Some of you may have noticed that we’ve not had a new blog post since September. However, much as we’d like to, we haven’t been on a two-month vacation.

We wanted to write about the housing problems facing ordinary Singaporeans in recent years, and the reasons sentiment on the ground has been turning sour. Our initial discussion turned on these issues:

  1. Widening income gap
  2. Aging population with low rate of replacement
  3. Reliance on foreign labour
  4. Lack of housing


But the more we thought about and researched these issues, the more we realised that they are deep-seated and cannot be addressed in a cursory manner. After digging deep, we decided that nothing short of a comprehensive analysis would suffice. Thus, the team took time off from blogging to focus our thoughts and efforts. Today, we present the first part of our findings.

First, we’d like to elaborate on each of the above issues that contribute to the housing problem, one by one.

Widening income gap

The widening income gap, as indicated by Singapore’s Gini co-efficient, is causing growing concern amongst Singaporeans. More on the Gini co-efficient, and what it means, can be found at this wiki article. To us, Singapore’s Gini co-efficient highlights the reality of how the rich, powerful and influential can easily afford high-end exotic vehicles, while the man in the street struggles to find a simple home, even when subsidised by the government.

Aging population with low rate of replacement

With one of the lowest birth-rates in the world, Singapore is well below the threshold required to replenish her aging population. That directly affects our rate of population replacement negatively. You may ask, why should this affect the average Singaporean? Well, apart from high-level concerns such as government policy, manpower allocation, productivity and growth, this has ramifications across all strata of society. Our daily lives will also be affected as cost of services and healthcare, to name a few, become more expensive. Needless to say, the Singapore government, and the ruling party, are very concerned about this trend, and have already tried to address this with other policies (which will bring us to our next point, in a moment). Unfortunately, much as we too should be concerned, the ordinary Singaporean is too busy trying to make ends meet to even consider starting a family, let alone having two or more children.

Reliance on foreign labour

In an attempt to compensate for the anticipated fall in manpower and productivity, the Singapore government has implemented policies that lowered the barriers to entry for foreigners, thus using foreign labour to make up the deficit.

This convenient solution of increasing foreign input of course, created another issue that is outstanding today – reliance on foreign talent and labour. On the street, disgruntled Singaporeans complain that these foreign imports are to blame for competition for jobs, poor language skills in the service industry, overloaded transport networks and eroding of cultural and societal standards. There are deeper issues with over-reliance on importing a workforce, however. It is but a crutch that will not fix the core issue of low workforce replacement rate. What’s worse, this crutch is composed of a workforce that has few ties to Singapore. With no incentive to stay for the long-term, they will leave the moment a crunch comes.


Population   1970   1980   1990   2000   2010   2011  
Total Population1,2 (’000) 2,074.5 2,413.9 3,047.1 4,027.9 5,076.7 5,183.7
Resident Population2 (’000) 2,013.6 2,282.1 2,735.9 3,273.4 3,771.7 3,789.3
Singapore Citizens (’000) 1,874.8 2,194.3 2,623.7 2,985.9 3,230.7 3,257.2
Singapore Permanent Residents (’000) 138.8 87.8 112.1 287.5 541.0 532.0


1) Total population comprises Singapore residents (i.e. Singapore citizens and permanent residents) and non-residents.

2) Data for 1970 and 1980 are based on de facto concept (i.e. the person is present in the country when enumerated at the reference period). Data for 1990 onwards are based on de jure concept (i.e. the person‟s place of usual residence).

Source: Singapore Department of Statistics, Population Trends 2011

Lack of housing

All these problems eventually lead to the focus of our discussion, which is of course, lack of housing. With more people competing for a roof over their heads, housing prices have started going through the roof. While those who hold the majority of wealth can easily have several properties to their name, more and more young Singaporean couples are finding it difficult to afford a place of their own, much less one that they can raise a family in. The influx of, not just foreign labour, but also foreign wealth, has caused a precarious overheating of the market. This is exacerbated by speculative and inexperienced investor culture.


As it stands now, not even public housing is safe from this belief that property prices can only keep rising. This perception is caused by the continuous rise in prices since 2005. Let’s break down some of the causes of this rise, to see why anticipated continuous price hikes are unsustainable.

