The current crsis threw up a problem with us as all struggled to pay our mortgages here.

As many as 5000 or more Singaporeans defaulted on their mortgages.

If a person is to buy a new flat at $300 000 (5 rm) he has to take a loan of at least $250 000 provided he has paid up front $50 000 already. His montly instalment should be around $1000 if he pays in 20 years’ time.

If ther person stops working due to retrenchment his CPF also stops contributing to the home mortgage, in no time, the loan will snowballs and he will be hit hard.

I wonder why we are so adverse to renting. Though rental is cash, it is always calculated based on a cash need basis i.e. people tend to be more prudent here as they need cash to pay their rent. Suffice to say, if a person is retrenched he will also have no money to pay his rent.

However, the interest levied on a $250K loan over 20 years is close to $600 a month if it is calculated at about 3% per annum. My alculation is very bad here.

For someone who pays interest on a home mortgage of $250 000 over 20 years, one can pay up to $200K iin interest f he pays till maturity. I wonder whether this is wise.

One will work till he retires (Around 60) if he takes up a housing loan at age 40 for a 20 yr loan and he still gets to pay close to $200k in interest to a home flat.

Anyway, we don’t have much choice here as we all need a loan to buy our loan but one may need to be prudent to buy something we are comfortble with plus once the flat value appreciates, it may be wise to sell it off to either cash out or downgrade to a cheape r loan.

One has to reduce loan over time or else we all get very stressed when we are jobless.

Gilbert (#1)

You have been missed as a writer and commentator!

Mr Leong, besides reading your articles I tune in to your radio segment on 100.3 every Tuesday morning without fail. I learn a lot from your sharing of sensible financial tips, and talk on the financial issues of government policies. Just want to say thanks.

I think Singaporeans are not adverse to renting. It is just not viable to rent in Singapore.

My friends separately rented HDB 3-room flat at $800 a month; and $2,500 a month for HDB 5-room flat. Rental for private apartments are even higher. Single room rentals is about $400 and above, which are usually just catering to singles and not the whole family.

If paying of mortgage is just $1,000 a month (usually a HDB 4 room flat), and you owned the place after 20 years, it makes more sense to buy then to rent. This is because, in both cases you lose your roof when you have no money but at least you have a stable abode while you can afford.

Renting is just extending leases every year and you are subjected to prices quoted by the owner. When there is no agreement over the rental amount, you have to leave and look for another place. (This exclude renting from HDB as it is catering for very low-income families and many may not qualify to rent from HDB.)

Nevertheless, I do agree that HDB needs to re-look into their policies to provide affordable housing (rental or purchase) to its people. I just don’t think that renting is not an option for many in Singapore at this point in time.

How much to build one 2 rm hdb?

i no no de.
anyone kno?

The HDB home-ownership program was a win-win in past decades. The environment in the past was conducive to buying one’s flat. Cost of flat was affordable to buy. Mortgage loan was more serviceable because of higher rates of employers’ CPF contributions and higher real disposable income in light of low inflation. Today the situation has turned 180 degrees. Yes, I agree with Leong SH that affordability is the issue now. The target of over 90% home ownership is no longer a realistic or attainable target for the government to model its housing plan on.

In the real world everywhere, and certainly now in Singapore it is an abnormal economic expectation that such a large proportion of people in any country, rich or poor, can afford to own properties. The growing queues for rental flats and smaller flats and the need for reverse mortgage and lease buyback schemes all attest to this sad reality.

Our public housing policy should alter course in two aspects:
1) to cater to housing needs on both basis which, moving forward, will hence require a rapid unsizing of stock of rental flats,
2) moderate its pricing policies of rental flats and even flats for sale from a market-based valuation to one more appropriately aligned to essential services.

People’s and govt’s mindset have to be altered to accept basic housing as an essential consumption item and ok to rent and that owning a property is a luxury not all can afford. There is nothing wrong with renting. After all, companies make “buy or rent” decisions all the time based also on cashflow afforbability considerations. To most who are uninitiated, owning a property comes with considerable sunk costs to the buyer in stamp duties, agent fees, property taxes, and interest costs that actually add no value to the property’s worth. BY renting, these cost are saved. There is also an added benefit for the individuals and the economy as disposable income for spending or investment is increased.

If Mr Leong can show us how a 35 year old man, with A level education, earning $3,000 per month, wife a home-maker and looking after 2 young children and an aged mother of 80.

Can Mr Leong show is this typical family able to afford a 4 room flat at current prices in Sengkang, and afford a min sum scheme or CPF Life and still retire at 62 years old.

