HDB, Housing, West Coast, SingaporeThe Ministry for National Development (MND) has just raised an issue that we have immense interest in. In a coming dialogue session “Our Singapore Conversation on Housing”, they plan to discuss home ownership in Singapore.

The topic synopsis:

“Today, 90% of resident households own their homes. Singapore has one of the highest home ownership rates in the world. This is because our overarching social mission is to achieve home ownership for Singaporeans. We subsidise public housing heavily to achieve this objective. Is 100% home ownership attainable or even desirable? What should be the balance between home and asset for HDB flats in the future?”

If our readers can recall, we have addressed the subject of rental living numerous times. With this issue receiving the limelight from MND, we feel now might be a good time to go over the points surrounding renting a home versus buying a home.


Why Singaporeans think ownership is so great

As we stated in our article Luxurious Expectations, Singaporeans have expectations of home ownership, probably due to the overwhelming success of the government’s initiative to allow everyone ownership of their home. The reason for this move was elaborated on in our article BLUTA on Housing, Part 2. In the 1970s, the Singapore government embarked on an ambitious plan to give citizens a greater sense of belonging and community. As a fledgling nation with largely immigrant roots, this was an important consideration. It would give people a reason to stay and promote a more stable workforce. Home ownership for all Singaporeans became a mantra, and the Housing and Development Board was given the mandate to do this.  This initiative was a great success, and today more than 80% of Singaporeans own their home.

But this also created a view that property rental is a blight on society, attaching a severe stigma to renting a home. This has also led to a disproportionate investor mindset:

  1. HDB experienced great success in the 1970s and early 80s in promoting home ownership
  2. A mindset was created that owning a home is one of the steps to fulfilling the Singapore dream
  3. This led to the expectation that one’s property will always appreciate
  4. Investor mindset became prevalent: property will always grow bigger, better and more luxurious


There many examples (such as the record prices of Sky Habitat) of the excesses of this mindset.


Advantages of renting

Renting a home doesn’t require a large up-front payment. This frees up funds that could be applied towards a business or other investment.

By having the population more evenly distributed into owners and renters, the housing dynamic is diversified. This allows the market to be more flexible and able to absorb bigger shocks.

With a smaller percentage of owners tied up in property, fewer people will be exposed to global and even more so, local property market uncertainty. A volatile market situation that crashes will result in potential negative equity. This would be exacerbated by a population that is largely in long-term mortgage debt.

With a larger market for rental, more investors will rely on a return on investment (ROI) based on steady rental income. This is a more well-founded form of investment, which promotes a stable property market and dampens rampant speculation, since investors will price their investments on a better, long-term fundamental, instead of short-term, sentiment-driven capital gains.

A widespread and comprehensive rental market, correctly priced in both public and private sectors, can act to prevent an over-exuberant home rental market. In turn, this helps to curtail runaway rental prices, and hence keep the entire housing market and its prices more grounded and affordable.

Our fear of the rental solution is quite an over-reaction. As the chart in our article BLUTA on Housing, Part 2 shows:


Country Home ownership rate (%) Date of Information
1 Bulgaria 97.00% 2011[2][3]
2 Hungary 91.90% 2001[4]
3 Singapore 88.60% 2011[5]
4 Palestine 84.00% 2000[6]
5 Ireland 83.00% 2002
6 Slovenia 82.00% 2002
7 Italy 78.00% 2011
7 Belgium 78.00% 2010[9]
7 Spain 78.00% 2001[7]
8 Norway 77.00% 2002
9 Brazil 74.00% 2008[8]
10 Israel 71.00% 2002
11 United Kingdom 69.00% 2002
11 Australia 69.00% 2002
12 United States 68.00% 2002
13 Canada 67.00% 2002
13 Finland 67.00% 2000
14 New Zealand 65.00% 2004[10]
15 Portugal 64.00% 2002
16 Japan 60.00% 2000
16 Sweden 60.00% 2000
17 Austria 56.00% 2002
18 France 55.00% 2000
19 Denmark 51.00% 2000
20 Netherlands 49.00% 2000
21 Germany 42.00% 2002


1 “Homeownership Rate: Definition from”. Answers.com. Retrieved 2012-07-06.
2 Bulgaria Tops Europe’s Chart of Private Home Ownership, Sofia News Agency, 30 January 2003
3 Renovation of Multi-family Buildings (Bulgaria): Retrofitting for the Future, Sustainable Energy Europe Awards
4 “Hungarian Census 2001″. Nepszamlalas2001.hu. Retrieved 2012-08-19.
5 “Statistics Singapore – Key Annual Indicators”. Singstat.gov.sg. 2012-02-14. Retrieved 2012-07-06.
6 “Home ownership statistics – Countries compared”. NationMaster. Retrieved 2012-07-06.
7 Cabré, Anna; Módenes, Juan Antonio, 9, “Homeownership and Social Equality in Spain”, Home Ownership and Social Inequality in a Comparative Perspective (Stanford University Press): p. 235
8 [1][http://oglobo.globo.com/economia/mat/2009/09/18/pnad-2008-numero-de-casas-proprias-no-brasil-aumentou-3-8-em-2008-767670771.asp]
9 “Aantal huiseigenaars daalt door crisis”. Vastgoedplatform.be. 2010-02-08. Retrieved 2012-08-19.
10 “Housing New Zealand”. Hnzc.co.nz. Retrieved 2012-07-06.


