Tag Archives: Policy

What makes housing affordable?

By Lindsey Kreckler, Engagement Strategist

Affordable housing, like so many other things in life, can be very difficult to define, and instead often is determined by normative statements. What constitutes “affordable” housing can vary widely even within a single city, never mind a country or the entire world. Affordable for whom? Affordable where? Many common definitions of affordable housing do not take these differences into account.

The most commonly occurring definition of affordable housing is that used by the United States government, which defines affordable housing as housing and related expenses (mortgages, utility bills, etc.) that do not exceed 30% of a household’s income. If a family’s housing expenses are higher than 30% of their income, they are considered burdened. This standard can generally be applied to households within the United States, and even in comparably developed countries, such as Australia, the United Kingdom, and Canada.

Another recurring definition of affordable housing, one that takes into account the differences between different geographic areas, looks at individual markets. The median multiple system, used in this report from Demographia and recommended by the World Bank and United Nations, determines the price to income ratio of a market by dividing the median house price by median household income. According to this system, a median multiple of 3.0 or less signifies an affordable housing market, while a median multiple of 5.1 or more demonstrates “severely unaffordable” housing. The map here at Numbeo, based on user-reported numbers, shows a similar measure, the Price to Income Ratio, defined as the “ratio of median apartment prices to median familial disposable income, expressed as years of income.” While these data are user-reported and should be taken with a grain of salt, the map provides an interesting visual of how the United States and other developed economies compare to the Global South and similarly developing economies.

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Singapore’s Housing and Development Board as a Vehicle for Homeownership and Nationhood

By Janaki Kibe, AHI South Asia Associate

It is difficult to imagine that 60 years ago Singapore had “one of the world’s worst slums” according to the British Housing Committee Report. No sleek high-rise residential towers, no Louis Vuitton boutiques, no Michelin starred restaurants, and certainly no $3.6 million cars selling on its streets.

Instead, over half a million people were living in overcrowded, unhygienic squatter settlements and slums without access to sanitation, water or health facilities. Clusters of Chinese, Malays, and Indians carved up the City along racial and ethnic lines.  

So, how did Singapore 2012 shed its notorious image of squalor and poverty and become the face of modernity, affluence, and let’s face it a gum-free nation?


Singapore slums in the 1950s

Much of Singapore’s success can be attributed to its Housing and Development Board (HDB), which was established in 1960 with the mission of providing housing of sound construction and design for lower-income groups at affordable rents, encouraging a property-owning democracy in Singapore and enable home ownership, and creating an inclusive, ethnically integrated nation. Today, about 82% of Singaporeans live in HDB flats.

Singapore Today

As Singapore’s sole housing agency, the HDB is unique in its organizational structure, function, and approach to housing. It operates like a single, comprehensive source for housing development and coordinates planning, land acquisition, construction, financing, and policy for housing in Singapore. By centralizing its public housing effort, Singapore has avoided the problems of government silos and fragmentation of duties that are associated with multi-agency implementation.  Can you imagine not having to visit 15 different government agencies to get a construction permit? (Or let’s face it, a passport?)

To me, one of the most interesting aspects of the “Singapore Success Model” as I like to call it is the way in which the government uses housing to tackle social issues like segregation and lack of nationhood. While planning tools have often been used to zone out the “wrong” sorts of people, it seems like an anomaly to find a housing policy that makes integration such a priority.

Just Say No to Nimbyism

For any newly formed entity—business, boy band or country—it is important to engender a sense of loyalty and community early on. The HDB saw housing as a means of building nationhood. Beginning in the 1970s, the HDB started allocating new flats in order to give a balanced distribution of races to different new towns. The results were positive and startlingly long-lasting.


A multiracial Singapore

“The Government wanted to achieve this, therefore we intermingled the races by balloting for the HDB flats, and mixing them in schools. The result is more socializing between our communities.” – Senior Minister Lee Kuan Yew, Straights Times, 4 March 2011

Building a Nation Brick By Brick

The HDB also emphasized home ownership as a way to cultivate nation building and instill a sense of “nationhood.” To happen, homeownership requires a supply of houses and an affordable housing credit. HDB initiatives eased mortgage financing problems for potential buyers, thereby encouraging renters (including lower-income families) to become homeowners.

One of the key aspects of the public housing program that helped make home ownership accessible to so many Singaporeans was a policy that allowed buyers of public housing to use a portion of their savings in the Central Provident Fund (CPF) to pay for the purchase of their HDB flat. CPF savings can go towards down payments (20% of purchase price) and mortgage payments (remaining 80%, which can be paid in installments through a HDB assisted mortgage loan with below market rate interest rates). CPF savings are essentially accumulated funds from the worker’s pay-as-you-go social security to which both employer and employee make mandatory contributions. Through a culmination of efforts directed towards promoting homeownership, of the 82% of Singaporeans who live in HDB flats nearly 90% of them are home owners.


HDB’s first eco-friendly residential project

And just to prove that public housing does not have to be ugly. (And skyscrapers are not always bad.)

82% of all households living in HDB flats have indicated that they would be content to always live in these flats (Housing and Development Board Survey, 2000).