The failure of past success - HDB

[oli9]

Then they should work out the exit route properly.

Existing exit route - any selling of HDB flats of less than 5 years occupancy is 95% of purchase price. HDB will buy the flat. Owners are not allowed to sell HDB in open market.

Do you know of any HDB exit plan that we dont? If you have, kindly share for the benefit for all of us here.

 

[Zombie]

Do you know of any HDB exit plan that we dont?

Not HDB exit plan.

Exit plan as in, delaying the divorce proceedings, rent out the rooms to get income, start looking out for open market buyers from 4.5 years onwards etc. There are people doing it this way.

Your friend got marriage problem in the second year, then used another year pleading. He probably returned his flat in the third year.

 

[oli9]

Not HDB exit plan.

Exit plan as in, delaying the divorce proceedings, rent out the rooms to get income, start looking out for open market buyers from 4.5 years onwards etc. There are people doing it this way.

Your friend got marriage problem in the second year, then used another year pleading. He probably returned his flat in the third year.

If every story has a fairy tale ending like your example, Im sure HDB would be made deities in the eyes of everyone. When couples divorce, there's no such things as niceties. Some preferred to get the divorce proceedings concluded asap.
Yes, my friend returned the flat after the 3rd year but not before HDB sent eviction letters. HDB are bastards, truly.

 

[Goh Meng Seng]

Buying a place which commits 1/3 of your salary is really foolhardy. Financial planners who say it is ok are just after your money.

A prudent person earning $2,800 would have bought a place that requires a mortgage payment of no more than $700. $500 to $600 would have been better. But of course such a house is just too small too far too ulu etc for big time Mr Rafi.

Dear Cass888,

It is the norm for people to pay about one third of earning for housing in many places basically because it is a big ticket item. The median income for Singaporeans is about $1,700 or $1,800 (I stand to be corrected) although the mean income is higher. This is due to the fact that income distribution is skewed.

Thus, median household income is about $3,500. Most people don't feel the pinch of paying the mortgage basically because most of it has been covered by their CPF. But their CPF contribution is 33% which is about one third of their income.

Of course, it would be better if one could pay less than 25% of his pay for housing. In Singapore, it is becoming very difficult for anyone to pay less than 25% for their HDB flats basically because the inflation of HDB prices out paced salary increases.

The most ridiculous increase in HDB prices are back in early 1990s.

Goh Meng Seng

 

[Zombie]

Most people don't feel the pinch of paying the mortgage basically because most of it has been covered by their CPF. But their CPF contribution is 33% which is about one third of their income.

His $2800 got no cpf and he spent most of it ie very little savings.

If he pays cpf, he should be getting around $2150 cash + $650 cpf ie total cpf at 30%.

Now if he could not even save $650 every month, how do you expect him to fork out $900 each month to pay instalments?

Even if he pays cpf, he should not buy a $244K 4-room flat requiring $900 monthly instalments.

Proportionately, he should have bought a $180K 3-room flat requiring $650 monthly instalments, to match his earnings.

Financially, he had over-committed and one-third rule does not apply.

 

[Zombie]

If every story has a fairy tale ending...

Too bad, this is a modern world.

 

[Goh Meng Seng]

His $2800 got no cpf and he spent most of it ie very little savings.

If he pays cpf, he should be getting around $2150 cash + $650 cpf ie total cpf at 30%.

Now if he could not even save $650 every month, how do you expect him to fork out $900 each month to pay instalments?

Even if he pays cpf, he should not buy a $244K 4-room flat requiring $900 monthly instalments.

Proportionately, he should have bought a $180K 3-room flat requiring $650 monthly instalments, to match his earnings.

Financially, he had over-committed and one-third rule does not apply.

It does not matter how you calculate, whether with or without CPF. We are talking about percentage of TOTAL WAGE.

If he pays CPF, he does not use CASH to pay that $900 but with CPF plus cash top ups. Your calculation is flawed here, assuming that he only used CASH to pay mortgage if he pays CPF.

Goh Meng Seng

 

[Seee3]

It does not matter how you calculate, whether with or without CPF. We are talking about percentage of TOTAL WAGE.

Using % is just a rule of the thumb. There is a minimum threshold, subsistence level, that must be taken care of first. If what is left after paying for housing loan is not enough to support basic needs, then this rule does not apply. Basis needs is again subjective. Different people have different levels of basic needs.

