Wednesday, March 20, 2013

Are 'shrinking' HDB flats really affordable?

Mar 20, 2013
AS A parent of three, I have been following the Population White Paper debate and the recent budget announcements with concern.

The Government says it will build infrastructure well ahead of demand ("Major shift in planning strategy: Khaw"; Feb 7). We are assured that HDB flats will always remain "affordable". But these assurances are not convincing.

[In other words, "we don't believe you." Oh to be clear, if you read the rest of the letter, she doesn't believe the "affordable" part. Not the "build ahead of demand" part. Not sure why she put that in.]

My colleague, who recently got married at 30, just took over his HDB flat in Punggol. He laments that his three-bedroom apartment of 93 sq m has a kitchen that can barely fit two people across its width. Costing $300,000, the 99-year leasehold flat comes with a 30-year loan. So my colleague will be in debt until he reaches 60. Is his flat really "affordable"?

[All HDB flats are 99-lease. That's like saying, "my colleague recently bought a car costing $X that runs on petrol and has 4 wheels." The petrol and 4 wheels are unnecessary unless you want to make a point?

And what's with "three-bedroom apartment"? HDB flats are 3-rm, 4-rm, 5-rm. If you meant a 4-rm flat, why so difficult to speak in our shared Singaporean language of HDB flats? Or did you want to point out that your colleague, who has NO kids, has bought a 4-rm flat with 2 extra bedrooms, probably to sublet for more income? Or were you hoping that we would read too fast and think, "3-rm HDB for $300k? That's expensive!" If so, that's rather devious.

And no, flats don't "come with a 30-year loan". You decide how long the loan will be based on how much you are willing or able to pay per month. A 30-year mortgage for a $300k flat will mean about $1000+ per month installments. That should be easily covered by the CPF of a couple in their 30s with NO cash outlay. If you are willing to put up some cash, you can shorten the mortgage term. You provided no info on your colleague's income, so let's assume that your colleague and his wife are at the median income of about $7,500 household income. They could easily afford a 15 year loan with about $1750 monthly installment that would be fully covered by their combined CPF. If they have only about $6,000 combined income, they could still have had a 20 year loan without cash top-up. At $6000 household income, if they wanted to bring the term to 15 years, they would just need to top up about $400 per month or about $200 per person, and as their income rises over the years, the CPF can cover more and more and they need to pay less cash as the years go by.

So a 30-year lease? That was their choice.

If they couldn't afford a 4 room, they could have bought a 3-rm flat.]
My concern is that new flat sizes will continue to shrink, and be restricted by tenure and other parameters.

[One proposal to keep things affordable is to reduce the tenure and impose stricter condition for flat ownership. You want cheap and you want freedom? Hokkien say, "ai phee, ai chee, ai tua liap nee".]

Singaporeans can calculate the price per square foot and compare values of HDB flats, and not just consider the absolute price. While many have little choice but to accept things as they are, the taste will be bitter.

Also, the national imperative that we should procreate for our own survival is dis-incentivised.

[Incentives, no incentives, disincentives... TFR not rising anyway.]

Take my colleague, for instance. His focus now is on his career, as there is not much space for a baby. Plus, he has to always remain employed, to make the loan repayments. At the prime of his and his wife's fertile period, their focus has turned to money-making, not baby-making.

[He and his wife just bought a 4 rm flat with 3 bedrooms. What do you mean "not much space"? The small kitchen? The baby's going to cook for them?]

Prices of new flats should be frozen for the next 10 years. Also, flat sizes must increase by at least 10 per cent, that is, carve out space for couples to grow a family.

[Why? Nothing in your letter supports your conclusion. You say the kitchen is small, but there are 3 bedrooms, and most people don't cook much anyway.
You did not mentioned how low their income was, and based on your complaining about all and sundry I am sure if they were low-income, you would have mentioned it. BUT if the couple were low income, why did they buy a 4-rm flat? 3-rms are also available at Punggol Opal, which matches the info you provided. And those flats are about $100k cheaper.

So no. Your colleagues are obviously not low income. So assuming that they are at the median income of $7,500, they should easily be able to pay off their loan in 15 years. ]

Will these work? Nothing else has, so why not give these a try?

[So your argument for your suggestion is basically, "it hasn't failed yet because we haven't tried it yet". Wow. What logic. By that logic, we should all try doing the Gangnum Style to try to raise TFR, because that also hasn't failed yet so why not give it a try and see if works.

No logic. Just irrational and unsubstantiated hope. May I just say that your proposal is unconvincing.]

Ng Mingyu (Madam)

[To be fair, parents are concerned and it is understandable that parents worry about their children's future. However, while policies should address concerns, concerns should not result in illogical, irrational, and impractical policies. In other words, concerned, irrational mothers are lousy policy-makers. They don't see the larger picture.]

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