Study finds ‘clustering’ of races in some neighbourhoods largely due to purchasing power disparity

• Ethnic clusters have formed in certain public housing estates despite the Ethnic Integration Policy, a study has found
• The clusters are in areas where the quota for a particular ethnic group has been reached in HDB blocks
• The clusters form due to the differences in the purchasing power of the different races, the study noted
• If left unchecked, this could be a cause for concern, experts said

SINGAPORE 一 The Ethnic Integration Policy (EIP) introduced by the Government in 1989 has sought to ensure that racial enclaves do not form in public housing estates. Yet, homeowners from the main ethnic groups comprising Chinese, Malays and Indians have been found to gravitate towards certain parts of the island.

This is based on a study led by Associate Professor Leong Chan-Hoong, a psychologist and statistician from the Singapore University of Social Sciences, who has been studying the spatial distribution of public housing blocks that have met their EIP limits since 2016.

The study was published in August last year in the book, Building Resilient Neighbourhoods in Singapore, which Assoc Prof Leong co-edited.

As part of his ongoing research, Assoc Prof Leong has since updated the findings with latest statistics.

The study also found that the proportion of Housing and Development Board (HDB) blocks that have met the occupancy quota for at least one of the ethnic groups has increased in the last six years, from 28 per cent in 2016 to 33 per cent in 2021.

While the percentage of blocks that had met the Chinese quota has remained largely stable at around 17 per cent since 2016, the figure for Malays doubled from 4.7 per cent in 2016 to 10.1 per cent this year. For Indians, the figure rose from 6.8 per cent to 8.8 per cent over the same period.

Assoc Prof Leong said that the clustering trend was due mainly to the differences in the purchasing power of the different races. Commenting on the study, experts interviewed by TODAY said that if left unchecked, this trend could be a cause for concern.

By combing through data from HDB, Assoc Prof Leong found that distinct “clusters” of HDB blocks have emerged in different parts of the island where the quota for a particular ethnic group has reached its maximum.

Chinese homeowners, he found, tended to congregate in more central neighbourhoods such as Bishan East, Marymount and Tiong Bahru.

Malays set up homes in areas such as Tampines and Woodlands, while Indian homeowners did so in Admiralty and Boon Lay, among other neighbourhoods.

In his study, Assoc Prof Leong did not set a minimum number of blocks to determine if a cluster had formed but said that as a rule of thumb, if at least five or six blocks in a group of 10 blocks within a neighbourhood had hit their ethnic quota, it would be considered a cluster.

The EIP was introduced by the Government over three decades ago after it observed that ethnic enclaves appeared to be forming in certain neighbourhoods.

For instance, Chinese households exceeded 90 per cent in neighbourhoods in Hougang New Town while Malay households exceeded 30 per cent in neighbourhoods in Bedok and Tampines.

Under the policy, the proportion of flats in each HDB block and neighbourhood that can be owned by households of each ethnic group is capped.

When the EIP was first introduced, the limit for each block was capped at 87 per cent for Chinese, 25 per cent for Malays and 13 per cent for Indians and other races. At a neighbourhood level, this quota was 84 per cent for Chinese, 22 per cent for Malays and 10 per cent for Indians and other races.

The quota broadly corresponded to the ethnic proportions of the population at a national level at that time.

In June 1988, Singapore’s ethnic proportions stood at 76 per cent Chinese, 15.1 per cent Malays and 8.9 per cent Indians and other races.

The quotas were revised in 2010, with the ethnic quota in blocks for Chinese and Malays remaining the same, while that for Indians and other races was increased to 15 per cent.

At a neighbourhood level, these quotas again remained the same for Chinese and Malays but increased to 12 per cent for Indians and other races.

As of 2020, Singapore’s citizen population was made up of 76 per cent Chinese, 15 per cent Malays, 7.5 per cent Indians and 1.6 per cent of other races.

WHY CLUSTERS ARE FORMING

Assoc Prof Leong reiterated that the clusters he observed had formed in part due to the disparity in the purchasing power of the different races. Through his research, he found that price was the main consideration of property buyers.

Using data from HDB, Assoc Prof Leong calculated the average resale prices per square metre (psm) for flats in different neighbourhoods based on resale transactions from 2017 to 2019.

He then mapped out the neighbourhoods according to the following average resale price bands:

• S$3,000 to S$3,958.46

• S$3,958.47 to S$4,699.24

• S$4,699.25 to S$5,492.50

• S$5,492.51 to S$6,501.28

• S$6,501.29 to S$9,000

He found that Chinese clusters had formed in areas where the resale prices of flats were higher compared to the areas where clusters of minority races had formed.

Sociologist Chua Beng Huat from the National University of Singapore (NUS) said that clustering could be driven more by cost rather than a preference to live with those of the same ethnicity.

Chinese clusters were found in central areas such as Bishan East, Bukit Ho Swee, Cheng San, Holland Drive, Marymount and Tiong Bahru, where the average resale price psm for an HDB flat was between S$3,958.47 and S$6,501.28.

Clusters of Malay homeowners were mostly found in the northern parts of Singapore such as North Coast in Woodlands and Woodlands West and the eastern neighbourhoods such as Tampines East and Pasir Ris Drive. These areas have an average resale price psm of between S$3,000 and S$3,958.46 in the north, and between S$3,000 and S$4,699.24 in the east.

