Listen to this article:
Note: Unless specified otherwise, all prices given in this article are denominated in Canadian dollars.
Singapore, a city-state in Southeast Asia, is home to what is often described as “the best public housing program in the world.” This success is largely attributed to the Singaporean government’s prioritization of housing on its policy agenda. During the British colonial period, Singapore faced explosive population growth, which led to a housing crisis — many Singaporeans lived in unsafe or crowded housing conditions, such as slums and poorly constructed buildings.
Upon gaining self-governance in 1959, the new government swiftly tackled the issue by creating the Housing Development Board (HDB). The HDB was granted wide-sweeping powers to acquire and redevelop land, with the authority to forcibly take any parcel of land in Singapore for raising public buildings until 1989.
This board was very successful at its job — in a country of only a few million people, it built over 120,000 housing units in its first decade, and 82% of all Singaporeans currently live in public housing. 95% of housing units are inhabited by their owners in Singapore, compared to less than 70% in the City of Vancouver and less than 80% in Toronto.
Skyrocketing Housing Prices — What’s Happening in Singapore’s Housing Market?
Despite stringent government regulations, housing prices in Singapore have surged, Housing prices in Singapore have risen more than 80% since 2009. Although Singapore’s housing is still more affordable than many global cities, this increase has made it challenging for many Singaporeans to afford homes, particularly those with lower incomes.
Furthermore, certain groups like unmarried young people, LGBTQ+ couples, and non-citizen residents who cannot access subsidized public housing face even greater difficulties. Many are forced to rent, but rising rental costs are making this option increasingly unaffordable.
However, individual housing units can go for much higher. For example, public housing units are beginning to fetch over $1 million, while private housing options, another sizable part of Singapore’s housing market, can sell for over $2.5 million. This surge is mainly caused by a slowdown in the construction of new housing units during the pandemic.
The resulting disparity between supply and demand was further worsened by the increasing flow of foreign population and investment into Singapore due to eased border restrictions after the pandemic. Besides the soaring house prices, 2022 also saw a 30% rise in both private and public housing rents in the city-state.
What Did Singapore Do?
Swift action was taken by the Singaporean government to cool down housing prices, with a list of policies released in recent months to discourage reselling. For example, public housing in high-demand areas that are sold on the secondary market can now only be sold to people who would also qualify for subsidized public housing (individuals making less than $7,000 per month, or couples making below $14,000 per month). In addition, the tax for foreign buyers was doubled to 60% earlier this year, which would help cushion the impact of the influx of foreign wealth on local housing costs.
The Singaporean government has also sped up the building of new housing units, with around 100,000 homes expected to be completed between now and 2025. This plan will help cool both the resale and rental markets, as families who qualify for affordable subsidized units will be taken out of the equation. These policies, along with the end of the pandemic, have led to slower rates of increases in housing prices over the first half of 2023, although housing prices continue to rise.
Why Should We Care, and What Can We Learn?
Despite the ongoing crisis, the Singaporean housing market remains notably more affordable than its North American counterpart. For example, the median resale price for three-bedroom suites in Singapore without subsidies is only around CAD 350,000. In comparison, the average apartment costs around $814,000 in Vancouver and $735,000 in Toronto. This is despite incomes being higher in Singapore than in these two Canadian cities. As a housing model the West often aspires to establish, Singapore may provide valuable insights into addressing our housing challenge.
Build More Subsidized Public Housing, Fast
First of all, we are not building enough houses. Whereas Singapore immediately announced plans to build more public housing after it saw house prices rise due to high demand, Canada continues to build housing, especially affordable housing, at a rate that is far too slow. For example, the Trudeau government just announced funding for 10,000 affordable housing units, when Singapore, a nation with far fewer people, managed to build over 120,000 within a decade 60 years ago.
Despite the federal government’s plan to build 400,000 units of housing across the country per year over the next decade, with prices sky-high across the country and continually rising, people with lower or even middle incomes will not be able to buy these units on the private market without significant governmental support. Thus, North American governments at all levels — local, provincial/state, and national — need to follow Singapore’s example by building more public and affordable housing faster at subsidized rates.
Stop Speculation Through Harsh Government Policies
Apart from the lack of affordable housing units, speculation also plays a significant part in North America’s outrageous housing prices. More than 28% of homes sold in the US last year were sold to “institutional investors,” that is, investment companies. In Canada, this number is close to a jaw-dropping 90% in some cities. Governments have indeed made some efforts — for example, Vancouver instituted an Empty Homes Tax aiming at encouraging higher home occupancy rates. But evidently, they are not doing enough, given that Vancouver’s housing prices and sales numbers continue to skyrocket and investors still own over 30 percent of homes in the city and over 20 percent across the country as a whole. In stark contrast to North America’s relative inaction, the Singaporean government has increased taxes on citizens buying second or additional homes (which are usually bought as investments), as well as on properties bought by non-resident investors.
Housing is an issue that can be solved, as seen in Singapore. However, doing so requires decisive government action to build more affordable housing, support lower-income groups, and combat property speculation — none of which is being done at the scale necessary throughout the US and Canada. If Singapore can stamp down a much lower rise in housing prices, then North American governments certainly can do even more. If Canadian and American governments are truly serious about combating the housing crisis, then they should start by building more affordable public housing, as well as implement more policies to discourage buying second or third homes.
Edited by Alexandra Hu