Douglas Todd: Singapore has impressive housing success. Can we?

Singapore is unique in so many ways and hard to see how its approach could ever be adopted here apart from some of the tax and surcharge approaches:

If you’re Canadian, you might feel envious learning the quest for affordable housing is basically a success for many of the 5.7 million people of Singapore.

That is not a story you hear often, or at all, in Canada, especially not in Greater Toronto, Metro Vancouver or Victoria, three of the world’s more unaffordable cities.

The wealthy city-state of Singapore, in South-East Asia, is like Metro Vancouver and Toronto in many ways: A megapolis that acts as a magnet for foreign people and capital, which has faced daunting housing problems.

Like other fast-growing cities, Singapore is known for its capitalism and cultural diversity, albeit with a stronger emphasis on orderliness, which leads to cleanliness and low crime. Despite free elections, it has had only one party in government since it gained independence from Britain in 1959. Its legendary first prime minister, Lee Kuan Yew, committed to every citizen being able to own a home.

The city-state approaches Canada for its religious and ethnic diversity: 75 per cent of residents are of Chinese descent, 15 per cent are Malay and seven per cent are from the Indian subcontinent. More than one quarter of Singapore’s population is foreign born, which is less than the proportion in Vancouver and Toronto.

Yet, despite broad similarities, the upcoming book Housing Booms in Gateway Cities, from David Ley, a UBC professor emeritus of geography, explores how Singapore, through innovative taxation, has conducted an impressive experiment in housing.

When Demographia analyzed the worst gaps between house prices and income in 92 cities in Australia, Canada, Hong Kong, Ireland, New Zealand, Singapore, Britain and the U.S., it found this year that Vancouver is the third most unaffordable city, while Toronto is 10th. Singapore is in the middle of the 92 cities.

Singapore has accomplished relative affordability with what Ley calls “its own version of municipal socialism” — a term that will either repel or attract Canadians.

“Typically, Singapore gets the prize of being the most business-friendly and economically open society there is. But, when it comes to housing, it battens down the hatches hard,” said Ley, author of Millionaire Migrants, whose new book will detail housing issues in the gateway cities of Vancouver, Singapore, Hong Kong, Sydney and London, England.

“It’s plan from the beginning was that everyone who is a (citizen) would be a homeowner, buying housing from the government, which is the principal landowner, or from a much smaller private sector.”

The megalopolis’s housing model, unlike in Canada, is based on differentiating three levels of citizenship rights. Restrictions on foreign investment are also tight.

“If you are born in Singapore you are called a Singapore ‘resident,’ and you have basically all the rights that are available,” Ley said. “You can also become a permanent resident and get a chunk of the rights, but not all of them. Or you’re a temporary migrant and you have almost no rights.”

As a result, nine out of 10 citizens of Singapore own a dwelling, said Ley, nearly all of which are apartments, ranging from run-of-the-mill to elegant. Most are leased for 99 years from the government. Another 20 per cent of housing is exchanged on the private market.

Here’s how Singapore’s experiment in housing works.

If you are a full citizen of Singapore, you get access to the apartments built and made available by the Housing and Development Board, or HDP, a high-powered government agency.

“And if you’re a permanent resident, but not born in Singapore, you get access to HDP apartments, but with conditions,” Ley said. “If you’re a temporary migrant you get no access at all.”

That means the majority of citizens are allowed to choose from decent or stylish government-built apartments in well-planned communities, which slowly grow in value because prices are controlled by taxation policy. It results in most residents being able to move up the housing ladder.

It also means the minority of temporary residents in Singapore mostly compete for private housing. The business people from China, Indonesia and the West who work in Singapore’s dynamic financial sector, who are called “Talents,” tend to buy nice flats. On the other hand, migrant nannies often make their homes in extra bedrooms, while many foreign construction workers live in dormitories.

While Ley joins many housing specialists around the world in observing most Singaporeans seem happy with the model, it’s not perfection. A non-Singaporean professional who lives there (and doesn’t want to be identified) told me this week that young adults complain they will not start having children until they own a dwelling. And some charge the government isn’t building them fast enough.

The debate has led to former Singapore cabinet minister Josephine Teo, who calls on citizens to produce more babies even if they don’t own, famously blurting: “You need a very small space to have sex.”

Singapore ‘tenacious’ at limiting housing speculation

“Singapore has been really tenacious in terms of controlling foreign investment in its housing market,” Ley said.

While Ley wonders if Singapore inspired B.C. and Ontario’s foreign-buyers taxes, the surcharges in Canada are modest compared to those in Singapore, where foreign nationals are taxed a solid 30 per cent on any purchase whatsoever.

Singapore’s politicians also curb speculation by local investors. A year ago they slapped a 17 per cent tax on citizens who buy a second property and 25 per cent tax on their third property. They do not, on the other hand, tax citizens who are first-time buyers.

And while Canada treats permanent residents the same as citizens when it comes to housing taxes, that’s not the case in Singapore. It has imposed a five per cent tax on permanent residents purchasing a first dwelling and 30 per cent on those snapping up a third.

While Ley generally supports a surcharge on foreign purchases, he was uncertain about Canada copying Singapore’s taxes on permanent residents who invest in primary properties to live in. To some extent, he said, such speculation is already tempered by Canada’s capital gains taxes.

What can Canada learn from Singapore’s remarkable system of relative affordability? “In some ways, sadly, it’s a rather unique place,” Ley says.

But that doesn’t mean some of the city-state’s effective policies couldn’t inspire creative adaptation here.

Source: Douglas Todd: Singapore has impressive housing success. Can we?

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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