  1. Interest rates dropped from 4% in 2005 to 1% now – how much lower can it go?
  2. Rise in population – how much more can our straining infrastructure take?
  3. Global easing policies created surplus of liquidity – how much more can it be done?
  4. Loan tenor creeping upwards – how long more can we extend tenor, beyond retirement?
  5. Relaxing of foreign buying of property – what else can we let them buy, HDB?


These factors are major contributors to the spike in property prices, but none of them can be sustained in the long run. Believing that prices will keep going up, just because they have been going up in the recent past, is a recipe for disaster. And this disaster will affect everyone, not just property speculators.


And here is the biggest problem with housing in Singapore today. By tying public housing, subsidised by the government, to “market value” in a way that is poorly understood by the typical Singaporean, there is no baseline anchor to prevent wildly-fluctuating property prices for public housing.

There is a dichotomy in Singapore public housing which must be addressed. Public housing is meant to meet basic housing needs, so that people can feel a sense of security in their homeland. However, there is currently a strong investor mindset pervading all levels of public housing. Without any form of control, the capitalistic market will tend to merge these two opposing concepts (subsidised housing versus property speculation), such that either:

A. All housing becomes as cheap as public housing (for example, in a case where a buffer stock of housing units is maintained, creating an elastic supply), or

B. Public housing is also caught up in an upward spiral of speculative pricing

Imagine a scenario where A dominates. It would be similar to a communist country, where everything was built solely for utilitarian purpose. There would be no aspirational targets, and loss of a major driving force for market growth. Now imagine a situation where B is the norm. Doesn’t it look familiar? Just look around at Singapore’s property market for the past three years.

We stumbled upon this almost by chance, but once the factors were laid out in our analysis, we realised how substantial this observation is. Having only A or B in a property market is detrimental to society at large. But in order to have them both co-exist in the same space, significant effort must be made in order to differentiate these two market niches.

Differentiation between private and public housing

The current situation where HDB flats have fancy value-added features that drive up cost is exacerbating this phenomenon. Tiled lift lobbies, expensive lighting and concealed common area utilities all lead to increased cost but lack true value-for-money. They make public housing less distinguishable from private property; resulting in a confused public and skyrocketing prices. In trying to make newer HDB homes stand out, HDB has started treading dangerously close to private property values. The Design, Build and Sell Scheme, as well as the award-winning Pinnacle@Duxton, are the most prominent signs of this worrying trend.

The middle ground between public and private housing is already well occupied by Executive Condominiums. As such, we feel that future HDB projects should cut down on bell-and-whistle features which are costly to implement and maintain. A distinct and obvious gap between the more speculative private market and the more value-oriented public housing must always be there.

Up until 1980s, and even in the 90s, this differentiation was always obvious. We could take a cue from those times in order to control costs of building and maintenance as a top priority. This will naturally be at the expense of frills that are the hallmark of private properties.

For example, earlier HDB block designs were standardised with minimal modifications. Today’s HDB blocks are fully unique and probably required architectural expertise, amounting to additional project costs. Also, it means that economies of scale for fittings and architectural components cannot be fully realised.

Many more examples exist of how we may keep public housing affordable by eliminating extra features normally associated with higher-end private property.

Differentiation within public housing

We do realise that more than 80% of Singaporeans live in HDB apartments. Even if we stop providing frills for high-end HDB developments, there is plenty of room for differentiation in the public housing space. HDB could offer a greater variety of public housing options and schemes to cater to the various needs of this segment. For example, HDB could provide bare apartments for owners who would require substantial renovations. For those whose priority is not length of lease, such as low-income or elderly buyers, HDB could offer 60-year lease apartments (as opposed to the current 99-year lease).

In conclusion, HDB should focus on value-for-money, basic yet homely accommodation for the masses, as it so successfully accomplished in the 1970s and early 80s. This was the initial focus of HDB, and it should never lose sight of that goal. The shift of focus in mid-1960s, to ownership, did have social benefits. However, coupled with the over-promotion of investor culture, the focus on ownership has created a situation that is detrimental to the initial goal of providing affordable, value-for-money housing for the average Singaporean.

For more on what we propose to address the issues we have discussed, stay tuned tomorrow and the days to come, as we present our ideas in this three-part special. Part 2 here.

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  2 Responses to “BLUTA on Housing, Part 1”


    Good analysis!


    very valid points that echo my thoughts as we were on a house hunt yet we are worried about the sustainability… eventually we decided to give up until the little one grows older and needs own room.

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