How Singapore and Australia Took Opposite Paths on Housing

Summary

• Global housing affordability crisis: Median age of first-home buyers in the U.S. rose from 33 in 2020 to 40 in 2025; OECD price-to-income ratio remains near record highs despite easing from 2022 peak.
• Australia's deteriorating affordability: House prices are over 13 times household disposable income per person, with median price ~A$1 million (≈$700,000 USD), up from ~4 times average weekly earnings 30 years ago.
• Policy critique in Australia: Economist Saul Eslake argues that allowing withdrawals from superannuation (retirement funds) for home purchases—such as proposed 40% withdrawals—adds upward pressure on prices, fails to help first-time buyers (who have low savings), and reduces retirement income.
• Political inertia in Australia: Eslake suggests housing affordability may never be solved deliberately because politicians know a majority of homeowners (with ~2/3 of wealth in real estate) do not want prices to fall, viewing housing as wealth accumulation rather than shelter.
• Singapore's contrasting model: Mandatory Central Provident Fund (CPF) contributions can be used for housing down payments and monthly payments, with ~75% population in public housing distributed across all neighborhoods to avoid segregation.
• Singapore's demand-side control: Additional Buyer Stamp Duty (ABSD) of 30% on second homes discourages investment in multiple properties, democratizes housing access, and depresses price growth, treating housing as a consumption good rather than just an investment.
• Divergent views on retirement fund access: Sumit Agarwal sees pros (helps with down payments, builds long-term wealth) and cons (inflationary pressure from more money chasing housing) of using 401k-like funds, while Eslake is uniformly skeptical.
• First-time buyer experiences: In Singapore, Jeff Chie found first-home purchase manageable with 5% initial down payment; in Australia, Jordan Davies saved for years and bought with no expectation of price appreciation, prioritizing shelter over investment.
• Market implication: Policies that increase access to capital (e.g., longer mortgages, retirement fund withdrawals) may inflate housing prices rather than improve affordability, with Singapore's supply-and-tax approach offering a potential alternative.
• Long-term uncertainty: Eslake speculates housing may only become cheaper through a global financial upheaval reducing credit supply, but political pressure would likely intervene to prevent price declines.