HDB's Flawed Policy Direction
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I have watched the Talking Point of Mr. Mah's effort to defend his HDB policies. After watching it, I feel very worried about the future of Singapore.
It has confirmed my initial guess of what this PAP government is up to, although I have heard about it from a professor whom might have helped to mold such policy direction.
MBT started off with three main points:
1) HDB flats are for Home Ownership, for Singaporeans to "own" their flats. This "asset" you could "sell it and you can keep everything that you made"
2) Extensive Coverage. Over 80% Singaporeans are within this scheme.
3) HDB is also acting as a form of retirement income. Singaporeans can "monetize" their flats, downgrade, rent out... etc. just for retirement financing.
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Mr. Mah responded to my constant ranting on the ground that with a 30 years mortgage, our children will not be able to have sufficient money in their CPF for retirement financing. If our children married at 30 years old, they could only finish their mortgage payment by 60 years old. Almost all money in CPF apart from Medisave will be used for this mortgage payment. There will be very little money left for retirement financing.
Mr. Mah responded saying that we could "monetize" our HDB flat for this retirement financing. The assumption that one could actually "monetized" our HDB flats to finance retirement is totally flawed. There are many issues here. When you pay high prices for your first HDB flat, by the time you finish paying the 30 years mortgage, you would be buying almost 50% more than the price you initially bought in terms of interests.
<span style="font-weight:bold;">Case I</span>
Take for example, if you are getting a loan of $225K for a 4 room flat, you will be paying about $865 for a 30 years mortgage. Your interests paid at the end of the mortgage is a total of about $103K at the HDB's concessionary interest rate of 2.6%. It means that if you are to make any money out of your flat, you must be able to sell at least $328K by the time you finished paying the 30 years mortgage. Please bear in mind that your lease will be left with 69 years. This is the reason why PAP wants the resale price of HDB to stay high.
However, if you sell off your HDB flat, where are you going to stay? Assuming that the studio apartment by then will cost you $100K. (Very conservative estimate indeed.) So you will have $228K left for retirement financing.
<span style="font-weight:bold;">Case II</span>
Could we do better than this? If the price today is priced at cost price, maybe $50K less. The amount of interest you will save will be about $23K with the same 30 years mortgage. You will be paying $190 less per month for your mortgage payment. This $190 will be in your CPF account earning an interest of 2.5%. At the end of the 30 years, you will get about $109K from this monthly saving of $190.
You will be taking a loan of $175K and paying $675 per month for your flat. Total interest paid will be about $79K. So in order for you to break even, you will need to sell $254K. Deducting that $100K studio apartment, you will get $154K plus the CPF extra saving of $109K. A total of $263K!
Please bear in mind that this is selling at break even, at lower price than Case I. If the flat could be sold at the same price as Case I, $328K, you will have another extra amount of $74K!
Besides, nobody could possibly predict what price the resale market will be in 30 years time! For the Case II, you will definitely get $109K first regardless of whether you can sell your flat or not. If you take $1000 per month for monthly expense, this $109K savings could last you about 9 years.
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The above is a simple example. However, I have not come to the other problems of Mr. Mah's method. If HDB insists on high HDB flat pricing based on resale market prices which are subjected more to excess liquidity from foreign sources rather than real income growth locally, the pricing mechanism will price young couples out. It is already taking effect on the lower income people now.
If we were to take Mr. Mah's policy direction at face value, it would mean that the resale market has to grow by at least 2.6% per year in order for the plan to be successful. However, can the Minister guarantees that our income growth could also grow at this rate for ALL Singaporeans? Apparently, by historical data for the past 10 years, the wages for the middle-lower income group has been stagnant or even regressed!
If more and more Singaporeans are priced out of the HDB property market, forced to stay with their parents, such a scheme will collapse. You may have 80% of Singaporeans staying in HDB but not all adult Singaporeans owning their flats! How could Mr. Mah's "HIGHFALUTIN IDEA" of using HDB flat as retirement financing works then?
