The Growing Contradictions of Singapore’s HDB Scheme

Picture: Dongli Zhang via Academia.sg

In an article by New Mandala, Chua Beng Huat examines Singapore's public housing scheme, a welfare program that has contributed to the intensifying wealth inequality between rich, and poor and across generation.

The PAP government’s intention of selling rather than renting public housing flats was already scripted into the 1959 Housing and Development Act. Financially, proceeds from the sale of flats would enable the government to maintain public subsidies to the national public housing program within tolerable limits of the national budget. The practical rationale behind permitting the sale of leases is to allow households to upgrade their housing as demand for space grows in tandem with the growth of the family. Ideally, a household is expected to sell its first subsidised HDB flat, known as “resale” flat, at market value and, with the profit finance the upgrade to the second, larger subsidised flat to meet increased spatial needs. Coincidentally, this would also improve its housing wealth. The financial benefit from the buy–sell–repurchase cycle is so obvious that it is commonly known as “two bites of the cherry”.

A resale flat tends to fetch a higher price than a new subsidised flat because it tends to be in “mature” estates. These are closer to the city and offer better access to social amenities such as schools, polyclinics, shopping malls, and public transportation infrastructure. Most significantly, buyers of resale flats can avoid the long years of queuing for new flats from the HDB. With the exception of brief periods of economic recession, prices of resale flats have risen persistently since the early 1970s, when households were first allowed to sell their flats in the resale market.