Public Housing Works: Lessons from Vienna and Singapore

Sargfabrik, an award-winning social housing project, is the biggest self-governing community in Vienna, Austria. Photo: Vienez

If quantity alone were the measure of success in affordable housing programs, New York City’s would sit near the top of the list. The largest public housing authority in North America, the New York City Housing Authority (NYCHA) owns 178,557 apartments in 2,563 residential buildings. But the NYCHA—like housing agencies across the United States—is plagued by problems. Chief among these are deteriorating housing stock and a mismatch between supply and demand. Whether Mayor Bill de Blasio’s recently-announced $41.1 billion housing plan will fix what is broken remains to be seen. What does seem clear is that the plan, while ambitious in scale, does not challenge the basic assumptions underlying affordable housing policy in the United States.

A look at two alternative affordable housing models suggests that a radical rethinking of American housing policy is in order. The public housing programs in Vienna and Singapore have, to varying degrees, succeeded in meeting critical housing shortages, preventing housing prices from spiraling out of control, and encouraging social cohesion. While the details of the two programs differ, their central premise is the same. Rather than stopgap assistance for only the most vulnerable, public housing in Vienna and Singapore is intended as a permanent solution for a majority of residents. By disrupting the private housing market through subsidy programs, and investing substantial government funds in construction and management, the two cities have built a supply of affordable housing that exceeds New York’s in both quantity and quality.

New York
Though larger than any other affordable housing program in the United States, the NYCHA serves only a small fraction of the city’s residents. Eligibility is determined by strict limits on gross income. As a result, the public housing population is skewed toward the bottom of the socioeconomic spectrum, with an average tenant household income of $23,150.

Recent funding cuts have exacerbated NYCHA’s most obvious problems: an inadequate supply of housing, and an aging housing stock. There are more families on the waiting list for conventional housing (247,262) than are currently being served by the program. Moreover, much of the city’s public housing is in poor physical condition. In spite of recent preservation efforts and attempts to secure alternative sources of funding, NYCHA seems to be hanging on by the skin of its teeth, unable to keep up with either new demand or the heavy maintenance required by its existing supply.

NYCHA's 334 public housing developments include the Fulton Houses in Manhattan, built in 1965. (Dan DeLuca / Flickr)

NYCHA's 334 public housing developments include the Fulton Houses in Manhattan, built in 1965. (Dan DeLuca / Flickr)

Because of these deficits, and in response to decades of inflation on the private rental market, Mayor de Blasio introduced his Housing New York plan in early May. The plan proposes building or preserving 200,000 units of public housing over 10 years in a 40/60 ratio. To facilitate new construction, it contemplates changing zoning and land use regulations to making building public housing easier, surveying vacant lots to identify possible building sites, and implementing a mandatory inclusionary housing program that would require developers to designate a portion of units as permanently affordable. De Blasio’s program would be paid for by a combination of a direct city subsidy ($8.2 billion), federal and state funds ($2.9 billion), and private investment ($30 billion).

While de Blasio’s plan would funnel much-needed funds into public housing, and loosen the legal framework that determines where and when affordable housing may be built, it represents a continuation of rather than a challenge to conventional housing policy. For an alternative view of affordable housing, we must look elsewhere—first to a city that has implemented public housing on a large scale for nearly a century.

Vienna
The Viennese model of affordable housing is distinguished, first, by its expanded definition of social housing. Where New York’s public housing developments are islands of poverty in a sea of private-market housing, the majority of Vienna’s residents (60%) live in subsidized apartments, including both city-owned flats and limited profit housing associations. In a chapter in Social Housing in Europe [pdf], Christoph Reinprecht summarizes the Austrian approach to social housing as follows: "There is a general political consensus that society should be responsible for housing supply, and that housing is a basic human need that should not be subject to free market mechanisms; rather, society should ensure that a sufficient number of dwellings are available."