 

[Goh Meng Seng]

Using % is just a rule of the thumb. There is a minimum threshold, subsistence level, that must be taken care of first. If what is left after paying for housing loan is not enough to support basic needs, then this rule does not apply. Basis needs is again subjective. Different people have different levels of basic needs.

I do agree with you here. If a family only earns $1200, they could not afford to buy any house. They need to take care of basic needs.

But in this case, it seems that Rafi, with $2800 and a mortgage of $900, could afford it; his family can get ends meet even after paying for the $900 mortgage.

It was only when he lost his job that he couldn't afford it. This is the crux of the matter.

Goh Meng Seng

 

[Ramseth]

CPF deviated from a retirement planning scheme to a flat selling scheme.

If you go to seriously advanced countries like the US, western Europe and Japan, most youngsters either live with parents or rent apartments. At certain age or income level, then would they consider buying their own apartments or houses.

In Singapore, every mid 20s contemplating marriage would naturally be faced with the question of which and where HDB flat to "buy". And yet, they (and we) don't really "buy"...we lease on a 99-year leasehold, minus whatever expired.

I think that the government has shirked the duty to provided affordable rental housing to all citizens and moved to profiteering from selling leases which it could get from requisition laws. Nobody owns HDB flats, except HDB. Instead of collecting $100 p.m. or so in rentals, HDB is collecting $1,000 p.m. or more in mortgage repayments for performing the same function. Unltimately, the land and bricks and mortar still belong to HDB, not the lessees, who may be illusioned into thinking that they're owners. Wake up the idea.

 

[Zombie]

It does not matter how you calculate, whether with or without CPF. We are talking about percentage of TOTAL WAGE.

If he pays CPF, he does not use CASH to pay that $900 but with CPF plus cash top ups. Your calculation is flawed here, assuming that he only used CASH to pay mortgage if he pays CPF.

Goh Meng Seng

Did you read his case properly?

His $2800 job got NO CPF CONTRIBUTIONS and he could save very little (from the $2800) even before he got his flat.

This means, he got to use CASH.

If he wants to pay CPF and since he is valued at $2800, his boss with any business sense would reduce his gross pay so that he will still receive "net pay in cash + total cpf" of $2800. And his total cpf contributions would be cut from his $2800 CASH.

There is no inflow of money into his cpf account except from his $2800 CASH.

If he already had sufficiently cpf fund from his previous jobs to cover a large portion of his housing debt, then he would not be in trouble now.

So, in on-going basis, his housing debt repayments would depend totally on his $2800 CASH.

One third debt service ratio measure creditworthiness and therefore covers all debts. If he had problems setting aside some money in savings (before he got his flat), it would indicate that his credit risks may be higher. It does not make good sense to justify $900 housing debt repayment just because it is 1/3 of $2800. Dude.

 

[Zombie]

But in this case, it seems that Rafi, with $2800 and a mortgage of $900, could afford it; his family can get ends meet even after paying for the $900 mortgage.

It was only when he lost his job that he couldn't afford it. This is the crux of the matter.

Goh Meng Seng

The crux of the matter is that he got no cpf to rely on, and he could not save despite getting $2800 CASH (he probably got other financial commitments).

Anyone who lost his job and have no income flow, cannot afford anything, unless he has savings or other funds to rely on . You don't need a professor to tell you that. You are just trying to make an issue out of it.

 

[leetahbar]

The news article published on The New Paper is not new. Moons ago, The Malay Newspaper Berita Harian has published alarming figures on those who are forced out of their HDB flats when they could not afford to pay their mortgage. They were even told by the HDB staff to "stay with their friends or relatives" instead of giving them a solution to their housing-financial woes.

The newspaper report actually gave a slanted connotation on the whole issue. Did Mr. Rafi bought a flat that is way beyond his means? Apparently no. Base on a monthly salary of $2,800, his mortgage payment of $900 is just about one third of his total salary. Ask any financial planner and they will tell you that this is quite alright. He did not buy a house that he could not afford back then.

It is only when he lost his job and found a job that pay less than half of what he used to get that make him unable to fulfill his mortgage payment. This is the key problem that the reporter refused to address.

Of course the reporter hinted that the blame of his plight now is due to "ill advice" from property agent but seriously, what other options could he possibly have other than selling off the flat that he could no longer afford?

The REAL BLAME lies in HDB and its policy! HDB KNEW that Rafi and his family can no longer afford to pay the mortgage and the only option is for him to sell their flat. But wait, where should they be living if they sell their flat? HDB refused their plead to rent a flat from them! I mean, rules and regulations aside, HDB could actually sit there and tell people that sorry, they could only live off the street or live with somebody else and they could not rent any flat to them!

