Tyler Cowen directed me to this article by Stephen Smith:
Now onto the case of Singapore. Singapore has highly encouraged homeownership as a means of social engineering (despite its free market bonafides, Singaporean housing policy is highly interventionist), and has been very successful at it: at 87 percent, its homeownership rate is trumped only by former communist countries that simply deeded people’s state-owned apartments to them after the fall of the wall (which I’m sure is going to become a huge problem once Eastern Europeans become wealthy enough to want to redevelop their infamous housing blocks).
But Singapore is also an incredibly dense city-state where the vast majority lives in multifamily buildings, so “homeownership” means owning your own strata unit (their term for a condo, also used in Australia, New Zealand, and Canada). And like all strata and condo buildings, the owners will almost never reach an agreement to sell, so they cannot be redeveloped by conventional means. Combine that with the ugliness of the buildings and the fact that Singaporeans, like all East Asians, place a high value on new homes, and you can begin to see the problem. (Worthwhile to note that en bloc sales were not allowed until a few decades after the homeownership policy took off, and it wasn’t private investors who built the unredevelopable strata towers in the first place – it was the government.)
So to solve it they instituted something called en bloc sales in 1994. The basic idea is that if a certain percentage of a designated building’s residents choose to sell their units (it used to be 90 percent, now it’s 80), then the developer wins the option to buy all the units (including apartments belonging to the “minority owners,” or those who did not approve the sale), which he can exercise at whatever price the supermajority agreed to.
. . .
En bloc sales are very controversial, though (there’s even a TV show about them), and I can’t imagine a non-authoritarian country like the US or Japan tolerating that sort of routine violation of property rights quite the way Singapore does it.
In contrast, in America the government can take and demolish your condo (via eminent domain) with only 0% of condo residents in favor. But of course we are a “non-authoritarian” country, not an elected dictatorship like Singapore. Our Supreme Court vigorously defends the constitutional right of people to say no to a forced government buyout, unless for public purposes. Oh wait.
Seriously, I’d guess that Singapore also has eminent domain rules. But here’s my question: Why should the government have any say in determining property rights rules in this area? Why not let each condo developer specify the percentage of owners who need to agree to a buyout? I’d much rather buy a condo in a development that could be redeveloped after an 80% or 90% vote of residents, than one that required a 100% vote. If I’m the exception then so be it, let 1000 types of property contracts bloom.
Leave a Reply