Saturday, June 16, 2012

Homeownership* And Everything In Singapore

Matt Yglesias puts up a chart which displays Singapore's nearly 90% homeownership rate.  As he's aware, and as on almost every issue, Singapore is doing something unusual that makes it hard to compare with other places.

A large majority of Singaporeans live in government-owned apartment buildings (they're called HDBs, for "Housing Development Board", the government body that builds and leases the apartments).  Citizens generally have 99-year-leases to the apartments, with title to the land held by the government.  Very little land in Singapore is actually privately owned in the sense we're familar with in the USA.  So there's a very strict definition of ownership on which you'd say Singapore has incredibly low homeownership.  But the government is likely to simply extend the leases to their holders when the 99 years are up, unless something really weird happens.  So calling the 99-year leasing "homeownership" is entirely reasonable.  

The government uses its ability to lease out apartments to accomplish various social goals.  They lease out the apartments at prices below what the market will bear, so there's basically no homelessness.  They make sure that different ethnic groups are integrated into the same housing developments, because they see ghettoized separate populations as generating a danger of poor social cohesion and possibly rioting.  They lease the apartments earlier to you if you have a kid, to encourage people to have kids.  (Otherwise you have to wait until 35.  This was very annoying for my 30-year-old single colleague, who was living with his parents for a while.)

In general, Singapore is caught up in a virtuous cycle of competent government policy.  The government starts out owning a whole lot of land.  They make smart policy decisions, so people want to live there and the value of real estate goes up.  Now, having a valuable resource (land, and the gigantic towers of apartments they build on it), the government can distribute that resource at below-market rates in ways that meet various social goals.  So people want to live there and the value of real estate goes up more, putting the government in an even better position.

[Update] Hello people sent here by Matt on Twitter!  There's a wikipedia page on housing in Singapore if you want to learn more.  


Toast said...

"Singapore is caught up in a virtuous cycle of competent government policy."

(sigh) What a concept.

Anonymous said...

First of all goverment apartments are sold at market price, minus some, at best for someone earning S$1000 a month the cheapest apartment lease for the government after all possible rebates is s$200k ; guess how many years the loan is before the lease is really yours?

Second the govt has said times and times again that the lease will NOT be renewed: don't get a sense of ownership.

However so far, the government has terminated such leases earlier than 99, relocating people to newer developments, with new (further from city) dwellings.

People are forced to buy lease because also partly because the goverment maintained only a fraction of apartments as rentable with rules such as minimum occupancy period.

There are no miracles, only statistics.

Neil Sinhababu said...

I'm just going off of what my Singaporean colleagues told me, and they're expecting leases to be renewed.