Demographic-oriented Housing Market and Its Long-term Unintended Spatial-demographic Consequence: Using Singapore as a Case
Figure 1. LQ of Age Group 0-4 and 65+ by Planning Areas in 2000
Date: 01/2018
One commonly observed issue in the vast majority of Asian cities is economic growth that pushes land prices up, especially in urban and inner-city areas. Consequently, low- and middle-income households are priced out of land markets. As affordable housing in Asia is a serious and considerable challenge, governments have implemented housing programmes, policies and institutional arrangements to provide a range of affordable housing alternatives.
As an example, Singapore has heavy government control over the housing markets, through direct construction and strict eligibility rules for public housing. During the past few decades, public housing projects, together with public housing policies, have enabled homeownership for the majority of Singaporean.
In what way the Singaporean government regulates the public housing market?
Among housing-related government policies, the eligibility rules and priority schemes plays an important role in matching households at different life cycle stages to the new supply of public housing dwellings in various locations. Given that the major eligibility rules and priority schemes use applicants’ personal and household attributes, such as citizenship, age, income, and household structure, as selection criteria, the new public housing allocation process in Singapore is mainly categorized as demographic-oriented. Income and household size is often the major criteria used by many other countries to determine households’ eligibility for public subsidized housing, and Singapore is among the few other countries around the world using household structure (marriage status) to determine households’ eligibility.
Another channel of government intervention is through the housing allocation processes. The Housing and Development Board (HDB)[1]gives priorities to first-time homebuyers and households at specific life cycle stages, such as newly weds, couples with their first child and couple with more than two children, during the housing lottery processes. The aforementioned types of households are believed to have urgent housing needs, and should have a higher chance to win their housing lottery.
In order to understand what factors could influence households’ housing choices, it is worth noting that there are several other market features, such as waiting time and minimum-occupancy period (MOP), in addition to the eligibility rules and priorities rules. Once a household wins a bid during the housing lottery process, the type of housing that this household is able to purchase from HDB is called “Built-to-order” (BTO), meaning the dwellings are uncompleted when the household makes its purchase decisions. Usually, the construction would take 3-4 years, and it starts several months after the housing purchase process is done. The assumption is that the number of households that apply for a specific BTO project exceeds 70% of the total number of units announced in the plan. The MOP requirement is currently five years. This means a household, which purchases a BTO flat, can not move out at any point of time during the first five years after moving in. This requirement is implemented in order to prevent housing speculations.
Lastly, the central region witnesses the massive development of HDB towns in the 1970s and 1980s. Recently, most of the new developments are located in the peripheral area, such as the North and North-East Regions. The decentralization of new housing supply has important implications for the planning of transportation services and community development.
In what way these housing features, including the waiting time and MOP requirement, could influence households’ housing choices?
Presumably, government regulations create distinct housing options for different types of households. For example, newly weds that are eligible for HDB units and enjoy priority to purchase HDB units may choose between moving away from the central region to a large public housing flat in 3-4 years (which is the typical waiting time for new HDB housing units) or moving to a small resale (the open market for public housing units) unit in a central or peripheral area without waiting. Even for a typical HDB eligible household, depending upon its household structure and housing situation, it may take over three years (the typical waiting time) to move into a HDB BTO unit because the household may not be satisfied with their lottery results and would like to re-enter the lottery.
What Unintended Spatial Demographic Consequences It Could Lead to?
By analyzing the 2000 Singapore census data, which reports the population by each age group in each planning area[2], is the existence of concentration of young children (aged 0-4) and elderly (aged 65 and over) (Figure 1). In particular, in the ranking of planning areas for the location quotients (LQ)[3]of age group 65 and over, planning areas located in the central region have a value more than 1.5, meaning that the proportion of elderly living in these planning areas is 1.5 times more concentrated than the Singapore-wide average. In contrast, the value of LQ of elderly in the peripheral planning areas, where new towns are concentrated, is quite low. This means those planning areas have a sparse population of elderly. On the other hand, in the ranking of planning areas for the LQ of age group 0 to 4, planning zones with an LQ higher than 1.5 are concentrated in north and northeast of the country. Meanwhile, planning areas with relatively low LQs of young kids (aged 0-4) are in the central region. It is worth noting, that planning zones with a high concentration of young kids are primarily the ones with low concentration of elderly.
Implication for Planning Policy Making
In the Singapore case, the government housing regulations favor households at certain life cycle stages. Over years, the unintended spatial demographic consequences are captured in the above analysis, which suggests that new HDB housing units and surrounding facilities are designed to serve households that are favored by government housing allocation rules. However, after several decades, because those households that no longer enjoy priority of getting HDB dwelling units are likely stay where they were when they first entered the HDB market, old HDB towns would see a significant amount of households headed by older adults. If the old facilities were originally designed to support lives of young adults, several years later, the users of these facilities would be seniors, who may have different kinds of needs. Therefore, such a process would lead to a mismatch between the housing and other public facilities and the demographic attributes of the people that are living in those towns. This deserves the attention of urban planners and housing policy makers to consider what planning strategies to implement so that the public infrastructure and services would be adjusted for serving the right groups of residents.
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Note:
[1]HDB was set up in 1960 in order to provide ‘decent homes equipped with modern amenities for all those who need them’ (Phang, 2005).
[2]According to the definition of planning boundaries from the Urban Redevelopment Authority (URA), there are a total of 55 Planning Areas in Singapore with each Planning Area served by a town center and several neighborhood commercial/shopping centers. According to the census, 35 of these planning areas had residential populations during 2000 and 2010.