I know when HDB prices were $60,000, it was possible. Now with shifting goal posts, eg CPF Life- is it possible to do a financial plan and live a Dream life in Singapore – or is this only a land for the rich (and free)

In Singapore, the husband and wife have to work whole life just to ay off the flat. very sad

In Singapore today, buying a hdb flat is as good as putting yourself a life sentence to pay until you die, this is exactly what our pap govt wants all of you to be, so you will not be able to voice up even if you are not happy with them.

and that is part of the reason why i want to get out of this hell hole. there are so many scheme to suck you dry, and with the latest development, when you get suck dry, you get discarded.

I don’t wish to be in the shoes of someone earning $3,000/’- a month with a HDB loan of $250,000 0 $3,000/- Mortgage with a 20 – 25 yrs coupled with the new CPF LIFE scheme to draw at age 65………….I can’t imagine the MONEY TRAP that I will be in and should I lose my job…………..My World will be crumbling down. Best is to be debt free and live within your means.

Mr Leong, please work out a viable plan – is it still viable? I never felt that Singaporeans could actually ‘reitre’ here and would like to hear a possible plan.

Rentals flats should only be for those in need. I don’t see the reason for renting them to ppl with private property. I saw cars parked near the rental flats,are you sure they are ppl in need of rental flats.

waaah. 100,000 households with per capita income of $340 is probably 250,000 persons who need help. Out of 2,000,000 Singaporean citizens(excluding PRs’ & new Citizens because they are highly unlikely to be in the economically-desperate group), that makes 12.5%?

Even if price reduced now, its not possible liao, imho.
why? many already paid and paid expensive flats.
if flat price drop, though ease load on new buyers,
i not sure what face the existing flat owners would show , especially those who bot at high.

JB got nice rooms with views not?

5) I no money buy new on February 17th, 2009 3.24 pm
How much to build one 2 rm hdb?

============================

hey bro, when you have the answer , please let me know also.
could this be the most toughest question on earth?

my email is srilanytus_gangooli@gmail.com

“Even if price reduced now, its not possible liao, imho.
why? many already paid and paid expensive flats.”

some people hor, neber used the brain wan. forgive them, they no not eonomy repercussion to reverse prices lah. that’s why, old man warn liao, don’t anyhow play play. wait your parents home and your home got zero value hor.

in fact, with so many foreigners living here, it is actually very stupid and very risky to buy homes here.
and yet, many is still buying. hohoho

Great article!

“Just because one has owned two new HDB flats or private property previously does not mean that one will never be in financial difficulties in the future.”

One of the best lines!

Don’t know what those jokers in HDB were thinking… This is so obvious.

Singapore has NO safety net.

Either you are not lucky and gifted and ended up having to stay in a HDB rental flat or you better pray that you never fail financially because you cannot even end up in a rental flat.

The whole GOVT is run like an insurance company and the ministers just pronounce fantasy with no intention of realizing them.

One reasons why people are emigrating is:

if this is the best team to run Singapore and this is what they can achieve, then there really is no hope for Singapore.

The only solution is to put up another team to run Singapore. Then hope will be restored.

“The second HDB concessionary loan entitlement for those who have to downgrade, should be given as a matter of course, instead of on a case-by-case basis as has been the HDB’s practice.

What is the rationale for granting a second HDB loan only to those who upgrade to a bigger HDB flat?”

Exactly what i was thinking all along… why make it so hard for people if they want to be more careful with their financial planning?

Faced with this situation now… Considering whether to take a 400K HDB loan for an executive flat… or a 300K bank loan for a 5 room flat… anybody knows which makes more financial sense?

aiyh, live within your means lah.worse scenerio, buy a tent and move around the perimeter of this island and hope you don’t gt caught.ha.

18) limsweetsay on February 18th, 2009 12.52 am
“Even if price reduced now, its not possible liao, imho.
why? many already paid and paid expensive flats.”

……………..

in fact, with so many foreigners living here, it is actually very stupid and very risky to buy homes here.
and yet, many is still buying. hohoho
=======================================

I think also the CPF is related to payment for HDB and while trying to make sgporeans more competitive for employers to earn more money, or just to survive, imho, uneducated analysis, this CPF may be a overhead for companies and this is too difficult to be removed EVEN if they decide to cut CPF or drop it altogether.

caught between a rock and hardplace?
i am not very sure if any of u agree with muah.

but i feel that we should move on and think positive.

First, we need to define ‘Affordability’.
Also we need to define ‘Actual cost of construction’.

With these can we then have a meaningful discussion.

It’s very sad that the outrageous prices of flats here has made us to accepting of these circumstances. The average $250000-400000 price of a shithole in Singapore can get you a big house, even in first world countries. And in those countries, your pay would be double or triple for sg pay!