… many well-established countries do in fact have large rental populations.


Implementation of rental

Rental of homes can take many forms, other than the traditional whole-unit rentals that are most prevalent. In article Housing in Singapore – Exploring the Alternatives, we mentioned the advantages of rooming. It allows a group of renters to defray costs, such that they can stay in greater comfort, security and style than they would have been able to, individually. By dividing the cost among several co-renters, the group as a whole can secure better facilities, locales and furnishings. Simply put, sharing one large unit with three other tenants is cheaper than renting four individual units that are a quarter of the size.

We also elaborated on a comprehensive rental scheme in our article BLUTA on Housing, Part 3. This entails making rental HDB units available on a larger scale, so that Singaporeans and other residents have a viable alternative to owning their homes.


Disadvantages of ownership

Much as we have been conditioned to view home ownership as some kind of holy grail, we should not be misled into thinking that it is a cure-all. Certainly, having 100% home ownership may look good on paper, but it introduces many problems as well, both social and financial.

The rampant investor culture can have a detrimental effect if everyone focuses on the capital gain aspect of home ownership. It usually results in a vicious cycle of ever-increasing property prices that cannot be sustained; people start believing prices will keep going up because, well, they’ve “always” been going up, haven’t they? Some people will start to get greedy, and over-leverage their financial resources.

Of course, they have forgotten that property prices have crashed and will crash again. But it won’t just be the over-leveraged, simple-minded investors that will be caught in a market downturn; their effect on the market is such that almost everyone who suffered high property prices will be caught, whether they were being greedy or not. Even our banks may not be immune to this.

As mentioned in our article Housing in Singapore – Exploring the Alternatives, debt of ownership can be a huge issue. It is a hefty burden that for many, represents a lifetime of loan repayment. There is no greater fear to keep you shackled to a job than the fear of losing your home and family. Is it any wonder that few dare to be different and explore alternatives?

Is it even really considered “owning” when one has to take a 30-year loan, is forced to hold a job at all times, with all CPF going to pay the loan, and no way of ensuring some savings? While some may claim that having CPF go into property is a form of savings, it is actually quite a poor form of savings. Due to the lengthy tenors and amount of leverage, a large portion of these “savings” is exposed to global economics.

This great burden comes as a direct result of the desire to own your dream home. That is the Singapore Dream, after all, carefully crafted way back in the 1960s and 70s. But in these times, is it practical, or even desirable? In fact, some might even argue that the opposite is true today. With Singapore Permanent Residents able to take advantage of public housing, won’t they be encouraged to sell for big profits and return to their motherland, where the same money can afford them more comfortable homes and lifestyles?

Lastly, home ownership tends to lock the focus on capital gains, as opposed to a steady rental income ROI. This is similar to playing the stock market, or even like a property casino with our homes. Such an investor mindset can be argued to cause bubble-like phenomenon, since everyone is playing the game to keep prices going up. A few lucky ones will have bought in areas that go up due to sentiment and unfounded exuberance, resulting in a vicious cycle with ever-increasing volatility.


Fixation on ownership is detrimental

Currently, the volatility of the Singapore property market makes it more like the stock market or even a gambling operation, instigated by a small percentage of speculators and punters. It seems to us, judging by the feedback and public commentary on housing, that many Singaporeans appreciate a stable property market with prices that are predictable and stable in time, much like a bond or other fixed income instrument.

In conclusion, it is our belief that even the current mix of home ownership is untenable, much less 100% home ownership. It is an illusion that is sustained through much effort on the part of society. After some serious thought, we at BLUTA caution against putting such an aspiration on a pedestal; it would be akin to putting all our nation’s eggs into the “home-ownership” basket. We advocate a more balanced mix of both affordable rental options as well as responsible home ownership. This would be healthy for both the market as well as citizens of Singapore.

What do you think? Let us know, and share with us by commenting below or in our social media channels, Facebook, Twitter, and Google+.


  One Response to “Singapore Conversation – Rent or Own?”


    Singaporeans merely lease not own their HDB flats. Leasing of HDB is by far the best ponzi financial instrument created by the ruling party.

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