[3]https://www.bea.gov/faq/index.cfm?faq_id=478
One commonly observed issue in the vast majority of Asian cities is economic growth that pushes land prices up, especially in urban and inner-city areas. Consequently, low- and middle-income households are priced out of land markets. As affordable housing in Asia is a serious and considerable challenge, governments have implemented housing programmes, policies and institutional arrangements to provide a range of affordable housing alternatives.
As an example, Singapore has heavy government control over the housing markets, through direct construction and strict eligibility rules for public housing. During the past few decades, public housing projects, together with public housing policies, have enabled homeownership for the majority of Singaporean.
In what way the Singaporean government regulates the public housing market?
Among housing-related government policies, the eligibility rules and priority schemes plays an important role in matching households at different life cycle stages to the new supply of public housing dwellings in various locations. Given that the major eligibility rules and priority schemes use applicants’ personal and household attributes, such as citizenship, age, income, and household structure, as selection criteria, the new public housing allocation process in Singapore is mainly categorized as demographic-oriented. Income and household size is often the major criteria used by many other countries to determine households’ eligibility for public subsidized housing, and Singapore is among the few other countries around the world using household structure (marriage status) to determine households’ eligibility.
Another channel of government intervention is through the housing allocation processes. The Housing and Development Board (HDB)[1]gives priorities to first-time homebuyers and households at specific life cycle stages, such as newly weds, couples with their first child and couple with more than two children, during the housing lottery processes. The aforementioned types of households are believed to have urgent housing needs, and should have a higher chance to win their housing lottery.
In order to understand what factors could influence households’ housing choices, it is worth noting that there are several other market features, such as waiting time and minimum-occupancy period (MOP), in addition to the eligibility rules and priorities rules. Once a household wins a bid during the housing lottery process, the type of housing that this household is able to purchase from HDB is called “Built-to-order” (BTO), meaning the dwellings are uncompleted when the household makes its purchase decisions. Usually, the construction would take 3-4 years, and it starts several months after the housing purchase process is done. The assumption is that the number of households that apply for a specific BTO project exceeds 70% of the total number of units announced in the plan. The MOP requirement is currently five years. This means a household, which purchases a BTO flat, can not move out at any point of time during the first five years after moving in. This requirement is implemented in order to prevent housing speculations.
Lastly, the central region witnesses the massive development of HDB towns in the 1970s and 1980s. Recently, most of the new developments are located in the peripheral area, such as the North and North-East Regions. The decentralization of new housing supply has important implications for the planning of transportation services and community development.
In what way these housing features, including the waiting time and MOP requirement, could influence households’ housing choices?
Presumably, government regulations create distinct housing options for different types of households. For example, newly weds that are eligible for HDB units and enjoy priority to purchase HDB units may choose between moving away from the central region to a large public housing flat in 3-4 years (which is the typical waiting time for new HDB housing units) or moving to a small resale (the open market for public housing units) unit in a central or peripheral area without waiting. Even for a typical HDB eligible household, depending upon its household structure and housing situation, it may take over three years (the typical waiting time) to move into a HDB BTO unit because the household may not be satisfied with their lottery results and would like to re-enter the lottery.
What Unintended Spatial Demographic Consequences It Could Lead to?
By analyzing the 2000 Singapore census data, which reports the population by each age group in each planning area[2], is the existence of concentration of young children (aged 0-4) and elderly (aged 65 and over) (Figure 1). In particular, in the ranking of planning areas for the location quotients (LQ)[3]of age group 65 and over, planning areas located in the central region have a value more than 1.5, meaning that the proportion of elderly living in these planning areas is 1.5 times more concentrated than the Singapore-wide average. In contrast, the value of LQ of elderly in the peripheral planning areas, where new towns are concentrated, is quite low. This means those planning areas have a sparse population of elderly. On the other hand, in the ranking of planning areas for the LQ of age group 0 to 4, planning zones with an LQ higher than 1.5 are concentrated in north and northeast of the country. Meanwhile, planning areas with relatively low LQs of young kids (aged 0-4) are in the central region. It is worth noting, that planning zones with a high concentration of young kids are primarily the ones with low concentration of elderly.
Implication for Planning Policy Making
In the Singapore case, the government housing regulations favor households at certain life cycle stages. Over years, the unintended spatial demographic consequences are captured in the above analysis, which suggests that new HDB housing units and surrounding facilities are designed to serve households that are favored by government housing allocation rules. However, after several decades, because those households that no longer enjoy priority of getting HDB dwelling units are likely stay where they were when they first entered the HDB market, old HDB towns would see a significant amount of households headed by older adults. If the old facilities were originally designed to support lives of young adults, several years later, the users of these facilities would be seniors, who may have different kinds of needs. Therefore, such a process would lead to a mismatch between the housing and other public facilities and the demographic attributes of the people that are living in those towns. This deserves the attention of urban planners and housing policy makers to consider what planning strategies to implement so that the public infrastructure and services would be adjusted for serving the right groups of residents.
------------------------------------------------------------------------------------------------------------------------------------------------
Note:
[1]HDB was set up in 1960 in order to provide ‘decent homes equipped with modern amenities for all those who need them’ (Phang, 2005).
[2]According to the definition of planning boundaries from the Urban Redevelopment Authority (URA), there are a total of 55 Planning Areas in Singapore with each Planning Area served by a town center and several neighborhood commercial/shopping centers. According to the census, 35 of these planning areas had residential populations during 2000 and 2010.
[3]https://www.bea.gov/faq/index.cfm?faq_id=478