Vienna’s Municipal Department 50 owns more than 220,000 apartments, over one-quarter of the city’s total housing stock. (Compare this to New York, where the NYCHA owns 8.2% of all rental properties.) Vienna’s public housing program began during the era of social democratic rule known as Red Vienna. Between 1924 and 1933, the municipal government built 61,175 apartments in 42 housing developments, which were distributed throughout the city to encourage interaction among social classes, and were remarkable for their combination of social innovations and high-quality design. Though the fascist government dismantled the public housing program—and intentionally damaged the existing settlements—it restarted almost immediately after World War II, and has since remained a municipal priority.

Reumannhof, designed by Hubert Gessner and built in 1924. The sign below the cornice marks it as municipal housing, and indicates the dates of construction. (Payton Chung / Flickr)

Reumannhof, designed by Hubert Gessner and built in 1924. The sign below the cornice marks it as municipal housing, and indicates the dates of construction. (Payton Chung / Flickr)

Public housing in Vienna is financed primarily by federal funds. According to Vienna Housing Research’s Wolfgang Förster [pdf], the city receives approximately €450 million per year from earmarked portions of income and corporate taxes as well as housing contributions paid by all working Austrians. Municipal monies make up for any shortfall. Unlike in the United States, the vast majority of Austrian housing subsides (92%) are object- rather than demand-side, meaning that they apply to housing construction rather than individuals. Four-fifths of all new housing built in Austria, both privately and publicly owned, is subsidized by public funds. Only second homes and the most expensive houses and apartments are ineligible for subsidy.

Vienna’s public housing program modulates the private housing market. Because so much of the city’s total housing stock is city-owned or subsidized, private landlords compete with social housing for the same tenants, and cannot afford to inflate rents. At the same time, the fact that majority of the population lives in municipal or subsidized housing means that the social stigma attached to public housing in the United States does not apply.

Vienna’s public housing program provides affordable homes to a majority of the city’s population without sacrificing architectural quality. The city distributes housing subsidies for large-scale developments through a process known as Bauträgerwettbewerbe, or developers’ competition. A jury comprising representatives of the city as well as architects, builders, and specialists in housing law chooses designs based not just on economy, but also quality and ecological impact. The competitions have cut construction costs by roughly 20%, and encourage creative themes, such as the Autofreie Mustersidlung, or car-free estate, or the Frauen-Werk-Stadt, a family-friendly community designed by women architects.

The Hundertwasser-Haus in Vienna, designed by the expressionist painter Friedensreich Hundertwasser with architect Joseph Krawina. Credit: Isik Mater.

The Vienna model is not without its flaws. Though it effectively mitigated the early-twentieth-century housing crisis, the top-down implementation of the program drew resentment from workers. It is still arguably not as democratic as it could be; while Municipal Department 50 is committed to involving designers and academics in the planning process, there appears to be little room for citizen participation.

In theory the city’s mixed-income housing developments should encourage social mixing at the neighborhood level. In practice, the recent trend is toward segregation, especially, as Reinprecht points out, of immigrants. Newly-arrived families and the elderly increasingly inhabit the older estates, while younger, Austria-born families gravitate toward the newer housing developments. Thus while Vienna’s public housing program may have bettered social cohesion within the city as a whole, a closer look at settlement patterns reveals tensions that have the potential to undo some of its gains.

Finally, the very success of Vienna's social housing program poses a threat to its continued existence. As the city's high quality of life, bolstered by the availability of affordable housing, attracts additional residents, pressure on housing stock increases. The city has already begun to rely on public-private partnerships to fill the gap between demand and supply. A reorientation toward private solutions may not be far behind.

Singapore
Singapore’s public housing program is, in the words of economist Sock-Yong Phang [pdf], "a neo-classical economist’s nightmare." The program, administered by the Housing Development Board (HDB) is even more extensive than Vienna’s. Eighty-two percent of Singapore’s residents live in HDB-built apartments, of which there are more than 900,000. In contrast to both New York and Vienna, HDB encourages public housing residents to purchase their apartments. Nine out of ten HDB residents own their homes. The 50,000 rental units are, according to the HDB website, "for the truly needy who have no other viable housing options."

The emphasis on homeownership began in 1964, four years after HDB was established, with the government’s Home Ownership for the People Scheme (HOPS). HOPS transformed Singapore’s public housing program from a solution to a housing crisis into an exercise in nation-building. It furthermore reveals an important difference between Singapore’s attitude toward public housing and the Viennese approach. While the latter uses housing subsidies as instruments of redistribution, Singapore, argue social scientists S. Vasoo and James Lee [pdf], sees its affordability measures as a means to promote economic growth in general.