Our parents wonder why we’re still buying small flats to make-do, just like them when they started out. Our standard of living has NOT improved from the 70s till now! Prices of flats have gone up ten times; but our salaries have gone up 3 times at most.

Simple, the government policies are dropping like flies, I mean failing and who suffers, we the oridinary people.

HDB does not even help reasonably-off single unwedded mums (with 1 or 2 kids) to BUY hdb flat (aren’t allow to buy) so how can hdb help those who are married with so many more mouths to feed? What do you expect from individuals/organisations that have no true compassion?

simple question : cost of constructing 1 unit of HDB flat how much? lets say a 3 room one. How much ? How much leh ? how is subsidy determined? heavily subsidised? how is that proven?

Or if you believe in conspiracy theories…

some say that the current scheme of using CPF to pay for our housing is to lock us into the system and also to book the “profits” to make their revenue look good…

One of the most saddest issue for Singaporean is public housing values via cpf let’s not say private property.

Just imagine the consequences for the next generation. So I think it’s better to be more practical to play safe than sorry “live within our means”. I guess the next next generation will need to inherit their ancestor property if better. So I assumed that our this generation aren’t that bad anyway if we do know how to overcome and play along with it…………………..

ai yah….read all these very headache lah. Just follow my style lah. Bought big private double storey house ( 24×80 sq ft ) in JB for less than SG125K. Then it’s mine forever & will retire there soon. Kept my parent small flat so my children can live/study in SG. My housewife & old parent stays permanently in JB. Children & I spent certain nights in SG to avoid jams at causeway. Yes my only luxury that I can afford is medium sized SG car that came in handy for travelling.

Best thing is I don’t have to worry about this HDB housing bullshit & my savings in CPF is fattening. Some may question my loyalty….err…what loyalty? I don’t know what loyalty means if I need to sweat out for something that I eventually can’t own.

Cheers….juz my view.

Reply to Mr Boombastic –

Hi! I had your exact same questions in my head when I was balloting for a HDB flat last year, and I came across this write-up that says that HDB prices its flats lower than the market value, which means lower than if you were to buy from the open market or resale in the same estate. If a subsidised rate is given based on the cost of building a flat, then the HDB price for the same size built at the same time should be the same, regardless of location. However, new flats in for example Woodlands are much cheaper than new flats in hot areas like Red Hill.

My own experience, I know of someone who bought a new flat recently in early 09 for $400+k. While I know it was $300+k back in early 08, because I also bought a unit in the same project but back in 08.

So… where is the subsidy?

The sincerity of the PAP regime is in question.Are they truly willing to help those in the lower income group or do they use their position of power and authority to get their way and at the same time enrich themselves. We do not have rule of law anymore in SinKapore. I am afraid if the case goes to court, the verdict will be in the gahment’s favour. If the parties invovled is somebody else, may be the result could be difference. Lawlessness within the gahment had been the order of the day for a long time. She might elect to go to prison as she could not affort to return the $18K. We may not see the end of this saga anytime soon. Somebody please keep track. I am living too far away to do it myself. I voted with my feet some year ago after my NS. The next big event I will back in SinKapore is the state funeral for our founder. You bet you would’nt see me cry but a grin from one ear to the next. Can’t wait for it to happen. Oh God, please answer our prayer.

Being a Singaporean has its good and bad… Some good which I find is not so good anymore…. Security… Living in Sg is defintely safer and better that our neighbouring countries… but with ‘Foreign Talents’ comes global crimes… You see more murders, robberies, abuses… I managed to stay employed during the economic crisis in 2008 but you really slogged for the money… earning gross 3Kplus is no means now and 1/6plus of it goes to my housing…. Luckily my parents benefitted from selling our old flats in 1999 which they bought in the 70s for S$7k plus and sought for 142k but our current flat in Sengkang cost 237k and I will have to cleared the HDB loan in 5years times and that is if I maintain employed. I am one of those lucky few that has the support of parents who used to own a flat and I have no intention of selling…
But I am definitely wooried for my daughter who is only 17months. When she grows up will she be able to afford an abode of hers with her spouse or will she have to be like me depends on some form of assistance from me her parents???
Living within our means has somehow become some sort of luxury…I have stayed home at most times and the only form of luxury is having dinner sometimes at a food court near the Compass Point with my family.
I think as Singaporeans, besides being creative, you need lots of luck…to survive the competition comfortably…maybe strike lottery or live with your parents till they passed on and wait for your flat to en block and the vicious cycle continues until the end of time….