, has played an important part in Singapore¡¯s nation building.

53 Looking ahead, I expect public housing will continue to play an important role in shaping Singapore¡¯s social fabric. Our public housing policies will have to evolve, not only to respond to the changing needs of the people, but also in support of national strategies.
Thank you.


1. Source: Home Ownership and Equity of HDB Households 2003, published by DOS in Oct 05.

Source: News 17 Aug 2006