Whilst Lee has retired for many years, the credit for Singapore’s achievements today should still go to him and the first generation of Singaporean political leaders.
In recent years, many Hong Kong citizens like to compare Hong Kong with Singapore, because they find their country lagging behind of Singapore in many areas, and are therefore unsatisfied.
Hong Kong Admires Singapore’s Housing
I believe what the citizens of Hong Kong are most impressed with Singapore today is its public housing policy. Nearly 90 percent of Singapore families live in flats that are sold by the government at rather low prices.
However, younger Singaporeans have taken this extraordinary feat for granted; little do they know that Singapore’s public housing policy is one-of-a-kind in the world. The rate of house ownership in Singapore is as high as 95 percent, and nowhere in the world is this kind of figure possible.
More interestingly, every Singaporean can apply for two public houses in his/her lifetime. When they apply for the first house, they may not have much money to spare, so they can opt for a smaller unit. After staying there for five years, they can sell off the house on the resale market and apply for a second, bigger unit. Furthermore, the government pays for major upgrading of certain public housing estates after two or three decades.
In Singapore, slightly more than 10 percent of the population stays in private houses. From an investment perspective, private properties are better investments that have high appreciation potential since supply is lower than that of public housing.
I believe that the success of Singapore’s public housing policy is the most important contributing factor for the ruling People’s Action Party’s – founded by Lee – long stay in power.
Lee has come very close to achieving the ideal of “Everyone is a homeowner”; not just home ownership, but also spacious houses, with per capita living space that is more than twice that in Hong Kong.
Hong Kong Wants Similar Housing
Can Hong Kong replicate Singapore’s housing policy on a large scale to achieve 90 percent home ownership? It will be tough. First of all, once Hong Kong starts building many cheap public houses, private home prices will fall, and this will impact the private property owners, who make up 50 percent of the total property market.
Hong Kong’s Sun Hung Kai Properties (0016) intends to modify its construction blueprint to reduce the size of residential units while substantially increasing the number of units, from 1,500 to 11,000, a full six-fold increment. Clearly, this was the result of the recent popularity of mass market apartments. If all developers follow suit, the number of units available for pre-completion sales in two years’ time will far exceed the current estimated number of units.
On the other hand, the Singapore government has recently announced that it will increase the supply of two-room flats for singles. The current trend in the societies of Singapore and Hong Kong is an increase in the singles population. Since singles do not need large units, I support Sun Hung Kai’s move towards building smaller units. After all this is a free market.
Most of the public land in Singapore is used for public housing, which limits the income that the Singapore government can earn from land sales. This is why Singapore collects GST (goods and services tax). The personal income tax rate of the highest income group is also much higher than in Hong Kong, which helps offsets the shortfall from land sales. In other words, the income that the Hong Kong government earns from land sales can also be considered a form of taxation. So, which kind of tax would you prefer?
Lee’s passing did not cause the Singapore stock market to fall, as the market has already digested the news. Lee resigned as Prime Minister in 1990 and was succeeded by Goh Chok Tong. Today, his son Lee Hsien Loong has been Prime Minister for many years, and will also retire in a few years’ time. When that happens, Singapore will face a totally new political scenario.