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Addressing the housing backlog

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Marvin A. Tort

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Addressing the housing backlog

On a visit to Singapore about 15 years ago, I had the chance to meet a number of key government officials, including senior people from Singapore’s public housing authority, the Housing Development Board (HDB). Many of the public condominium units in Singapore now were built and are currently managed by HDB.

The way it works is that those seeking public housing can make use or tap their mandatory savings with the Central Provident Fund, a compulsory comprehensive savings plan for working Singaporeans and permanent residents primarily to fund their retirement, healthcare, and housing needs. Both employers and employees contribute to the fund.

I cannot help but recall that trip in light of present developments here, particularly the recent creation of the Department of Human Settlements and Urban Development. This agency will now serve as the primary national government entity responsible for managing housing, human settlement, and urban development as it merges the present Housing and Urban Development Coordinating Council and the Housing and Land Use Regulatory Board.

Based on news reports, the new department will have administrative supervision over the National Housing Authority, National Home Mortgage Finance Corp., Home Development Mutual Fund, and the Social Housing Finance Corp. It will reportedly be composed of the Office of the Secretary, various bureaus, services and other regional offices.

The department’s creation is timely if not overdue. However, moving forward, crucial to its success will be appropriate, suitable policies; effective implementation; and support from all stakeholders. Otherwise, the department may just end up as another layer of bureaucracy that further slows housing development.

The new housing agency faces a tough challenge. To address the backlog or shortage in the supply of affordable housing from now until 2030, as estimated in a study by the University of Asia and the Pacific, we need roughly 11 million homes put up and sold to buyers in the next 11 years, or an average of one million homes every year.




I cannot help but point to Singapore, because I consider their public housing program a success. At the time of my visit to HDB way back, they were about to build new homes, and were going about refurbishing older developments. In short, other than new development, there was also redevelopment of older properties.

Today, anybody visiting Singapore will be amazed at how they have managed to provide decent public housing for their residents, and how they have also spruced up older HDB buildings to make them look more attuned to the times. Public housing units are well-built, clean, and well-maintained.

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Started in 1 February 1960 to address a housing crisis, HDB was given the task of providing sanitary living conditions for Singapore residents, in place of what were deemed to be “unhygienic slums and crowded squatter settlements.” In three years, 21,000 flats or apartments were built. And by 1965, 54,000 flats were already up.

Information on the HDB website indicate that, to date, more than one million flats have been completed in 23 towns and three estates across the island. HDB flats are said to provide homes to over 80% of Singapore’s resident population, with about 90% of these resident households owning their home. And these are not cheap homes, mind you.

Moreover, if your HDB unit is already old, you can opt to remodel it with assistance from HDB. Data available indicate that the biggest proportion of residences in Singapore (about 32% of all homes) are four-room HDB flats with an area of about 90 square meters. And the average cost of home renovation, for an old flat, is about S$55,000 (about P2.1 million). That is just for renovation.

Over here, by government definition, “socialized housing” are units costing not more than P450,000; and, “economic housing” are homes costing P450,000 to P1.7 million. These two brackets cover mostly the lower-income class, and around 85% of the housing backlog. “Low-cost housing” are homes costing P1.7 million to P3 million. Mid-cost is anything above P3 million, while High-End is anything above P6 million.

As far as mid-cost and high-end are concerned, there is no backlog in the Philippines. There are plenty of developers and homes available in these segments. The biggest backlog is in the “economic” segment, or homes in the P450,000 to P1.7 million range, followed by the “socialized” segment, and then the “low-cost” segment.

Given the magnitude of the housing problem, one cannot help but wonder why from 2001 to 2014, as one research noted, HLURB issued Licenses to Sell for only about two million housing units, covering all housing segments, from socialized up to the open market group. This averaged about 130,000 housing units per year. Even if we averaged 250,000 units yearly until 2030, we will still have a backlog.

With the new Department of Human Settlements, one can only hope that things will start looking up for housing. However, the department needs to hear out all sectors, all stakeholders, and learn from best practices in public and private housing development here and abroad.

It needs to take time to study and learn, and to update its assessment of supply and demand, and to draft long-term plans as well as policies to put those plans into action. Proper planning, consistency and continuity in policy and action, and support from all stakeholders will all be crucial to the new department’s success.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council

matort@yahoo.com

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