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Hong Kong VS Singapore: Public housing

November 24th, 2012 | Author: Contributions

Public Housing apartments: Singapore(left), and Hong Kong(right)

What comes to mind when you think of Hong Kong’s housing? Dark, cramped, dingy and tiny spaces tucked away in decrepit buildings, or less dreary but equally tiny and exorbitantly-priced shoebox apartments in chopstick-like skyscrapers (pictures)? Either way, the gut feeling or general impression of most people, including yours truly, is that housing conditions in Hong Kong leave much to be desired. By comparison, housing conditions in Singapore are superior by a long shot. If we talk specifically about public housing, it is even more untenable to suggest that Hong Kong’s public housing is better than Singapore’s in any way.

So unsurprisingly, Hong Kong’sMingpao draws similar conclusions aftercomparing housing in the two cities: public housing (HDB flats/ 政府M屋) in Singapore is not just more spacious but also more affordable. The annual supply of HDB flats matches the number of newly registered married couples; those with children can upgrade to bigger flats while the aged may monetize existing flats by selling them back to the government and downgrading to smaller ones.

I can already imagine Hongkongers green with envy.But let’s take a deeper look into the two public housing systems before we draw further conclusions.

1. Density

Although Hong Kong’s population density is lower than Singapore’s, it is in fact way higher if you consider that only 23.7% of its land is developed given the mountainous terrain and other factors. Of this, only 76 sq km of land, or 6.8% of the total land area, is developed for residential purposes. Anexpert estimates that population densities measured at block level in some areas may even exceed 400,000 persons per sq km.

2. Size

Broadly speaking, public housing in the two cities may be divided into rental flats and owner occupied flats, which are sub-divided into several categories or schemes.

Right from their inception, public flats in Hong Kong were smaller than those in Singapore. A1974 articlecomparing public housing in the two cities notes that the then-minimum space per capita in Hong Kong was 35 sq ft (3.25 sq m) whereas Singapore’s standards ranged from 57 to 104 sq ft (5.3-9.66 sq m). There is still a conspicuous disparity in the living space per capita in the two cities today (see Table above).

So if we talk about the quality of public housing, in terms of size, comfort, density, Singapore’s HDB flats are, in general, a cut above Hong Kong’s. What about prices and affordability?

3. Rental

Hong Kong’s Public Rental Housing (PRH 公屋): As of March 2012, about 2.1 million people (30% of population) lived in PRH flats. PRH rent, inclusive of management and maintenance costs, is reviewed every two years and adjusted according to PRH household income. As of March 2012, PRH monthly rent ranged from HKD260 to HKD3,520. About 189,500 applicants are on waiting list and the waiting time is 2.6 years (source).

Singapore’s HDB rental flats (租UM屋): In 2011, about2% of population resided in rental flats. Depending on household income and flat type (1 or 2 room), rent varies fromSGD26 to SGD275. HDB only provides subsidized rental for 1-2 room flats. Households that wish to rent 3-room flats have to go to the open market, where rental for a 3-room flat ranges from SGD1,630 to SGD2,300 (source).

There are currently 49,300 units of 1- and 2-room public rental flat for which the waiting time is 6 months or longer (source). Strangely, although rental flats are in short supply and are meant for the needy, there are some blocks jointly managed by privateoperators and the HDB, which rent these HDB flats tonon-Singaporeans at commercial rates of over SGD1,500 per month (source).

Theeligibility conditions for HDB rental flats are stringent. Some needy, likethis elderly,are deemed not so by HDB’s standards. Social workers also reported that there are many old folks likethis old woman who opted to forego her SGD5O pay raise because it “would have pushed her into a higher salary bracket, causing the rent of the flat to go up from $26 to $111.” The unabated demand for rental flats since the 2009 financial downturn according to our Members of Parliament (here andhere) is also a disturbing indication of how times have changed and policy hasn’t.

4. Pricing

Mingpao reports that the prices of HDB resale flats (D售M屋) have risen about 20% from an index of 161.3 in the 2^nd quarter of 2010 to 194 in the 2^nd quarter of 2012 which, the journalist opines, “is not too high considering the overall asset pricing.” The report then citesCCL (Cent