On the other hand, more and more Singles and Divorced Singaporeans will be priced out by the system because the system is basically based on two income earners assumption. In the end, they may be forced to buy studio apartments or 2 room flats. If that happens, they couldn't possible downgrade further, could they?
Besides, this system is in danger of turning into sub-prime. At this rate we are going, there is no guarantee that everyone will be able to stay employed for the whole 30 years of their lives without decreased wages. Even Government agencies and GLCs are totally biased against older applicants who have passed 40 years old.
This is basically the reason why more and more Singaporeans are unable to fulfill their mortgage payment, ended up having their HDB flats being repossessed, evicted out of their flats. This is no laughing matter. They would have lost everything in the whole process or even ended up still owning HDB money after losing all their CPFs and the flats. At the very least, if they have kept that $190 per month savings in CPF as in Case II, they would still have some funds for retirement in future!
The other problem with this model is that there will be a great possibility of over building of studio apartments in view of an aging population. There will be a peak of this aging population and then it will decline, stabilizing at sometime later. During the peak of the aging population, the resale market may just collapse! This is basically because many people who follow Mr. Mah's direction would have to sell their flats to finance their retirement. Thus, Mr. Mah's hope of having high resale market price by the time of our retirement may be just fat hope.
On the other hand, the HDB may not react sufficiently to provide enough studio apartments to these people because they will be very concerned of over building. It will be a very delicate balance to maintain. By HDB's track record back in 2007 and 2008, it doesn't seem to be very nimble in estimating demand.
The situation would be great demand on studio apartment but there are competing resources now. HDB would have to build and cater to TWO big groups of people, the young couples and the retirees. If we do not have more PRs to buy up the resale flats from these retirees, we will be in trouble! There will be a huge oversupply of flats in the market.
Thus, the "downgrading" option is not economically sound at all. What about "reverse mortgage"? How much money do the government of the day needs to fork out to satisfy this system? Especially for an aging population when the PEAK of retirees begins to surface? Is that sound at all for the financial system to put in so much money to finance an "unproductive" investment?
How about the renting out option? First of all, there must be enough demand. If we do not have enough foreign workers working here to rent the flats during the peak of aging population, we are doomed. Furthermore, more PRs would prefer to buy their own flats and rent them out as well! Could anyone guarantee that there will be so many foreign workers around? If that is so, our own Singaporeans may just face depressed wages as well! The problem of affordability of HDB will come back to haunt us again especially so when we need the wage to grow as fast as the flat prices to grow at the rate of 2.6% per year.
Thus I think the suggestion of using HDB flat as "retirement financing" is really a very dangerous one. It has no basic sound economic foundation to start with. It is just based on some "ideal situation" scenario which is totally unrealistic. The premise of the "ULTIMATE PLAN" of PAP's retirement financing for Singaporeans is totally flawed. This system cannot work at all.
The better bet is the second case scenario whereby flats are sold at lower prices and Singaporeans could continue to save their money in CPF to be used for future retirement financing. To bang on Mr. Mah's policy direction on High HDB price for Future Retirement Financing is a very dangerous move. There are so many variables to take care of. His plan that aims to solve one problem, will eventually create more problems for Singaporeans and future government.
Goh Meng Seng -
Asset inflation.
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The CNA interview of Minister Mah was nothing more then a set-up to polish the deteriorating public image of the minister in preparation for the expected elections.
There was a PAP Member of Parliament to distract the hard questions posed by a third guest - who was a Housing Agent - while the moderator was no more then another distraction to guide the entire staged event for the minister.
Can the HDB unit be used as a source of income for one who retires - when there are so many sticky rules governing rental ?
Only a week ago, an HDB unit was repossessed by the HDB for breach of the rental guidelines - and nothing was further mentioned if the HDB owner received any market rate compensation based on current valuation.
In the period before 1957, when the British Colonial Government was still governing Singapore - our forefathers had more liberties and choices in housing, whether to live in the rural areas or in the city.
