Can Singapore Solve Hawaiʻi's Housing Shortage?

Mar 27, 2019

An HDB estate in the Orchard neighborhood. Singapore is one of the highest population density areas on Earth. A two bedroom apartment can be purchased for under $300,000 U.S. Dollars.
Credit Bernard Spragg / Flickr

Eighty percent of Singapore’s 5.6 million residents live in public housing. A 2-bedroom, 1-bathroom apartment can be purchased on the resale market for around $250,000 U.S. dollars. The island nation’s success in making housing affordable has caught the attention of lawmakers in Hawaiʻi.

Singapore’s public housing program began in the post-World War Two period. As the country was decolonizing, the government was pouring resources into infrastructure and education.

A series of destructive fires in the 1950s left tens of thousands of people homeless, prompting government intervention. The Housing Development Board, or HDB, was created in 1960 to oversee the construction of public housing for the displaced.

The HDB quickly evolved from providing rental housing to developing apartment for sale. Flats were available in varying sizes for purchase under a 99-year leasehold contract.

As more of Singapore’s population achieved middle class status, the HDB began including amenities in its projects that would appeal to those consumers.

According to Ho Chi Tim, a Singaporean historian, the HDB began building entire communities from the ground up.

“In each estate or town, there will be apartment blocks, there will be markets, there will be infrastructure, there will be transport. For a time, those estates would also have light industries built near by so people could go to work without traveling too far.”

Tellingly, an overwhelming majority of Singapore residents are satisfied with HBD housing. Ninety-six percent were satisfied in a 2008 survey. In 2014, that number had dipped only slightly to 91 percent.

That success has at least one Hawaiʻi lawmaker seeking to create a similar program for Honolulu’s shortage-plagued housing market. The median sale price for a condo on Oahu was $685,000 in February. For a single family home, it was $950,000.

Under a proposal being called Affordable, Locally Owned Homes for All, or ALOHA Homes, state Sen. Stanley Chang, wants to replicate Singapore’s housing success.

His bill would create a public housing authority similar to the HDB that would commission the construction of high-density apartment buildings along Honolulu’s planned rail transit line. Units would be sold to residents who do not already own property under 99-year leases for a cost of around $300,000.

To keep construction costs down, land already owned by the State of Hawaiʻi and the City and County of Honolulu would be used. Owners would be required to live in their unit. Seventy-five percent of the profits from resales would go to state tax authorities, meant to discourage speculation.

The properties could be passed down to children, but only within the 99-year period, at which point ownership would revert to the state.

Chang said that he wants to solve the housing shortage, not just improve the situation. He envisions constructing around 6,000 new units every year under the ALOHA Homes program. The sale of the units would offset the development costs, eliminating the need for a recurring taxpayer subsidy.

It’s unclear whether or not that will work out as planned. Private, for-profit developers would still be needed to construct the new units. Chang believes that they will be able to achieve a sufficient profit margin through scale.

But not everyone in the community is enthusiastic about the plan. The conservative-leaning Grassroot Institute on Hawaii has criticized the structure of ALOHA Homes. President and CEO Keli’i Akina would rather see a reduction in development restrictions imposed by the state and local governments.

“We only develop on 5 percent of the land. What would happen if you developed on 1% more? If you went from 5 percent to 6 percent, you would increase the available land by 20 percent. The real problem is that the government…creates an artificial scarcity.”

Akina also took issue with the 99-year lease, which he said prevents Hawaii residents from accruing generational wealth.

But other pro-business advocates have supported the ALOHA Homes measure. The Hawaii Chamber of Commerce cited the financial pressure high housing prices put on local business and an already tight labor market.

At the moment, it appears that ALOHA Homes will have to wait until next year. The bill failed to get the required approval hearings needed to reach a floor vote in the House of Representatives, despite gaining similar approval in the Senate.

Advocates have already announced they will reintroduce the bill in the 2020 legislative session.

Take a tour of an HDB flat here.

Read community testimony for SB1.