A Singapore-style ‘city housing’ solution?

A Singapore solution to Wellington housing, or Sling it in the crazy bucket?

5th Mar 17, 7:24am by Alex Tarrant

By Alex Tarrant

Wellington City councillors could be forgiven for feeling a bit left out when it comes to the nationwide debate on affordable housing.

Despite price and rent rises in the city showing no signs of slowing while those in other centres cool off, the focus has remained on Auckland values, Auckland’s development pipeline and Auckland Council’s urban plan.

Wellington has even been ignored to the extent that it isn’t eligible to borrow from the government’s $1 billion housing infrastructure fund because it isn’t deemed a ‘fast-growing’ area like Auckland, Hamilton, Tauranga, Christchurch and Queenstown.

But that hasn’t stopped councillors in the capital discussing how to ensure the local market does not end up becoming like the “speculative bubble of Auckland,” as one representative said at Thursday’s council meeting.

While the meeting was primarily to discuss a plan to build 750 more council-owned social housing units over the next 10 years, a side-discussion may have revealed the direction Mayor Justin Lester wants the city’s housing officials to take.

Speaking in support of Wellington’s Draft City Housing Strategic Investment Plan, Lester urged councillors to keep in mind the example of Singapore, where about 80% of the city-state’s inhabitants live in flats built by the central government’s Housing & Development Board (HDB). About 90% of these tenants own their flats outright.

The HDB was set up by Singapore’s newly independent government in 1960 to provide access to rental housing, and this was soon boosted to promoting home ownership. City residents can purchase a flat from the HDB directly or via a resale programme.

There have been various tweaks, but the scheme effectively remains the same as when introduced. Over the years, changes have been made surrounding choice and variety of the units. Flats range from small one-bedroom affairs to four-bedroom flats meant for multi-generation families.

Price is at cost of construction and land less a certain (secret) discount – effectively pricing HDB homes below market prices. The government provides grants for first home buyers and those on low incomes. Minimum occupancy periods and resale levies are designed to discourage people from flipping the units for a quick buck.

Funds are available to prospective buyers from Singapore’s Central Providence Fund, a compulsory employee/employer retirement savings plan – think how KiwiSaver works in New Zealand.

There have been some bumps in the road. Oversupply after the Asian Financial Crisis led to the imposition of a build-to-order scheme rather than having government guess how many units would be needed.

And house price rises on the back of a net migration boom in the lead up to Singapore’s 2011 election saw the government impose various measures to cool the market. These included higher stamp duties for sales within three years and debt servicing ratios – think our Reserve Bank’s macro-prudential tools.

Singapore nationhood, Wellington cityhood

Wellington Mayor Lester praised the HDB initiative as having been central to the creation of a strong sense of Singaporean nationhood.

Deputy Mayor Paul Eagle harked back to councillors’ forebears in the 1950s and 60s who built houses for workers in key city occupations. There was no stigma attached to this or to those living in state housing at the time, he said.

Another councillor urged colleagues to shift their thinking from “social housing to city housing.”

It’s no accident that the stance held by Lester and Eagle resembles the Labour Party’s KiwiBuild scheme – both are members of the party, with Eagle set to leave the council at September’s national election to replace Annette King in the city’s Rongotai electorate.

And it is no accident that housing is set to dominate the agenda for the 2017 general election. If a Labour-led council not even deemed fast-growing is discussing a massive city-led home building scheme, others might be wise to look as well.

Interest.co.nz invites readers’ comments on whether such a scheme could work in New Zealand’s major cities? What tweaks would be required to fit the local context (more available land, less demand for ‘cookie-cutter’ housing). Do we even need to look this far due to the government-led house building scheme already underway in Auckland?

Read more on the HDB scheme in this 2014 paper from the National University of Singapore and on the HDB website.

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16 Comments

by Kakapo | 5th Mar 17, 8:19am 1488655191

Hmmmm. Something that's been proven to work, and which has supplied people with the housing they need at a reasonable cost, and facilitated the productive economy? Sounds good, if NZ can manage to get it done without finding a way to sabotage it and turn it into an expensive failure.

by Squishy | 5th Mar 17, 4:00pm 1488682847

Given that local councils and National government have spent years talking about a potential hypothetical approach that could possibly one day lead to more housing being built, maybe in a decade or two etc etc.