A young graduate can own a house within the first year of his working life, and need only to take a housing loan for no more then 10 years, and begin to save for his retirement in the next 15 years of his working life to enjoy full retirement at 55.
Since the PAP got into power in 1957, despite all the direct intervention of the PAP in the lives of Singaporeans - from family planning to education, from health to racial quotas in public housing, from jobs to CPF for retirement - Singaporeans are living in a deteriorating quality of life compared to our forefathers under Colonial Rule.
The PAP needs to have Singaporeans fully dependent on their talent - to have all Singaporeans living in HDB estates - so as to contribute to the huge annual surplus that this government claims to have the talent to produce.
It begins with moving Singaporeans staying in HDB estates - and the milking process starts to drain the financial resources of Singaporeans into the PAP Government Treasury.
Is it any surprise that this PAP Government can report glowing annual surplus - when Singapore do not export as much as Hong Kong or Taiwan or even South Korea - and Singapore has a ‘Foreign Exchange Reserve’ that is higher than all these countries ?
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Uncle, why alway mingle on those old days, let move on. We rather be independent than be dependent on those colonial white master ya. And when we obtained independent, we must work hard and show to the work that Singapore, a small country without any natural resources can survive. And indeed not only we survived, we also progress ourselves much better than most big country who have natural resources and lands. And if you ask British to come and colonise us again now, they will be most glad to take over...covert yr Reserve to British Pounds and send back to their Queen Chest. Please, please...let move on from here for a cheaper, better and faster Singapore.
Thank you
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Originally posted by angel7030:
Uncle, why alway mingle on those old days, let move on. We rather be independent than be dependent on those colonial white master ya. And when we obtained independent, we must work hard and show to the work that Singapore, a small country without any natural resources can survive. And indeed not only we survived, we also progress ourselves much better than most big country who have natural resources and lands. And if you ask British to come and colonise us again now, they will be most glad to take over...covert yr Reserve to British Pounds and send back to their Queen Chest. Please, please...let move on from here for a cheaper, better and faster Singapore.
Thank you
If you do not know anything about Singapore's past - are you qualified to speak about Singapore's present and future ?Stay out of Singapore politics and you will not be insulted repeatedly.
Can Singaporeans depend on foreigners like you with the intelligence of a Taiwanese 'hum' begin and end at its ‘Labia Majora’ and ‘Labia Minora’ ?
All you are capable of is to indulge in rapturous idiocy - can anything of any substance flow from your hopeless brain that is no bigger then the size of your ‘clitoris’ ?
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I know, i studied modern Singapore History and gets a 3 grade in my O level ok.
But past is what make today, and what we do today will determine the future, so it is very important to concentrate on the present so that the future will be brighter ya, and not to mingle much on the past.
By the way, singapore only have a short history, everyday keep repeating, i never study for history (jump class go shopping and watch movies) also can pass
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Originally posted by angel7030:
I know, i studied modern Singapore History and gets a 3 grade in my O level ok.
But past is what make today, and what we do today will determine the future, so it is very important to concentrate on the present so that the future will be brighter ya, and not to mingle much on the past.
By the way, singapore only have a short history, everyday keep repeating, i never study for history (jump class go shopping and watch movies) also can pass
You will benefit Singapore if you not only jump class but jump out of the school window and it will be one foreigner less.Your intelligence begins and end at its ‘Labia Majora’ and ‘Labia Minora’ - which only help with your useless indulgence in rapturous idiocy.
Can anything of any substance flow from your hopeless brain that is no bigger then the size of your ‘clitoris’ ?
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...my class in that Haig girl high school was down stair, my landed house just opposite only, ya, u r rite, i jump our of the window, outside the window is a garden, from the garden we reach a fench which someone had cut a rabbit hole out of it, then from there we run away...go catch butterfly..so happy during those days..hmmm
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Is anyone interested in your personal history ?