Clusters of Indian households were found in Admiralty, Boon Lay and Pasir Ris Drive where resale prices psm were between S$3,000 and S$3,958.46.

Indian clusters were also found in areas with higher resale prices. These included central areas such as Bendemeer and Kampong Java, where the average resale price psm ranged from S$5,492.51 to S$6,501.28. There were also clusters in the northeast such as Punggol and Sengkang where resale prices psm ranged from S$3,000 to S$4,699.24.

Assoc Prof Leong said that in general, Chinese flat buyers with higher purchasing power are pricing out the minorities with lower purchasing power in the prime and central areas where flats have higher resale value.

“And then minority ethnic groups will move to other places, perpetuating this ethnic clustering effect,” he added.

On clusters of Indian homeowners found in both areas of high and low average resale prices, Assoc Prof Leong attributed it to a “difference in choice... between local-born Indians and naturalised Indians”.

He added: “We do not have residential location segmented by place of birth and income, but we know that permanent residents and by extension, naturalised citizens, tend to have higher income than average Singaporeans.”

He noted that the Global Indian International School has a campus in Punggol, while Kampong Java and Bendemeer were located near Little India. As such, both areas had amenities that drew Indian permanent residents or naturalised citizens.

Latest census data from the Department of Statistics 一 which surveyed Singapore citizens and permanent residents 一 showed that the median household income from work increased across the board for all households between 2010 and 2020. However, the increases for Chinese and Indian households outpaced the rise for Malay households. In 2020, the median household income from work was S$$7,972 for Chinese, S$5,704 for Malays and S$8,500 for Indians.

Although Indians have the highest median household income, Assoc Prof Leong believes that Chinese buyers are able to “dictate” market forces in resale prices as they make up the majority of home buyers.

“Given the numerical dominance, if the majority of Chinese decide to move into a residential neighbourhood, that will drive up resale prices and limit the options for minority home buyers with lower purchasing power," he explained.

Most property analysts and sociologists interviewed by TODAY said that while cost could be a factor, there may be other factors driving the formation of clusters, such as being close to family or workplaces.

Ms Christine Sun, the senior vice-president of research and analytics at property agency OrangeTee, said that the preference for a particular neighbourhood by different ethnicities could be driven by industries that hire a higher proportion of a particular race.

Property analyst Nicholas Mak, head of research and consultancy at property agency ERA, said that price influences the choice of flat buyers, but location also plays a key role in their decision.

Many buyers prefer areas near their older parents, workplace or schools where their children are studying, he said.

POTENTIAL IMPLICATIONS

Assoc Prof Leong noted that some homeowners, particularly those from minority races, have faced difficulties in selling their flats.

Under the EIP, a homeowner of a minority race can sell his or her flat only to another member of a minority race, once the quota for the majority race has been reached.

Therefore, sellers may see a smaller pool of eligible buyers, resulting in them having to lower their asking price, reducing the capital gains on their property.

This issue took centre stage during the parliamentary debates earlier this month when Leader of the Opposition Pritam Singh questioned the relevance of this policy, pointing out its negative impact on minority homeowners.

This was met by a rebuttal from National Development Minister Desmond Lee, who stressed that the policy is still needed to buttress racial integration despite its “rough edges”.

Assistant Professor Laavanya Kathiravelu from the Nanyang Technological University (NTU) said that the clustering effect was of concern because it potentially means that people have lower chances of meeting others of a different race or socio-economic class.

“This could create more insular living environments and everyday experiences in interacting with fellow residents.

“This effect could also be heightened since many of us now work from home and have less opportunities to interact with people outside our immediate residential neighbourhoods,” the sociologist said.

RELOCATING SCHOOLS TO ‘DE-CLUSTER’

To “de-cluster” areas that have hit their limits on ethnic quotas, Assoc Prof Leong suggested relocating popular schools from central to peripheral areas to encourage Chinese buyers to move to other areas.

His other suggestion is that a cap be placed on the cash over valuation (COV) permissible for resale flats, to reduce incentives for the seller to sell to the highest bidder.

COV is paid when a resale flat is sold above its valuation by HDB and it must be paid in cash by the buyer.

Mr Mak of ERA said that relocating popular schools may draw Chinese buyers to peripheral areas and benefit minority flat owners in these areas who can pocket a profit from the sale of their flats.

However, subsequent minority households with lower purchasing power will be priced out of these peripheral neighbourhoods again.

One suggestion by Ms Sun from OrangeTee was that ethnic quotas in neighbourhoods that are experiencing clustering can be readjusted if it will not significantly erode the mix of races there.

Asst Prof Laavanya of NTU proposed that there may be more flexibility in the conditions of the EIP so that flat purchases can be more equitable across the different ethnic groups.

She pointed out that the policy also does not account for naturalised citizens, who are a growing group in Singapore, and warned that clusters of new citizens would not be ideal for integration efforts.

Assoc Prof Leong reiterated the need to address the trends found in the study. “In the long run, this could lead to an unequal housing structure that is also explained by racial background, running contrary to what we want to see in our neighbourhoods,” he said.