OLIVER FRANKEL. Making housing affordable – Drawing inspiration from India and Singapore

Mar 8, 2017

Not many of those following the housing affordability debate in Australia would think of looking to India and Singapore for inspiration, yet the experiences of each of these countries are inspiring in their scale and ambition (and in Singapore’s case, already proven success), and could provide useful lessons for us as we attempt to deal with the housing crisis afflicting many parts of Australia.  


With a population of around 1.3 billion (some 54 times that of Australia), India is a true colossus of a nation. Everything about the country is big, except the material wealth and standard of living of a large proportion of its citizens.

According to Economist magazine figures, India’s per capita GDP is barely more than 3% that of Australia. More than a fifth of its people live below the poverty line. Life expectancy is materially less than Australia’s and infant mortality shockingly high by comparison.

In the face of India’s many daunting social and economic challenges, the government of Prime Minister Narendra Modi has set itself some bold and inspiring goals. Not least of these is the “Housing for All” program, designed to address the country’s massive lack of affordable housing.

Begun in 2015, the program aims to create some 20 million new affordable homes over the period to 2022, predominantly to assist poorer people.

Even for a country with a population as large as India’s, the scale of this undertaking is breathtaking, representing close to 3 million new dwellings per annum.

Included in the overall 20 million home target is a goal to build 10 million homes by 2019 to house the homeless and those living in “kutchas” (ie. Mud huts and the like).

In its recent India Union Budget 2017-18, Finance Minister Arun Jaitley introduced a raft of economic and fiscal reforms to help push along the Housing for All program. The reforms build on measures introduced in last year’s Union Budget. Most notably, they include according “infrastructure status” to affordable housing, a move widely expected to stimulate more institutional investment in the sector.

The Modi government has also increased the level of already generous “interest subvention” (aka subsidy) for smaller loans – subsidizing around 4% per annum of an eligible borrowers’ interest costs for up to 15 years – together with some profit linked tax exemptions for promoters of affordable housing.  


Although a minnow in terms of its population (5.6 million) compared to India but even next to Australia, the island city state of Singapore has an enviable economy by any standards. According to Economist magazine figures, Singapore enjoys per capita GDP on a par with Australia’s, and an unemployment rate well under half that of Australia.

In its recent international survey of housing affordability, Demographia International accorded Singapore a median house price multiple of 4.8, enviable by comparison to Sydney’s 12.2 (the 2nd least affordable in the survey) and Melbourne’s 9.5 (6th least affordable).

Demographia noted that “Singapore has perhaps the most land constrained geography of any major metropolitan area in the world…”

Singapore’s response to the pressure of space and low income earners’ housing struggles, was to establish a publicly sponsored housing construction program. Administered by the Housing and Development Board (HDB), this highly disciplined program with across the board government subsidies has made enormous progress in ensuring housing for all, particularly since the 1960s.

According to Demographia, Singapore’s success relative to similar markets appears to result from its long-standing public commitment (mainly via HDB) to keeping house prices under control. Singapore has restrictions on foreign ownership which may have helped to constrain the demand side of the equation.

Some 83% of Singapore residents now live in HDB sponsored housing.

Singapore has an overall 88% rate of home ownership, the highest of any country in the Demographia survey.

Lessons for Australia 

What lessons can we draw from India’s and Singapore’s experience in dealing with housing affordability?

First, with a federal system of government not unlike Australia’s, India has approached its housing crisis with leadership at a national (rather than state or territory) level, steered its policies toward bold and far reaching goals and supported them with appropriate central funding.

Second, both India and Singapore have recognized that highly targeted government interventions (including generous fiscal incentives), directed towards those most in need, are the best way to achieve meaningful results over a reasonable timescale.

Third, neither India nor Singapore were content to rely simply on general market forces, including just increasing supply, in relation to an issue as vital to their country and the wellbeing of its citizens as housing.

Fourth, Singapore has demonstrated a high degree of success in housing its population relatively affordably, with a level of home ownership far exceeding that of Australia. The key appears to have been active intervention in and tight regulation of Singapore’s housing market, via a disciplined government sponsored and subsidized housing corporation. These initiatives, together with significant barriers to foreign ownership of residential property, have helped dampen purchase demand.


While seemingly worlds and experiences apart from Australia, both India and Singapore nevertheless provide thought provoking examples of alternate approaches to easing housing affordability. While implementation of any such approach would clearly require modifications appropriate to the Australian setting, learning from these examples could at least broaden the policy options currently on offer.

Oliver Frankel is a former corporate finance and M&A lawyer, who has spent the second half of his career in finance, investment and management. Most recently, he has taken a strong interest in how to address the affordable housing crisis.

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