HDB's Pinnacle@Duxton development features 50-story towers connected by aerial bridges and gardens. (Malcolm Tredinnick / Flickr)

Singapore offers residents substantial grants and awards—up to S$60,000 for first-time buyers—toward the purchase of an HDB apartment. But the crucial piece of the financing puzzle is a policy introduced in 1968, which allows the use of Central Provident Fund savings (the Singaporean social security program) to make down payments and monthly mortgage installments. Today, 80% of HDB homeowners make no cash outlay on their mortgage payments, but instead have the entire amount drawn from their CPF account.

By focusing welfare spending on a few areas, including housing and healthcare, Singapore has, by most accounts, put a roof over nearly every resident’s head. (The government does not publish statistics on homelessness, so we do not know how many Singaporeans remain unhoused.) HDB’s tiered grant system awards the largest subsidies to households with the lowest incomes. Families at risk of homelessness can obtain a rental apartment for as little as $20 per month.

HDB has also achieved a high degree of socioeconomic and racial integration in its public housing developments. The 1989 Ethnic Integration Policy sets racial quotas for neighborhoods and apartment buildings, and may be used to prevent residents from selling their apartments to overrepresented ethnic groups. In addition, HDB developments are planned as self-sufficient communities with a variety of apartment types for people of different incomes, ages, and racial compositions.

Like Vienna’s Municipal Department 50, HDB is committed to remaining on the cutting edge of building design. A case in point is the Pinnacle@Duxton, recipient of multiple architecture and urban design awards. Completed in 2009, it comprises multiple 50-story towers connected by aerial bridges and gardens. Sustainability is also a priority for the housing agency. All new homes incorporate a standard suite of eco-friendly strategies, including LED lighting and toilets that flush with greywater.

The most troubling feature of Singapore’s public housing program is also the source of its strengths. HDB exercises control over every aspect of the system, not only building and selling apartments, but acting as a mortgage lender. The agency can also operate as an arm of the police. According to Phang, the HDB has the power to withhold keys from residents with unpaid parking tickets, and to evict those convicted of more serious offenses.

In addition, economists worry that both individual Singaporeans and the city-state itself have invested too much money in housing, leaving little for consumption and corporate investment. Older Singaporeans, in particular, are left in a vulnerable position. Though virtually guaranteed a home, that home comes at a price: namely, their retirement savings.

Lessons
Neither Vienna’s nor Singapore’s affordable housing programs are perfect. Yet both have achieved a level of success, measured in terms of both quantity and quality, that remains elusive for most American cities. What distinguishes these two models is their broad definition of social housing. In the United States, public housing is essentially crisis management. It offers temporary support to households who would not be able to afford housing without municipal assistance. Vienna and Singapore take a longer view, in the belief that offering subsidies to a majority of residents will benefit both society and the economy. As a result, the Viennese and Singaporean governments consistently invest both money and political capital in affordable housing, without fear of disrupting private housing market.

An effective affordable housing program benefits both residents and the community at large. Research demonstrates [pdf] that access to high-quality housing improves resident health incomes by reducing exposure to stressors and acting as a point of delivery for health care services. Affordable housing can also support residents' education [pdf], by preventing disruptions associated with residential mobility. On a community level, the construction and maintenance of public housing provides jobs and boosts the local construction industry. In addition, affordable housing supports the local economy  by leaving residents with more disposable income. Affordable housing located near businesses provides employers with workers more likely to be productive, and less likely to move because they are overspending on housing.

Beyond the practical considerations lies a moral dilemma. Where Vienna and Singapore understand affordable housing as a right, American public housing programs—rhetoric aside—treat affordability as a privilege. If the latter is acceptable, then more of the same will work just fine. If not, it is time to move affordable housing from the periphery to the center of municipal policy.

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This post is part of Shareable's and San Francisco Public Press' exploration of affordable housing solutions during June and July 2014. Check out the rest of the series here.

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