The rise of U.S. home prices—which used to be mostly a coastal urban problem, but has swept the nation during the pandemic—has led to a predictable demand for more public housing. Some internet commentators, often working under the “DSA” or “NUMTOT” label, go so far as to say public or social housing should be the predominant form of construction. One example they often point to is Singapore, a quasi-socialized system that holds some positive attributes compared to the U.S. But those are largely due to unique circumstances which are unreplicable here, and as we will show, not all is rosy with Singapore’s housing situation anyway.
The call for more public housing starts from the assumption that “the market” can’t provide affordable housing, so the government should. One activist told Los Angeles Magazine that the effect of new housing construction on overall prices—called filtering—is insufficient to decrease rents. This is not borne out by the evidence—in particular, because the examples cited all entail cities where up-zonings are limited—but it is worth exploring whether their preferred model would deliver lower costs and better outcomes.
In Singapore, nearly 80% of the population resides in housing that is developed and managed by the Housing and Development Board. Units are owned, however, by tenants. The government, following a land-lease system common in other city-states, owns the land and leases it out for 99 years to these unit owners.
Singapore’s policy has less to do with an embrace of socialism (its economic freedom rates are actually among the world’s highest) or even affordability per se than it does with other domestic policy goals.
As Bloomberg notes, the housing began getting built in the 1960s as a way to provide safe accommodations, following decades of rapid migration into Singapore’s unsanitary slums. Ng Kok Hoe, a Senior Research Fellow with the National University of Singapore, adds that it was as much a way to boost homeownership, as to spread wealth across the many racial groups. This is in contrast to U.S. public housing, which is generally rented.
In fact, Singapore’s land-lease approach is akin to a somewhat obscure model that is popular with urbanists: Georgism. Based on economist Henry George’s idea of a Land Value Tax, Singapore is, by owning land, able to collect economic rents through leasing. It also enables Singapore to make long-term land deals, whereas, in the U.S., this would require government land acquisition either through voluntary purchase or eminent domain.
Whether or not Singapore’s land-lease model sounds attractive depends on one’s ingrained attitude towards government, and their goals for the housing market. The pros I see as being the following:
The cons of the model surface from these same factors:
To conclude, there are aspects of Singapore’s model that would appeal to capitalists—such as the fiscal solvency and mass homeownership; and some that would appeal to socialists—such as government ownership of land and management of buildings. But neither can claim that Singapore’s system has been good at producing affordable housing. Another counter-argument is that while the idea may work in Singapore—in that it presumably produces nice units—that does not mean it would work in the U.S. Singapore has a famously competent civil service that also manages to profit from its roads and mass transit. This is in contrast to, say, U.S. urban public housing authorities, which as I explained in a past Catalyst piece, are famous for patronage and corruption.
To sum up, Singapore’s housing policy is interesting because it is different. But it would be far-fetched to say this model would ever be applied in the U.S., much less that it would work.
[This article was originally published by the Independent Institute.]
Scott Beyer owns and manages The Market Urbanist.
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