Singapore is getting poorer. There can be no doubt about that after newspaper reports today that the Housing and Development Board (HDB) is building more two-room and three-room flats. The same Housing Board that once stopped building anything smaller than four-room flats.
"The government is building smaller flats to help more low-income families own homes and those home owners who need to downgrade because of financial difficulties," says the Straits Times, quoting National Development Minister Mah Bow Tan. "However, he did not say how many more of these flats were to be built. Instead, he stressed these flats were to meet a 'niche demand' and that the bulk of HDB homes being built will be three- and four-roomers," it added.
It's revealing that the bulk of the new flats under construction are three- and four-room units — and not five-room apartments and maisonettes that used to be so popular.
Official figures show average incomes have been rising every year since 1997. According to a Ministry of Manpower report, average monthly earnings have risen from 2,480 Singapore dollars in 1997 to 3,773 Singapore dollars ($2,478) last year.
Public housing figures tell another story. As the Straits Times reports:
The Housing Board stopped building two- and three-roomers in the 1980s.
But in 2004, three-roomers were re-introduced. Two years later, the HDB said it would resume building two-roomers to meet increasing demand and, since then, it has put on sale 539 of them. The growing popularity of these smaller flats is a turnaround from the mid-1990s when the overwhelming demand was for bigger four- and five-room flats, with few takers for the two- and three-roomers.
However, since 1997, following the Asian financial crisis, more and more people have clamoured for them as they were forced to downgrade.
Why, if incomes are rising, is there a growing demand for smaller homes?
Because those are nominal earnings and not real incomes, as the ministry makes it clear.
And, besides, there a growing income gap in Singapore.
There were 77,000 millionaires in Singapore last year, up 15 percent since a year ago, the Straits Times reported in June.
But the income gap widened at the same time. According to the official Statistics Singapore:
The gulf between the rich and the poor is wider in Singapore than in Britain and America, which have Gini coefficients of 0.343 and 0.45 respectively. Lower still is the income gap in Continental Europe. The UN Habitat report released last month says the Gini coefficient is:
- Lowest in the world — below 0.25 — in Denmark, Finland, the Netherlands, and Slovenia
- Low — between 0.25 and 0.3 — in Austria, Belgium,France, Germany, Luxemburg, Norway, Sweden, and Switzerland
- "Relatively high by European standards" — between 0.32 and 0.33 — in Greece, Ireland and Italy, Portugal (0.363), Britain (0.343), and Spain (0.34).
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