Singapore Housing Seriously Unaffordable: Report

Still Better Than Hong Kong, Australia and New Zealand

There is not a tinge of surprise in the finding by Demographia International that Singapore housing is seriously unaffordable.

MerlionBut the US-based research group praised Singapore for being far more successful in controlling housing affordability than the markets that have followed the British urban containment model.

It ranked better than countries such as Australia, New Zealand and Hong Kong. That surprises me! Home ownership in Singapore stands at 88%, which is better than the other countries and which won praise from Demographia International.

Hong Kong was the worst of the markets tracked, coming in as severely unaffordable with a rating of 17.0 and the U.S. fared best with a median of just 3.6. New Zealand and Australia were rated severely unaffordable with a rating of 8.2 and 6.4 respectively.

Hong Kong and Singapore are just one-market countries whereas larger countries such as the U.S., the U.K., New Zealand and Australia with a number of States had more markets within each, so a median rate is applied against them. The UK stood at 4.7, marginally better than Singapore (5.0), and Canada came in with 4.3.

Institutional Failure: Demographia points out that the purpose of its Surveys is “to alert the public and policy-makers if housing exceeds 3.0 times annual household incomes, that there is institutional failure at the local level.”

Details on the 11th Annual Demographia International Housing Affordability Survey 2015 can be checked out at: https://sg.finance.yahoo.com/news/singapore-home-prices-seriously-unaffordable-better-other-countries-220015526–sector.html

The full report can be downloaded from: http://www.demographia.com/dhi.pdf

My Take:

Singapore does deserve credit for being better in managing housing than many countries that are several times larger than it.

If countries that are least dense are pricier than Singapore that does point to a failure on the part of the governments there to keep housing affordable. Part of the reason could be land prices having been artificially propped up in major State capitals.

Still, being seriously unaffordable is not a happy scenario for Singapore to be proud of. What made Singapore housing so pricey?

Cooling measures alone cannot make housing affordable. It is a supply and demand issue in this tiny country. When there are more people here than the country should accommodate property prices will only go through the roof.

The country has to accept its size limitations and plan accordingly. Bringing in foreigners at will is the key reason and that needs to be addressed first. Building more high-rise apartments throughout Singapore will only compound the problem and make the country unlivable.

As the report concludes: “Urban policy should focus on the fundamentals — putting people first.”

G Joslin Vethakumar

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4 Comments

Filed under General

4 responses to “Singapore Housing Seriously Unaffordable: Report

  1. SM Goh

    There is a difference between Singapore and HK, Australia and NZ. Technically when we buy a flat from the government, it is on a 99 year lease, so effectively we are renting, so they should be compared to rental markets in these countries instead. Also this means that home ownership is not really 88%….

  2. LSH

    For info, property in HK is not freehold. http://www.hkpropertyinfo.com/ While most property in australia is mostly freehold, it also means rich people will own more and more land (in good locations), and the rich will get richer. freehold does has it drawbacks as compared to a leasehold model. And in singapore, if one is “renting” from the govt, then perhaps the “renter” should return the profit to the government when they sell the flat. neither could you renovate your flat since the govt would have the final say. paying $300k to $400k for 99 years is a very good deal, as a new flat (99 years) can easily last you about 3 generations. (and is the govt really that stupid to rent you for 99 years without a clause to increase the rent?).

  3. The government claims about 90% of the residents own their HDB flats. It is captured even in the HDB site. The leasehold practice does appear to be a commercial one favouring the government more than the residents.

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