I'd put my bets on nothing coming of it. There isn't the political will to agree an approach much less commit funding to shovels and concrete.

by dictator | 5th Mar 17, 8:47am 1488656831

There's nothing wrong with apartments or townhouses. Those living in Wellington are used to them and don't have a problem with them being cookie cutter. If someone wants a bespoke house they can build it themselves.

In Auckland the NIMBYs do need to be set aside; their malicious self-interest is not what's good for everyone in the community. The seeming low density of housing is a joke. Building an 8 bedroom McMansion and renting individual rooms is ridiculous. Apartments and townhouses are need to fit more households into the limited area. Although it isn't just housing but public transport that needs serious work in Auckland. There should be a better train network, something that is critcal now and even more important when creating denser residential buildings.

Given the large number of people I know that believe it is impossible for them to own a home social housing with the potential for ownership would be welcomed by a lot of people.

by Kakapo | 5th Mar 17, 9:29am 1488659399

Higher density is completely possible without it being oppressive high-rises, if the damn NIMBYs would get out of the way. My suburb is one that originally went up 1870s to 1920s, and the majority of those houses are still there, but there's also a significant number of those apartment blocks that went up in the 1930s. Two to three stories high, two to four apartments per floor, on a standard-size section, or sometimes spread over two, with lawns, clotheslines and parking spaces. Significant intensification, but blend in with the single houses, are spaced so as not to overlook or overshadow, and aren't out of proportion.

by two otherguys | 5th Mar 17, 9:12am 1488658357

Melbourne ... The Housing Commission ... unable to return to the past

They did exactly what you suggest ... except the end result was ugly and did not fit in easily into low rise residential areas

"Though the Commission was set up with the best of intentions, by the end of its tenure it was seen as a juggernaut intent on destroying swathes of the historic inner suburbs of Melbourne for 'urban renewal', rather than fulfilling its original purpuse. The most visible legacy of the Commission is the 40 or so high-rise apartment towers in inner Melbourne, all built using the same pre-cast panel technology. The 'commission towers' are popularly considered blights on the Melbourne cityscape, but successive governments have not been able to justify the expense of demolition" (they want to get rid of them)

https://en.wikipedia.org/wiki/Housing_Commission_of_Victoria

by Zachary Smith | 5th Mar 17, 9:16am 1488658569

The Singapore solution seems to be all encompassing though so I don't think it will work if it is just a half-hearted effort. They build whole towns with infrastructure, industrial centres to provide work. Even have little neighborhood police centres in the buildings.
The Wikipedia article is interesting:

Public housing in Singapore

Some snippets:

When the HDB took over in 1960, they fully adopted the new town planning concept on a large scale, building partial towns from scratch in locations all around Singapore.

More than 80% of Singapore's population live in HDB flats. HDB Flats in Singapore are sold on a 99-year lease agreement. The remainder are rental flats reserved for those who are unable to afford to purchase the cheapest forms of public housing despite financial support.

Singapore maintains a quota system of ethnicities through the Ethnic Integration Policy.

Singapore's history of being somewhat authoritarian has probably helped. Not sure how it would work in NZ where society is much more cynical and "freedom loving".I think that Singapore doesn't have the generous social welfare system that we currently have. A taxi driver there told me old people had to work to get a benefit. That's why there were so many cleaning tables and sweeping up in the food halls and plazas.

by Double-GZ | 5th Mar 17, 9:30am 1488659420

I agree Zach. I think we're comparing apples and durians really. Singapore has such different economic, political and cultural landscapes, not to mention the entire country is smaller than the size of Lake Taupo.

On a different note did you read the Herald this morning on $2m+ suburbs have now double!

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=118…

Apparently the next one to join the $2m club is none other than Epsom #DGZ :-)

by Zachary Smith | 5th Mar 17, 10:30am 1488663057

It's about time time this injustice is rectified! I've been feeling a little excluded not being part of that club.