What has become of this PAP government? This is a clear case of REAL NEED! Housing policy such as HDB has been one of PAP's greatest political achievement back in the 1970s and 1980s. They were proud to say that every Singaporeans will have a decent roof over their heads and this is their great political achievement. But now, this no longer holds any truth!

HDB, through the PAP government's policy, has actually DENIED Singaporeans of any roof over their heads! This should be the REAL ISSUE of this newspaper report! And there are many more people in the same plight and it was reported in Berita Harian that many Singaporeans who could not pay for their flats will be evicted out of their flats and HDB will not provide any alternative housing (i.e. rented flats) for them!

I think PAP's ultra-capitalist approach to governing Singapore has just gone too far. Where are the visions and promises of the past PAP for Singaporeans to have decent roof over their heads, a decent job, really cheap subsidized healthcare and the great promise of CPF covering their retirement needs?

Contrary to what Prime Minister Lee wanted us to believe in his National Day Rally, Singapore has become worse, not better! At the very least, back in 1970s and 1980s, we do not leave people to live off the street without a roof over their heads. We did not need to demand patients and their family members to guarantee that they are able to pay for whatever medical costs before admitting them into the hospitals which are now really overpriced. We did not have massive influx of Foreign workers to become cheap labour substitutes of Singapore workers and depressing our wage. Our wages are stagnant or even regressed for some segment of Singaporeans for the past 10 years while price hikes (Public Transport fare) become a common practice.

PAP's past success has failed. CPF as retirement funding has failed. HDB as part of 100% housing for all has failed. Affordable basic Healthcare has failed. Providing stable and good pay jobs has failed. There is really little past success of PAP left.

Goh Meng Seng


Mon, Aug 17, 2009
The New Paper

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Their spiral into the streets

ah seng, u blurcock!

hdb is so successful that even china comes to learn and copy from it.

ALL SINGAPOREANS ARE ASSET RICH BUT CASH POOR. go think about this sentence.

 

[Lee Hsien Tau]

How come when SGH shrink ask me, and I said flat belonged to Lee Con You, I get sent to IMH?

:oIo::oIo:

CPF deviated from a retirement planning scheme to a flat selling scheme.

If you go to seriously advanced countries like the US, western Europe and Japan, most youngsters either live with parents or rent apartments. At certain age or income level, then would they consider buying their own apartments or houses.

In Singapore, every mid 20s contemplating marriage would naturally be faced with the question of which and where HDB flat to "buy". And yet, they (and we) don't really "buy"...we lease on a 99-year leasehold, minus whatever expired.

I think that the government has shirked the duty to provided affordable rental housing to all citizens and moved to profiteering from selling leases which it could get from requisition laws. Nobody owns HDB flats, except HDB. Instead of collecting $100 p.m. or so in rentals, HDB is collecting $1,000 p.m. or more in mortgage repayments for performing the same function. Unltimately, the land and bricks and mortar still belong to HDB, not the lessees, who may be illusioned into thinking that they're owners. Wake up the idea.

 

[Zombie]

ALL SINGAPOREANS ARE ASSET RICH BUT CASH POOR.

That is because we love to speculate.

Yes, speculate... because housing debt is a commitment of future incomes at today's price level. This is like buying futures.

 

[Zombie]

It does not matter how you calculate, whether with or without CPF. We are talking about percentage of TOTAL WAGE.

http://mycpf.cpf.gov.sg/Employers/Tools/Home_Affordability_Calculator.htm

Home Affordability Calculator

Please note that banks may have their own methods of calculating the amount that they are willing to lend you. This calculator by CPF Board is meant to illustrate one possible way of computing your home affordability.

This "maximum percentage of income to be spent on housing loan" is also known as the "debt servicing ratio".

While the CPF calculator's default debt servicing ratio is 35%, you may vary it by using figures between 20% to 40%.

Some banks may assume that this amount would be spent fully on repaying the housing loan. Other banks may take your other financial commitments into consideration (eg. car loans, credit card debts, existing housing loan payments, etc), and reduce this amount, which would in turn reduce the maximum loan they would be willing to offer to you.

This CPF calculation is based upon the gross monthly income figure. You should note that some financial planners may use the net monthly income figure (the take-home pay after deducting CPF contributions) when they calculate financial planning data for clients.

