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SG Housing vs Other Superstar Cities: Sacrificing Academic Honesty As Offering To LKY


Apple to Apple comparisons?

It’s pretty obvious tt the median house price for SG is derived fr tt of HDB prices only. But the other 4 cities appear to be taken fr across BOTH private & public hsg prices.

That being the case, there is already a built-in bias for the SG data to be lower than it actually is or shd be.

The prof appears to hv conveniently but deliberately not tried to account for tt bias by then taking the median household income which includes those who buy public or private hsg. That naturally jacks up the median income number in SG’s case. In other words, the higher incomes of condo, landed property buyers are included in calculating the affordability ratio when those earners are NOT BUYERS of the hsg type in the study in SG case.

If my doubts are correct, then the kindest tt can be said of Prof Phang is tt he lacked the academic rigour in his work. Perhaps, he was in a rush to complete her piece in time to justify n announce her admiration for LKY.”

Below, Chris takes apart Phang’s oh-so-unacademic thesis, a real shame to sacrifice one’s academic if not intellectual honesty on the altar of blind admiration for LKY.

Going by the SMU lecture “Home prices and inequality: Singapore versus other global superstar cities” given by Professor Phang, Singapore housing and by extension Singaporean household finances are better than Hong Kong, London, New York and Paris. However, the statistics and analysis are extremely skewed. Warning: This article gets a little wonkish but important.

Housing Affordability

There are several problems with this chart.

The most obvious is that the SMU has used HDB prices as the median house prices when it should use the median price for all housing types to be on par with the other cities whose housing stock is predominantly private.

Yet, the SMU has no qualms using median household income which includes those high income households which are ineligible for HDB housing.

Median household income instead of simple median wages flatter Singapore’s affordability because of the much higher incidence of 2 or more income earners in a household. Singapore’s median household income is over 80% higher than wages, compared to 60% in London and New York and just 25% in Paris. All three have much better total fertility rates.

In all 4 cities, pensions cannot be used to finance homes, therefore retirement funding are not depleted unlike Singapore.

Particularly for New York, Paris and London, the low home ownership masks a high degree of residents renting for work but owning properties outside the cities.

Income Equality

The writer has frequently written about the importance of distinguishing between Gini coefficient before tax and social transfer and Gini after tax and social transfer. The former is obviously higher than the latter.

The trouble with this chart is that the SMU may have used Gini after tax and social transfers (41.6%) for Singapore but the Gini before tax and social transfers for London, New York and Paris. Using Gini after tax and social transfers, London scored 0.34 according to the Work Foundation, i.e. below Singapore. Paris ought to be further below. This put the chart in a rather different light.

Ideal Society?

The SMU appears stretching the conclusion.

Based on my estimates, the low inequality that has been achieved in the distribution of Singapore’s gross housing asset comes close to capital distribution in Piketty’s ‘ideal society’. The bottom 50 per cent owns one quarter of the gross housing wealth.”

First, since French rockstar economist Thomas Picketty is invoked, it should be understood his conclusion in “Capital in the 21st Century” that the ratio of capital to income, thus wealth disparity had returned to the 19th century had been found to be flawed, particularly in the way capital is measured in national income among other errors. (http://www.voxeu.org/article/housing-capital-and-piketty-s-analysis, an easy read).

Where the trouble really begins is that Piketty’s tenet of the accumulation of capital was found to result from pension assets and entitlements both are not drivers of inequality, followed by real estate. However, unlike all 4 cities, Singapore’ gross housing wealth is funded by a depletion of pension assets and there is a complete absence of entitlements (state pensions, etc). Therefore, the use of gross housing wealth alone to reach the conclusion of achieving Piketty’s ideal society is massively overstating the case for Singapore especially when bottom 50%’s assets are heavily weighted in their primary residence due in the depletion in CPF and personal savings whereas the top 50% has more assets beyond their primary residence .

Second. The tenure of real estate needs to be considered since physical capital such as real estate needs properly to be depreciated to estimate the long term wealth effect. With more than 80% of Singapore housing stock had their leases expire worthless, depreciation meant the wealth effect is less significant than the higher proportion of long leases and freehold property and the favourable treatment of lease renewals in the west.

