China can learn from Singapore on bigger govt role in housing policy

By Xu Guochong and Zhang Chenzhou Source:Global Times Published: 2018/8/8 20:48:28

Government can play bigger role in housing market


Illustration: Luo Xuan/GT



 

When a country reaches the middle and high income range, wealth redistribution and social justice emerge as important issues. Public housing in Singapore has set an example for the rest of the world by helping society, ethnic groups, communities and families.

It binds citizens together with the nation, since property owners tend to care more about their country. Additionally, housing built by the government can easily achieve reallocation of public space. For instance, distributing low income groups into different constituencies, together with supporting policies, prevent social gaps from widening. This is one benefit of a strong government.

The public housing system shares benefits with citizens. Construction of public housing is a non-profit endeavor. The houses are sold and managed by the Housing and Development Board (HDB), but at prices lower than their cost. The deficit created is covered by national finance and issuing bonds. Through this method, the Singapore government has managed to provide sufficient and affordable housing for almost everyone.

"Affordable" usually means buyers are able to pay back the mortgage in 25 years using just the housing provident fund, or in four years with salary.

Housing policies can also magnify the effects of other policies. The HDB has issued multiple priority schemes. For instance, in order to encourage families to have more children, the Third Child Priority Scheme was released in 1987 to help families with more than two children get public housing more easily.

The policies also target the needs of special groups, such as senior housing and executive condominiums for young people with higher income. The Singapore government achieves its public administration function by distributing and managing public housing. Since 80 percent of people in Singapore live in public housing provided by the government, housing policies have a huge leverage effect.

Housing policy is the key to achieving other policies. This art of social management should be a lesson for the Chinese policymakers. Housing is one of people's basic needs, and its financial function should not overwrite its social function.

Since the Singapore government is taking an active role in managing the housing market, there are no unemployed adults living with their parents and no slums in the city. Young couples purchase houses together, make a living and care for the elderly. And marriage is the basis of policies including housing, taxes and healthcare.

Singapore's housing policy combines advanced technology and Confucian wisdom, and policies work together to produce positive outcomes.

So far, China's housing prices have maintained an upward trend. Time and time again, regulations to "skim the froth" on the macro level have failed to tame the soaring housing prices since the real estate industry opened for private business. Pricy housing has become a means for income redistribution and wealth exploitation.

Today's dilemma in China's real estate industry can be attributed to treating houses as commodities rather than public goods.

Housing is as important for people as the land is for farmers. In the last couple of decades, housing has become a tool for investment and speculation. Its basic function, which is to serve as a residence, has faded. This situation needs to be changed.

The government should understand its responsibility and the significance of the real estate industry to public administration. Housing should be the acting point of a solution package. Government and citizens should grow together while managing public housing, not overemphasizing the financial function of housing.

The central government is determined to put a stop to surging real estate prices, which will inevitably affect the industry. Since the privatization of housing is not the solution, more government involvement is not necessarily a bad thing. Affordable housing can be the first step and a yardstick in talking about sharing the fruits of reform and opening-up and improving public welfare.

Xu Guochong is an associate professor with the School of Public Affairs at Xiamen University. Zhang Chenzhou is a PhD candidate with the School of Public Affairs at Xiamen University. bizopinion@globaltimes.com.cn


Newspaper headline: Government can play bigger role in housing market


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