Is it any surprise that the Taiwanese 'hum' will flap its ‘Labia Majora’ and ‘Labia Minora’ in rapturous idiocy - just to attract attention to itself as an 'Attention Seeking Whore' ?
Can anything of any substance flow from its hopeless brain that is no bigger then the size of its ‘clitoris’ ?
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everyone knows the hdb policy is full with flaws. that why they keep changing and changing , bend here and there. but until now, they still cannot rectify the problems. i pity the agents also. if they got caught by the change in laws, they held responsible for it. but when govt policy are caught with so many flaws, no one held responsible for it.
transparency is the problems. if transparency is not upheld in all govt ministeries and minister alike, complaceny will result in more future more potent flaws that will drag singapore into the abyss!!
that why more singaporeans are going aust and NZ.
i also heard many singaporean are marying malaysian woman to migrate there when they are old!!
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oh, then Singaporean gal like me marry to who leh???? all singaporeans men go NZ, OZ, malaysia, taiwan, thailand and part of China to marry there...left only Bangala, chinamen and indian men here....aiyo, cham liao...
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Originally posted by angel7030:
oh, then Singaporean gal like me marry to who leh???? all singaporeans men go NZ, OZ, malaysia, taiwan, thailand and part of China to marry there...left only Bangala, chinamen and indian men here....aiyo, cham liao...
Which part of your CBM are you now using - the outer ‘Labia Majora’ or the inner ‘Labia Minora’ ?Do we need to indulge you with your irrelevant idiocy that flows from your hopeless brain that is no bigger then the size of your ‘clitoris’ ?
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I think one of the main problems is that the real wages of the general population is not rising in tandem with the rise in prices of HDB flats.
And if you have to divert the majority of your money to financing the purchase of the flat for 20-30 years, you have very little left for retirement and savings.
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Originally posted by reyes:
everyone knows the hdb policy is full with flaws. that why they keep changing and changing , bend here and there. but until now, they still cannot rectify the problems. i pity the agents also. if they got caught by the change in laws, they held responsible for it. but when govt policy are caught with so many flaws, no one held responsible for it.
transparency is the problems. if transparency is not upheld in all govt ministeries and minister alike, complaceny will result in more future more potent flaws that will drag singapore into the abyss!!
that why more singaporeans are going aust and NZ.
i also heard many singaporean are marying malaysian woman to migrate there when they are old!!
transparency is the problems. if transparency is not upheld in all govt ministeries and minister alike, complaceny will result in more future more potent flaws that will drag singapore into the abyss!!
You nail the issue headon! transparency! Subsidies, price of building a flat and land cost. Factors that are still shrouded.
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I hope in future elections if a new leader could provide public housing pricing public housing for the 85% singaporeans and scrap COE and ERP. Just limit the COE based on 1st come 1st serve basis , no need price the COE. Also, allocate certain number for business and non-business eg. 70:30 allocation.
can still limit the number of cars on the road without any cent.
Its not like the COE solved traffic congestion problem.
If it did, all countries in the world would have implemented it. as simple as that.
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Originally posted by charlize:
I think one of the main problems is that the real wages of the general population is not rising in tandem with the rise in prices of HDB flats.
And if you have to divert the majority of your money to financing the purchase of the flat for 20-30 years, you have very little left for retirement and savings.
I think one of the main problems is that the real wages of the general population is not rising in tandem with the rise in prices of HDB flats.
The issue of rising real wage in tandem with rising price of HDB flat may look politically sound. But not economically.
If we take the perfect scenerio where real wage rises in tandem with rising flat price, sustains over a long period of time. What next?
We will be faced with a diminishing lease conversely with a mushrooming price.
Will future Singaporean be happier living with a leasehold of 10 years or less with price tag of $2 millions? -
Originally posted by charlize:
I think one of the main problems is that the real wages of the general population is not rising in tandem with the rise in prices of HDB flats.
And if you have to divert the majority of your money to financing the purchase of the flat for 20-30 years, you have very little left for retirement and savings.