Fourth. A central tenet of Piketty’s theory correctly posits those who own capital benefitted more than wage earners because the return on capital exceeds GDP growth. Since the top 50% owns more risk capital (shares, 2nd real estate) than the bottom 50%, then wealth disparity has increased beyond what is measured by the Gini coefficient especially since real estate returns far exceeds GDP growth. Further, since the most of the bottom 50%’s assets beyond their primary residence is in CPF, then the 3.7% aggregated return from CPF being below GDP growth caused even greater wealth disparity.


London, New York and Paris have strict preservation and zoning regulations, urban prevention laws, ancient laws and rights. The Economist magazine had this to say

“Over the last few decades technological changes have greatly increased the return to locating in large cities filled with skilled people. Being in such places makes workers more productive and raises the income they are able to earn. But skilled cities have not allowed housing supply to expand to meet rising demand. As a result, quite a lot of the gain from employment in productive places is captured by landowners earning rents thanks to artificial housing scarcity. This may mean lower overall productivity, more income inequality, and more income flowing to capital rather than labour.”

However, Singapore’s high prices are due not to these restrictions but to government land monopoly. Even if the SMU argued prices are still far better than the western superstar cities, there are already significant trade-offs because none of them has Singapore’s low productivity, high income inequality and low total fertility rate.

Given its unreserved praise to government policies, perhaps, the SMU lecture should be seen more as political polemic and an ode to Lee Kuan Yew.

Chris K


9 thoughts on “SG Housing vs Other Superstar Cities: Sacrificing Academic Honesty As Offering To LKY

  1. Do you mean Professor Phang Sock Yong who holds the 2014 Celia Moh Professorial Chair at SMU? The Celia Moh Professorial Chair was established in Year 2000 by the late Mr Laurence Moh, former Chairman of Plantation Timber Products, in honour of his wife Celia Moh to commemorate their 40th wedding anniversary.

    Liked by 1 person

    • Hello, jd!

      Thank you very much for pointing out the error. It is now corrected. Rgds,

      A new thot just came to my mind as I write. What Phang has done is akin to Prof Kishore telling the UN assembly that ‘poverty has been eradicated’ back in 2001.

      I guess, like Calvin Cheng who rushed to announce LKY’s death ahead of occurence, some of our fellow citizens appear to want to be ‘thinkers’ ahead of everyone else and events. 2cents.


  2. Well I guess there are professors and there will always be professors. This chap is obviously the former. Now I know why 60% of PMET’s don’t seem to have the right skills to hold down a decent job in SG.


  3. Thank you for the excellent write up. It was very thorough, insightful and educational.


    • Hi, @dotseng!

      Thx for the feedback & comment. Please help pass the info around. It’s crucial if not critical for us to reach out to the FMMs (fence-sitters, marginal supporters, mal/misinformed voters) fed as we have all been on a diet of Straits Times.

      Only with alternative info and views, which everyone is welcome to challenge, can we hope to influence some changes in some of the FMMs.

      Sincerely, 2cents.


  4. I read the ST article, but cannot remember if it is solely based on public housing prices. But even if you add private property in, the median price would still be lower than all the superstar cities, because HDB is still the largest type of housing here. to add on, there is little or no sale of public housing in the other cities, so the professor is not trying to cherry pick statistics. in fact, if we were to let private developers run the show, we would probably be worse off in terms of prices.

    second, where is the data on social transfers? the lack of a source seems to sour this article.

    lastly, i cannot fathom your conclusion. you say the govt has a monopoly, rather than having restrictions on planning and zoning. you do not know the existence of the URA masterplan? In every city, the government has the ultimate monopoly, because they own the land. leaving it to the monopoly of market forces (like HK), would probably be a less than ideal scenario.

    it would take a lot more to convince a fence-sitter like me.

    Liked by 1 person

    • G’morn, @LSH.

      Thx for yr observations. To address yr points.

      – For academic integrity, it must be stated clearly if the prices are purely HDB’s or the entire hsg spectrum. To have left tt bit of crucial qualification or definition out is not being rigourous enough and/or leaving room, intentionally or otherwise, to mislead readers.

      – In SG, landed property prices is typically 4-5x higher than HDB while condos are at least 2x higher. Given the 23.7% pte residential properties, the effect on the median price will be considerable. .

      Therefore, whether or not the ‘the median price would still be lower than all the superstar cities’ as you postulate remains to be seen.

