“SUPERCOOL you’re here,” says Eugene, looking like he means it. The young Singaporean is showing visitors around his new apartment, a three-bedroom flat in one of the city-state’s many high-rise blocks. Eugene says he and his new wife can’t wait to start filling the space with babies. He even sounds excited that his in-laws are coming to stay.

If Eugene sounds too good to be true, that’s because he’s a hologram, trapped behind glass at a self-aggrandising museum in the bowels of Singapore’s Housing & Development Board (HDB). Lots of countries show off their public-housing projects, but few are quite as devoted to them as Singapore, where four-fifths of the permanent population live in subsidised units built by the government, most of them as owner-occupiers. The city-state’s suburbs bristle with HDB towers, painted calming pastel hues.

This vast national housing system surprises visitors who think of Singapore as a low-tax hub for expatriate bankers and big multinationals. But HDB is a linchpin of economic and social policy and an anchor for the ruling People’s Action Party (PAP), which has led Singapore since independence. It is also a tantalising but tricky model for Singapore’s fast-urbanising neighbours to follow.

HDB was formed in 1960, replacing a city-planning agency created by British colonialists. The agency intended at first to build rental housing for poor families, but within four years it had switched to building apartments for sale to the masses. Lee Kuan Yew, Singapore’s prime minister from 1959 to 1990, wrote later that he thought promoting widespread home ownership would give every citizen a “stake” in the country, better knitting together an island-nation populated by ethnic Chinese, Indians and Malays. The government used its powers to acquire much of the land that was not then under its control (it now owns around 90% of Singapore’s territory), and gradually moved Singaporeans from low-slung villages into concrete high-rises.

Today there are about 1m HDB apartments, largely clustered in two dozen new towns that extend in a semicircle around the city’s coastal core. Each year the government sells a fresh batch of as-yet-unbuilt flats, predominantly to first-time buyers. They all come with 99-year leases and are sold at lower-than-market prices, though successful applicants must wait three or four years for their blocks to be completed. Alternatively Singaporeans can choose to buy existing HDB apartments directly from their owners, at whatever price buyer and seller can agree. First- and second-time buyers get money through government grants, regardless of whether they buy new or old flats. Quotas ensure that the mix of Chinese, Indians and Malays in each HDB block reflects the ethnic make-up of the country as a whole, a measure designed to preclude the formation of racial enclaves.

New three-bedroom flats that were offered this year in Punggol, an outlying suburb that has been home to much of HDB’s recent development, cost a little over S$300,000 ($217,000) on average. A means-tested government grant entitled first-time buyers to shave up to S$75,000 off the purchase price. Buying a comparable HDB flat on the secondary market would have cost about a fifth to a quarter more. Buying an apartment built by private developers—whose projects cater primarily to the richest Singaporeans and to foreigners—can easily cost three times as much.

The cash Singaporeans use to buy HDB’s properties is provided in part by the Central Provident Fund (CPF), a mandatory national-savings scheme into which most citizens of working age are required to squirrel 20% of their monthly salary (employers must contribute a further 17%). Citizens are entitled to draw down a portion of their savings to use as a deposit on an HDB apartment. Many are also entitled to cheap mortgages provided by HDB, and to use their CPF contributions to meet some or all of the monthly payments.

By many measures the system is a success. Singapore has virtually no homelessness. HDB’s towers are somewhat drab to look at, but they are clean and safe and their apartments spacious enough. HDB housing is more affordable than comparable accommodation in Hong Kong, London and some other rich cities: the agency says that on average first-time buyers devote less than a quarter of household income to their mortgages.

It is also a good deal for the state. In 2015-16 the treasury put aside S$1.8bn, or 2.4% of the national budget, for housing, which was enough to cover HDB’s annual deficit. (The agency itself had a budget of S$17bn; it benefits from government loans but also borrows from banks and the bond market.) The government says it has paid a little over S$28bn in grants to HDB since its founding in the 1960s.

Handouts linked to housing are one reason Singapore manages to do without a conventional tax-funded pension scheme. The theory is that almost all Singaporeans will own apartments outright by the time they finish working, in addition to having savings of their own. Those willing to downsize upon retirement—or “right-size”, as the government likes to say—do best. Singaporeans are granted an extra discount if they choose to buy property located in the same neighbourhood as their parents, nudging them to help with care that could otherwise fall to the state.

The system is also a reason for the longevity of the People’s Action Party, soon to enter its seventh decade in power. Its admirers say it is no surprise that a party that prioritises housing has retained voters’ trust, but it is also true that extremely high rates of home-ownership have helped make Singapore’s electorate unusually risk-averse. In election campaigns, PAP candidates have often noted that HDB buildings in constituencies that vote for the opposition go to the back of the line for government-funded upgrades.

Moreover, the government uses its control of the housing system to help shape how Singaporeans live. Strict rules dictate who may and may not buy HDB flats. Some of these decrees keep costs down, but they also reek of paternalism. Most sweeping is the priority granted to married couples, justified in recent years by Singapore’s eagerness to raise its low birth rate. Loners can apply for flats of their own, but only if they are still unwed by the age of 35.

This means that young adults tend to live at home until they get hitched (unless they have the means to rent or buy on the open market, where they must compete with well-heeled expatriates who need not pay into the CPF). Gay couples are in the same boat, given that they may not legally marry. Since a moral panic in the mid-1990s mothers of young children born out of wedlock have also found it more difficult than other parents to purchase government flats.

Poor planning

There are other complaints. Provisions for the poorest look meagre compared with social-housing programmes in America or Britain. Subsidised rental apartments are generally only available to those with household incomes below S$1,500 a month who are unable to bunk up with relatives. They consist only of studios and one-bedroom flats—not a good fit for families who fall on hard times. (HDB says that people earning only slightly more than that should be able to afford to buy a home through the usual schemes.)

Meanwhile, the link between HDB-ownership and a comfortable retirement is less certain than it once seemed. For one thing, older Singaporeans have turned out to be keener than expected to hang on to their homes, rather than release capital by moving in with their children or “right-sizing” to smaller flats. One solution is that oldies may now sell back to HDB whatever portion of their remaining lease they expect not to live long enough to use. But that scheme has not wowed, in part because HDB-owners are still coming to terms with the idea that their properties could be worth nothing when their 99-year leases expire. (Whether and how leases will be renewed is a growing concern for all sorts of HDB-buyers, given that some blocks are more than 40 years old.)

More broadly, it remains to ask whether a system fixated on home ownership and dismissive of renting will continue to suit Singaporeans’ needs. Some question whether the money young adults are pouring into mortgages might be better spent starting businesses. Buying HDB property requires commitments that young people in other countries would find stifling, beyond having to commit to a mate: they must seek permission to move or let within the first five years of ownership, even though many will have already waited three years for their apartments to be built.

So far it has seemed a reasonable deal. But Singaporeans continue to marry later in life, despite HDB’s incentives. Rising prices have stretched wallets, even if cooling measures have lately brought costs down. Today’s buyers will certainly not enjoy the capital gains which their parents and grandparents experienced, when Singapore was growing at breakneck speed. The risk is that youngsters will come to see the system less as a national asset, and more like a gilded cage.