As smart as you are, you fail to see the exploitation part of the govt, as long as wage lag behind housing price, peoples will have to work forever, that is the objective of the govt, so, how can they allow peoples wages be in tandem with housing prices?There are many ways to slavery and the worst one is silence slavery, slave until you also dunno what is happening.
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Originally posted by likedatosocan:
I hope in future elections if a new leader could provide public housing pricing public housing for the 85% singaporeans and scrap COE and ERP. Just limit the COE based on 1st come 1st serve basis , no need price the COE. Also, allocate certain number for business and non-business eg. 70:30 allocation.
can still limit the number of cars on the road without any cent.
Its not like the COE solved traffic congestion problem.
If it did, all countries in the world would have implemented it. as simple as that.
If that is what you want a new leader to do, i think corruption will set in. -
Originally posted by angel7030:
As smart as you are, you fail to see the exploitation part of the govt, as long as wage lag behind housing price, peoples will have to work forever, that is the objective of the govt, so, how can they allow peoples wages be in tandem with housing prices?There are many ways to slavery and the worst one is silence slavery, slave until you also dunno what is happening.
The Taiwanese 'hum' is no more then a sly hypocrite in this Speaker's Corner - supporting the PAP Government in the other thread in the call for Singaporean workers to improve their skill - and chastising Singaporeans for not taking up the call, while hypocritically explaining in this thread the reasons for the PAP Government reluctance to tie wages to housing prices.
Do we need a Taiwanese 'hum' to spell out the obvious as if Singaporeans are dumb and dim witted ?
Stay out of Singapore politics and you will not be insulted repeatedly.
Can Singaporeans depend on foreigners like you with the intelligence of a Taiwanese 'hum' begin and end at its ‘Labia Majora’ and ‘Labia Minora’ ?
All you are capable of is to indulge in rapturous idiocy - can anything of any substance flow from your hopeless brain that is no bigger then the size of your ‘clitoris’ ?
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Originally posted by angel7030:
If that is what you want a new leader to do, i think corruption will set in.
If corruption can be created by providing cheap housing and scrapping all the social and economic straight jackets that the PAP Government has created to generate revenues for themselves - the Taiwanese 'hum' is obviously a foreigner that is ignorant of what life was before it even existed on our shores.Stay out of Singapore politics and you will not be insulted repeatedly.
Can Singaporeans depend on foreigners like you with the intelligence of a Taiwanese 'hum' begin and end at its ‘Labia Majora’ and ‘Labia Minora’ ?
All you are capable of is to indulge in rapturous idiocy - can anything of any substance flow from your hopeless brain that is no bigger then the size of your ‘clitoris’ ?
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another reason is verious PAP ministers denial about the PRs effect on spiralling HDB prices.
although PRs might not necessary be the highest bidders /winners of cOv(cash above valuation). they certainly make an impact causes desperate singaporeans to step up their bid to buy their dream flats. afterall, singaporeans are here to stay for long term while PRs often view their hdb is a investment for short term gains!! thus PAP explaination that PRs dont causes sprialling of HDB flats are narrow and immature. they fail to analysis the true market mechanisam that drive this prices higher. frankly speaking, MBT and his HDB ministeries are bunch of sleeping cronies!
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It is really contradicting.
On one hand, they keep saying repeatedly there is no speculation or bubble.
On the other hand, they start to implement various measures every few weeks to try to stop the speculation.
I think they are also very confused as to what is happening and to what they are doing.
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There are hot money coming in Singapore driven by sky rocketing property boom in China and HK.
Investors there took profit and run in anticipation of correction. Parked their money here, and in so doing, drives our private property prices up and up.
Hot money from the US and Europe are also pouring into our private property. Europe - in anticipation of the currency volatilities and economic stagnation. US - monetary policy of printing money.
The strong economic performance in Indonesia also filtered in our property boom as Singapore is traditionally their safe haven.
