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How Other Nations Solved Housing Shortages: What Can We Learn?

When noted writer and politician Edith Sommerskill visited Singapore in 1954, her observations of Singapore and its landlords was less than flattering. Today, it hardly seems as if she is describing the same city.

At the same time, UK housebuilding has routinely fallen short, resulting in a housing shortage and decreasing rates of home ownership. 

There appears to be a lot we can learn from the way this city-state has rebounded. After achieving its independence, Singapore required an effective policy to solve its housing shortage and rejuvenate the economy.

Government bodies were established and given the legal powers needed to implement these policies. In the 1970s housing expenditure was approximately 8% of the GDP and reached up to 15% in the 1980s and 1990s. 

In his book, former Singapore Prime Minister Lee Kuan Yew delivered insights into how the country developed and implemented its housing policy. In the 1960s the government enforced compulsory purchase orders and set a limit on land purchase prices, preventing profiteering and ensuring that the country had enough land to build homes. By the end of 1965, the housebuilding target had been exceeded. 

Structural Defects Insurance

To encourage home ownership, Singapore tried two approaches. The first approach, which involved low interest rates, failed because the 20% deposit was beyond the means of too many borrowers. A compulsory workers’ pension scheme forced people to save money for a down payment.

Four years after buying a home, homeowners could sell at the open market price. Grants and subsidised rent became available to those who still could not afford a home. 

Meanwhile, in modern Britain, housing has been identified as a major issue for all primary national political parties. In the 2015 election, the Conservatives and Labour pledged to deliver 200,000 new homes every year by 2020 while the Lib Dems promised 300,000.

All party manifestos offered sound ideas for reaching these goals, one of them being Labour’s vow to give local authorities the power to compel developers to build. The Conservatives advocated subsidised deposits and the Conservatives, Liberal Democrats and Ukip wanted to free up public sector sites and brownfield. 

None of them appeared to go far enough. While these proposed strategies could help achieve housing objectives, the systems for delivering them were weak. These targets were aspirational, with little evidence to show that they would be delivered upon as happened in Singapore.

If they truly intend to solve the housing shortage, UK politicians should take a look at what was achieved by Singapore’s approach and investigate if any of their ideas could be implemented here. 

Specialists in Construction Insurance


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