We suggest that your total monthly debt payments (including your home loan) should not be more than 35% of your gross monthly income. Thus, if you have other financial commitments amounting to 5% of gross monthly income, you should consider limiting your home loan repayment to 30% of gross monthly income.

Think carefully before getting a loan for the maximum amount! While monthly repayments are almost a certainty, can you be sure that your monthly income will continue uninterrupted over the long-term?

It is simply saying that one third ratio on total wage is not a golden rule. And if 1/3 is the recommended guideline, then $900 out of $2800 is already reaching the maximum amount (ignoring any other financial commitments he may have).

 

[Papsmearer]

CPF deviated from a retirement planning scheme to a flat selling scheme.

If you go to seriously advanced countries like the US, western Europe and Japan, most youngsters either live with parents or rent apartments. At certain age or income level, then would they consider buying their own apartments or houses.

In Singapore, every mid 20s contemplating marriage would naturally be faced with the question of which and where HDB flat to "buy". And yet, they (and we) don't really "buy"...we lease on a 99-year leasehold, minus whatever expired.

I think that the government has shirked the duty to provided affordable rental housing to all citizens and moved to profiteering from selling leases which it could get from requisition laws. Nobody owns HDB flats, except HDB. Instead of collecting $100 p.m. or so in rentals, HDB is collecting $1,000 p.m. or more in mortgage repayments for performing the same function. Unltimately, the land and bricks and mortar still belong to HDB, not the lessees, who may be illusioned into thinking that they're owners. Wake up the idea.

I think what everyone has failed to notice is retirement money is for retirement and nothing else. Sinkies have been suckered into using thier retirement money (ie CPF) to pay for their monthly mortgage. Mortgage payments are living expenses and should be paid out of after tax income. Especially since people don't own the HDB flat, they are tenants, why are should they use their retirement money to pay for rent? That is why when these people actually retire, they hope that the sale of their leasehold interest in their HDB flat will actually net them a profit large enough to make up for their depleted CPF account. But this is speculating with your retirement money, which is the last asset u should speculate with. As everyone knows, people have actually lost money on their flats. If u are unlucky to sell during a downturn, than good luck to you.

 

[londontrader]

Dear GMS,

It would seem that the man waited for a very long time before seeking advice and taking action (something like 3 years!). I would also point out that the 1/3 percentage of total wages you referred to is a CEILING. Mr Rafi was earning $2800 in a job without CPF = not very secure employment. I think he was being a tad optimistic buying a 4 room RESALE flat based on his circumstances.

I wonder if Rafi could have continued financing a 3 room flat (not in Clementi) based on $1200 per month wages?
What do you think?

I do agree with you here. If a family only earns $1200, they could not afford to buy any house. They need to take care of basic needs.

But in this case, it seems that Rafi, with $2800 and a mortgage of $900, could afford it; his family can get ends meet even after paying for the $900 mortgage.

It was only when he lost his job that he couldn't afford it. This is the crux of the matter.

Goh Meng Seng

 

[londontrader]

On that point, I would agree with you!
It was/is a policy error to allow the CPF to become

1. A Mortgage fund
2. An automatic stabilizer ie. CPF cuts during recessions

I think what everyone has failed to notice is retirement money is for retirement and nothing else. Sinkies have been suckered into using thier retirement money (ie CPF) to pay for their monthly mortgage. Mortgage payments are living expenses and should be paid out of after tax income. Especially since people don't own the HDB flat, they are tenants, why are should they use their retirement money to pay for rent? That is why when these people actually retire, they hope that the sale of their leasehold interest in their HDB flat will actually net them a profit large enough to make up for their depleted CPF account. But this is speculating with your retirement money, which is the last asset u should speculate with. As everyone knows, people have actually lost money on their flats. If u are unlucky to sell during a downturn, than good luck to you.

 

[Nice-Gook]

If you go to seriously advanced countries like the US, western Europe and Japan, most youngsters either live with parents or rent apartments. At certain age or income level, then would they consider buying their own apartments or houses.


I think that the government has shirked the duty to provided affordable rental housing to all citizens and moved to profiteering from selling leases .

True,in most countries young couples usually live with their parents--a true extended family.Houses are mostly rented if working couples choose to live in hyper cities.In fact providing housing or housing allowance is a major factor in employment contract if one needs to shift to cities....so the issue of a mortgage albatross always hanging around one's neck is not there.

This government had shirked its duty to provide affordable rental housing to all citizens..