The Herald article seems quite optimistic about Central Auckland area from our POV. The story about the couple returning from Australia and choosing Remuera over Westmere was interesting. Got in at just the right time.

by Double-GZ | 5th Mar 17, 11:11am 1488665495

Well I honestly think that it doesn't matter if she had chosen Westmere over Remuera, or Ponsonby over Epsom; or Herne Bay over Parnell. These quality suburbs are actually within 3 - 6km from each other anyway! She got in just in time regardless #GoodBuy ;-)
Just to point out, the story about the couple buying in Mainston Rd in Remuera...goodness me, it's not even in DGZ and it is in the south side of Remuera Rd near Ellerslie. If prices have double there, gawd knows how much value properties within DGZ would have risen since 2011!

by Zachary Smith | 5th Mar 17, 11:41am 1488667315

Yes of course, when I sped read the article I had in my mind West Auckland instead of Westmere. There really are very few cities like Auckland in the world with lots of detached family houses in mature suburbs close to the city centre. As urbanization continues at a global level these oases will only get more expensive. New developments of mass housing will likely be high-rises and apartments. I very strongly believe we should maintain the character of these suburbs. I am an ultra NIMBY.

by Double-GZ | 5th Mar 17, 11:51am 1488667872

I am proud to be a NIMBY! All my neighbours on my entire street and neighbouring streets are all NIMBYs! We are super-ultra NIMBYs Zach :-)

by Cowpat | 5th Mar 17, 10:17am 1488662247

Is New Zealand simply clutching at straws. We have created an affordability issue, by using debt to ramp up prices and speculating in a basic human right. We have allowed , multiple vested parties to dictate policy and opinion, and by fortunate timing and herd thinking given a few lucky souls benefits which will not be reciprocated, to those that the likes of Tony Alexander alludes to. . As Double GZ states above , although my numbers are slightly different,( Lake Taupo slighty smaller) New Zealand is 384 times larger than Singapore. Singapore is 697 sg km in area.( not to mention that the population is greater ) Start anywhere on Singapore, travel at the speed limit 90 k, within 30 minutes you are in the sea. Most Sunday Kiwi cyclists would cover the perimeter on a morning ride. Additionally there is more class divide in Singapore, I wonder why. To solve the affordability issues, why don't we just stop speculation in housing and upset the status quo on occasion. As a kid growing up in Auckland, I recall advertising a house for sale consisted of a 3-4 line advert in the Auckland star. Now the photo of the agent is about 384 times larger, about the same difference as the geographical landmass of Singapore compared to New Zealand.

by profile | 5th Mar 17, 2:58pm 1488679085

Yep about as much a solution as the tiny house fad.

by happyfunball | 5th Mar 17, 10:23am 1488662616

This could work, but only if a large number of units was built, otherwise this would be just another Accommodation Supplement that puts money in the pockets of those charging rent.

There is plenty of design talent in Wellington to make attractive low-rise apartment blocks. But where would you put them? And who gets first pick? There are several demographics that are in need, so unless you make a large number of units it would only serve the interests of a small group. How would you restrict them from being purchased by the old and then rented out at a profit to the young? And who would buy a property you can't rent out?

This sounds like short term thinking designed to win an election.

by i am not a nimby | 5th Mar 17, 10:41am 1488663714

We had a perfect plan called a Auckland Unitary Plan (AUP). But no we had to flatten it, knock it for several years before we bowed to the NIMBY'S and got a very slim version of final AUP. A slim version of original AUP is not going to cut into the shortage of Auckland housing. Singapore or Vietnamese style housing is not a solution which Auckland is probably willing to open up to. Perhaps in some remote locations, maybe. Remember we could not handle small apartments as it was too small for the objectors who would never want to live in them and therefore did not want others, who rightfully thought and think at times small units (so called shoe boxes) is perfectly ok.

by unaha-closp | 6th Mar 17, 10:51am 1488750704

Cool, all they need is to reposition Wellington at the trading confluence of 2 global economic powerhouse zones and then start up a low tax multi-national banking industry.

Or they can get rate-payers to pay about 300% more rates.

Either or really.