      – Data on social transfer is available but not shown here. For those of us frequent readers of social media, esp tremeritus.com, tons of such data not available in mainstream media are frequently shared. Hence, to keep the article shorter, it’s not included. I’ll look up the link & pass it to you. Maybe, it’s a good idea to add it to the article. I leave it to Chris to decide.

      – Lastly, insofar as housing cost is concerned, the control of the masterplan has some but not the main effect on price and pricing. Likewise, yr earlier view about letting ‘private developers run the show’ may not be as relevant on the price. LAND COST is the elephant component. As far back as 2002, this has been objectively discussed here . (Note also the ‘90%’ estimate of govt’s ownership of land.) Another estimate of land cost being 60% of HDB flat prices is discussed here,

      It’d be too ambitious to discuss the ‘ideal scenario’. But for a start, confronting openly the issues of cost (with relevant data of HDB cost breakdown) plus the original sacred duty of a govt to provide affordable PUBLIC hsg will go some way to building the SG we all want for Singaporeans to truly call home.

      Getting academics to present theses to fit a preferred political narrative on the issue of a basic Maslowian need (shelter) is not the right way about it, don’t you think?

      May I sincerely commend you on yr openness to new info, perspectives as a fence-sitter. Pls do con’t until you satisfy your intellectual honesty on issues that strongly affect our lives.

      My respect, 2cents.

      Liked by 1 person

    • Hello LSH. Usually in the interest of keeping articles short and readable (important consideration these days with short attention span) I tend not to over elaborate; otherwise each article will run to 3,000 words or more.

      The median prices used by the SMU is HDB alone, the latest statistics from HDB refers. If this is all housing types, the median price will conservatively be over 550k, this can be roughly estimated from URA statistics which, annoyingly, only report prices per housing type. That’s 40% higher than the statistics used by the SMU. Definitely not insginficant as you appear to infer. Yet, as pointed out, the SMU did not have a problem using median household income which includes those who own semi-Ds, condos and the like. Housing affordablity as a multiple of income is extremely skewed lower to flatter the Singapore situation. The professor is indeed cherrypicking statistics.

      In regards to social transfer, please refer to the OECD website which provides both Gini before tax and social transfer and Gini after tax and social transfer. For the cities you need to search for city govt statistics but you will find there is little difference between the city and the country they belong. My previous article referenced these statistics and explained the large differences between the two Ginis in the OECD and the small difference in Singapore (not part of OECD) resulting high level of inequality in Singapore caused by the tax regime and minimal social spending.

      Advise caution when super-imposing one’s own experience in Singapore onto other cities. This is a tendency among Singaporeans who are unfortunately exposed to a single narrative (social media is slowly changing that). Although you are right about Hong Kong and that is a collusion between the government and the taipans, in the 3 Western cities, the government is not ultimate monopoly.; in fact there is no monopoly. There are laws, regulations and commons rights, some of which are ancient. Can they be overturned? Yes with some difficulties but should they be overturned? Now would New Yorkers, Londoners and Parisiens want their cities, the epitome of centuries of architecture and culture turned into another, heaven forbid, Singapore and Hong Kong?

      In this article and others I have written, I am at pains to explain that we should not look at property prices in isolation from the effect on retirement adequacy and healthcare provisions because of the unique Singapore treatment of CPF as cashcow that lets the government off the hook, something that no other countries will do to their citizens’ pension.

      I may not fully convince you but it is one step at a time, Besides, for the sake of more intellectual discussion to open minds, it is better to have alternative opinions than a single narrative, don’t you think so? Anyway good of you to raise some points for me to expand. Cheers

      Liked by 1 person

    • @LSH,

      I do not agree with your assertion that “if we were to let private developers run the show, we would probably be worse off in terms of prices.”

      The biggest component of home prices in Singapore is the land cost which is dictated by the government. In the past, when the government wanted to promote asset enhancement, it reduced the supply (land) and increased demand (FTs). Now it wants to keep prices in check so it introduces various cooling measures to increase supply (land) and reduce demand (levies).

      The cost of structure probably accounts for 20-30% of the flat where land accounts for the lions share. It many countries, it is the exact opposite. So it is entirely possible to lower flat prices by half if there is a political will. The current prices is the result of an asset enhancement policy gone mad. In many cities where there are no land constraints, almost all housing stocks are private. Of course no cities or countries has the same homeownership rate as Singapore but that is due to Singapore’s unique policy. That does not mean that one model is better or worse than the other.

      Liked by 1 person

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