Ideas for a public housing policy

1. I like to give my views about what are the elements of a good public housing policy.  The Singapore Government is in a unique position to implement this pubic policy, as it owns 80% of the vacant land in the country.

2. The Government can set a policy to ensure that housing is available to the citizens at an affordable price, which I will define as 5 years of the average household income. Based on an average income of $60,000, the flat should cost $300,000. This can be for a size of 1,000 sf.

3. Smaller flats can be made available to poor families at a lower price, say $180,000 and $240,000.

4. Housing at these prices will be build by a government agency, i.e. the HDB, based on these prices. These prices can be adjusted yearly according to changes in the average income.

5. Those who earn over the average income can buy a home from the private market. They are also given the option to buy the public housing i.e. there is no income ceiling.

6. If the Government is willing to provide the public housing at the benchmark price to all families who opt for it, the price in the private market will not run off too far from the standard flat. Similarly, the resale market for the public housing will also not move too far off.

7. Instead of allowing the resale market to set the price for the new public housing, it should be the other way round, i.e. the benchmark price for new flats provided by the housing agency should influence the resale market.

8. Each family is allowed to buy a public housing at the benchmark price only once. If they wish to upgrade, they have to go to the resale market. As indicated, earlier, this market will not deviate much from the pricing of the new flats.

9. The housing agency should also build flats for rental to locals, who are not yet ready to commit to the purchase of a flat, or to foreigners working here. The rental rate should bear a reasonable ratio to the purchase price.

10. People who be encouraged to relocate closer to their place of work. If they sell their home and buy a new home, they should only be required to pay stamp duty on the difference in the value of the homes.  The transaction cost, i.e. agency and legal fees, should also be reduced.

11. Housing should not be allowed as a form of speculation or making profit. It should be a place to stay and to moderate the cost over the long term.