80% of Singapore young population lives in government-built flats. What is the reason behind such a high percentage? Well, Singapore Housing and Development Board (HDB) is the government department behind the irresistible house subsidies. Unlike a majority of other countries where they show off their public-housing project, none is quite devoted as Singapore.
A brief history of HDB
HDB was formed in 1960 and is responsible for city planning. The agency started by building rental housing for needy families but now has switched to building apartment for sales to the general public. Early HDB flats were made as 1, 2 or 3 room and categorized as an emergency, improved, standard, new generation, and simplified houses.
Currently, there is about 1m apartment. Most of these are apartments clusters around two dozen new towns encompassing the coastal city core. When constructed, the government sold them to first time home buyers at a lower than market price. However, a successful applicant must wait an average of 3 years for their houses to be completed.
Alternatively, Singaporean can opt to buy existing HDB apartment directly from the previous owners at whichever the price the seller deem fit. A three-bedroom flat built this year in an outlying suburb cost $270,000 on average. First time home buyers get the house with $75,000 off the purchase price. Buying a similar house built by private developers can cost three times as much.
How does the government come up with the fund for such houses?
The money Singaporeans use to buy houses in subsidized flats is part of Central Provident Fund (CPF). This is a mandatory national-0saving scheme into which majority of working citizens must pay 20% of their salaries per month to facilitate. For employers, there is a further 17% to contribute. Citizens are allowed to down a portion of their savings to use as deposits when buying HBD apartment. There is also cheap mortgages provided by HDB.
By many measures, the HDB system is a massive success as proved by virtually no homelessness in Singapore. The apartments are drab in looks, but they are clean, safe and spacious enough. The HDB housing is affordable compared to accommodation in London, Hong Kong, and other major cities. In return, the treasury gains something to pool at the national treasury. IN 2016/2017 the project contributed to 2.4% of the national budget.
Politically HDB is one of the major reason why People’s Action Party is still in power. Admirers say that it’s no surprise that the party has won peoples votes and trust by providing them affordable housing. The HDB system is also a way to keep Singaporean n check. Strict rules must adhere to those who seek to buy the HDB flats.
HDB aims to provide affordable, quality homes, ensure vibrant towns and prioritize in building cohesive communities within Singapore towns. The policies and schemes formulated under this department are meant to meet the changing needs and aspirations of Singaporeans. They are planned to support the country objectives such as strengthening family ties, focusing on needs of elderly, need of those under financial difficulties and maintaining racial harmony.