Singapore is a prime example of a country where the government has developed real estate on a large scale and established an effective internal circulation system. In Singapore, the government is the largest developer; the majority of the housing market is controlled by the government, with government-built housing accounting for 90% of the total market, while private developers account for only 10%.
According to data provided by the Housing and Development Board (HDB) of Singapore, the HDB is a statutory board that operates on a non-profit basis, providing end-to-end services including housing planning, construction, allocation, sales, and leasing. The HDB can independently determine the selling price of HDB flats, allowing these prices to remain independent of market fluctuations. Over the past 47 years, the HDB has built approximately 900,000 flats.
Currently, about 85% of the population lives in government-built HDB flats, with over 90% of these households being homeowners. Additionally, 7% of low-income families rent affordable housing from the government, forming a unique model where the government addresses the housing needs of the majority of the population. Meanwhile, about 15% of high-income households in the country reside in high-end commercial properties purchased on the open market.
Since 1968, the Singaporean government has allowed residents to use their Central Provident Fund (CPF) to pay for housing down payments, ensuring that low-income individuals can afford HDB flats. The CPF is funded by the people and used for the people; the substantial funds required by the Singaporean government to maintain the HDB system are derived from this source. The Housing and Development Board also utilizes the Central Provident Fund to issue mortgages. If residents do not purchase a home, they can only access their CPF funds upon retirement, ensuring that the capital remains within the Singaporean government's system rather than flowing into the pockets of private developers.
At the National Day Rally in August 2007, Prime Minister Lee Hsien Loong reiterated the three responsibilities of the Singaporean government: helping citizens purchase HDB flats, ensuring the appreciation of these flats, and assisting the elderly in selling the leases of their larger flats or downsizing to smaller apartments to cash out for retirement.
The Singaporean government promises its citizens that first-hand HDB flats purchased from the government will appreciate in value; therefore, the government consistently uses supply and demand to regulate housing prices. For example, the government may demolish a portion of older HDB flats to create a temporary supply shortage in the market. If the government determines that housing prices have risen to a level that requires control, it will increase the pace of new HDB construction. Furthermore, the Singaporean government also adjusts CPF contribution rates, thereby influencing the number of people eligible for housing loans and, consequently, housing prices.
