I refer to the article “HDB flats with 70-year lease unlikely to have strong demand: Khaw” (Channel NewsAsia, Nov 3).
Earn $1,000 can afford HDB flat?
It states that “”With significant housing grants, first-timer families who today earn S$1,000 per month can afford a 2-room Build-To-Order (BTO) flat in a non-mature estate … They can do so with little or no out-of-pocket cash.”
How likely is such a scenario?
– The logic of this often cited statement may be flawed. How likely is it that a Singaporean earning $1,000 a month can find a spouse in order to form a family nucleus to apply for a HDB BTO 2-room flat as a first-timer – and qualify for the maximum housing grants based on household income?
How many don’t qualify?
In my volunteer work doing financial counselling in the last decade or so – practically every family or person earning less than $1,000 we met – do not qualify as a first-timer for various reasons under the HDB’s rules.
How many Singaporeans who earn $1,000 who do not qualify for the maximum housing grants for BTO flats?
How many managed to buy?
Is this possibly the reason why despite the question being asked repeatedly over the years – I believe we have never had the answer to “how many families earning $1,000 or less have managed to buy a HDB BTO flat with the maximum housing grants”?
Study on affordability?
Whilst we are on the subject of the affordability of HDB flats – I would like to refer to the article “Ministry takes issue with don’s study on affordability” (Straits Times, Mar 12).
Bottom 30% households spend more than they earn?
It states that “A study by an economist, which found that Singapore’s bottom 30 per cent of households spend more than they earn, has been disputed by the Ministry of Finance (MOF) and a veteran statistician.
Main cause of rising expenditure was housing?
The study by National University of Singapore (NUS) economist Tilak Abeysinghe compared households’ expenditure against their incomes from work. Professor Tilak said that according to his research, the bottom 30 per cent of households spent 105 per cent to 151 per cent of their income last year and the main cause of rising expenditure was housing.
What about HDB prices, loan tenures?
Also, we should take into account the rising prices of HDB flats, and the longer tenure of housing loans in recent years.
HDB as asset enhancement?
I think we may also need to think about the unique situation in Singapore, whereby most lower-income HDB flat owners may be using a lot of their CPF. Unlike a typical house investment in other countries, much of the proceeds when one sells a HDB flat, may not be realisable as cash because much of it may be deferred until age 65 when only a fixed monthly life annuity will be paid out.
Assume everyone has enough CPF always to pay for mortgage?
The MOF showed figures that “for a family on a monthly household income of $2,000 who buy a three-room flat, their actual expenditure on housing is $134 a month, far lower than the average imputed rental of $700.”
– I believe this “actual expenditure on housing is $134 a month” refers only to the cash outlay and does not include the CPF utilised to pay for the mortgage.
We should not assume that every HDB owner has CPF to pay for the bulk of one’s mortgage throughout the typical 30 year loan tenure. What about the self-employed who do have have CPF contributions that can be used for housing, the reduced contribution rate to the CPF Ordinary Account as one gets older, job loss, pay cuts, etc?
What about those who don’t own flats?
Also, what about the few thousand staying in homeless shelters, about 60,000 families renting HDB rental flats, those paying rent on the Interim Housing Scheme, those renting in the open market, etc?
Leong Sze Hian
P.S. Come with your family and friends to the 5th Return Our CPF protest on 29 November 4 pm at Speakers’ Corner
https://www.facebook.com/events/796694730417598/
