Lee Hsin and Donald Low explains HKU Prof Low’s argument of why the Singapore model of public housing won’t work in Hong Kong

Singapore’s public housing system has been a ideal model for Hong Kong for a long time now. Hong Kong has struggled to house its population for decades and looking to a similarly small city-state with limited land but successful housing system seems only natural.

However, University of Hong Kong adjunct professor Tony Kwok said in an article for South China Morning Post (SCMP) that Hong Kong cannot copy Singapore’s approach. This is because Singapore’s success in housing its growing population isn’t as simple as increasing its land mass.

In fact, he says it is an oversimplification to say that that was Singapore’s only approach. He adds that much of Singapore’s success is better attributed to the conditions in Singapore back in the 60s and 70s when the late Lee Kuan Yew was Prime Minister, noting that those conditions vary significantly from the conditions in Hong Kong today.

Authors Lee Hsin and Donald Low explained in a separate article on SCMP about Prof Kwok’s arguments that most of the Singapore’s reclaimed land was put to non-residential use. Airports, industrial parks, ports, recreation spaces were all built on reclaimed land while only a sliver was portioned off for public housing.

Instead, it was the public housing policies introduced under LKY between 1959 and 1990 that was the key to Singapore’s success in housing its population. In the late 50s, there was a shortage of housing and the city centre housing blocks were plagued with overcrowding. SCMP said that at the time an estimated 500,000 residents needed accommodation and about 400,000 of them had to be moved out of the city centre.

Housing Development Board and strong policies

The British government at the time set up the Singapore Improvement Trust (SIT), which built only 23,000 public housing flats in its 32 years. In 1960, the Housing Development Board (HDB) was set up to replace SIT under the newly elected independent government of Singapore.

The article explains that despite the ‘superficial similarities’ between Singapore and Hong Kong, the development of public housing in the Lion City was effectively just land reform and wealth redistribution on a scale that is unimaginable today in Hong Kong.

The authors note that Singapore autonomy from the interests of social groups from big business to labour, land owners, property developers, or those in finance means that the government could do what needed to be done to make the system work. The people also accepted this set up as they saw how it benefited them.

To make it work, HDB undertook responsibility for all aspects of housing from planning to development, design, building, and maintenance. With an initial priority of creating easily accessible planned population areas outside of the city, HDB managed to surpass its target by building more than 50,000 flats.

By 1990 when LKY stepped down, Singapore’s population almost doubled from 1.6 million to 3 million since the late 1950s. Even so, 88% of residents owned HDB flats and 87% lived in those flats. The HDB is credited for this accomplishment.

The article goes on to explain that several important policy shifts that helped Singapore get to where it is now in terms of public housing. The 1920 Land Acquisition Ordinance was repealed and replaced with the Land Acquisition Act (LAA) in 1969. This allowed the state to acquire land for any public purpose or work of public benefit. A subsequent amendment to the LAA in 1973 allowed the government to acquire even private land in exchange of a blow-market value compensation. The authors note that these acquisitions were seldom challenged in Court.

These ‘draconian rules’ facilitated the country’s housing and industrialisation programs, with state ownership of land rising from 31% in 1949 to 76% by 1985. The government also passed laws to ensure that leases on state owned land didn’t exceed 99 years.

Unthinkable savings policies

This, the authors highlighted, would be ‘unthinkable’ in contemporary Hong Kong. The laws allow for the Land Development Corporation (LDC) in Hong Kong to acquire land from private owners but the efficacy of the law is limited because the LDC would have to demonstrate that there is no ‘undue detriment’ to the interest of landowners. That’s often difficult to prove. In Hong Kong, the interests of the landowners are not subordinate to the state.

SCMP also said that the Singapore government tailored its policies to explicitly favour home ownership, making buying a more attractive option than renting. And in 1968, the government increased the contribution amount to the state pension plan, Central Provident Fund (CPF), so that citizens would use their savings to finance home purchases.

Starting off in 1955 at only 5 % of their monthly salary, by 1990s the rate had risen to 16% from the employee and 24% from employers respectively.

They noted that such a stringent mandatory savings plan wouldn’t find much support in Hong Kong where many would view it as paternalistic and wouldn’t be willing to accept the lower take-home pay.

The article points out that two decades after Hong Kong’s return to Chinese sovereignty, only 36% of households were in public housing and 49% owned their homes. Financing for public housing is not supported in Hong Kong to the same degree as it is in Singapore. The article described how a successful applicant for a flat in Hong Kong under the Home Ownership Scheme will only own the property until they pay the land premium determined by the market value. The applicant then also pays the government for the cost of construction.

On that note, SCMP said that neither Singapore’s past experience and present circumstances suggest that it is should be a model for Hong Kong. The article continues by saying that while Singapore’s public housing programme was successful in its first 5 decades, some Singaporeans now question the long-term viability of a policy based on perpetually rising flat values. Many are worries about the possibility of the depreciation of their ageing HDB properties which they used much of their SPF savings on.

The article concludes, “Given how unique and context-specific Singapore’s success in public housing was, it is questionable whether it can be grafted onto contemporary Hong Kong’s context – unless its society and politics were to mimic Singapore’s, and how likely or desirable is that for Hong Kong?”