HDB Deputy CEO: singles earning $2,500 a month can afford resale flats
September 14th, 2009 | 
Author: From our Correspondent
HDB Deputy CEO Mr Yap Chin Beng had a busy time of late trying to answer a flurry of questions from Singaporeans regarding affordability of HDB flats in the Straits Times Forum.
For a second time in less than a week, Mr Yap is forced to pen another letter to allay public concerns about the rising prices of HDB flats. His answer is the same as before: HDB flats remain affordable to the masses. (read article here)
In his second letter, Mr Yap answered the questions posed by writers point-blank in letters published on 5 September, one of which is a reply to a Mr Loo who ask about the percentage of income a single Singaporean earning $2,500 a month pay for a three-room resale flat at the quoted price of $200,000.
Mr Yap replied that “with an $11,000 subsidy, an eligible single earning $2,500 a month would need 29 per cent of his income for the loan. He can pay $575 from his monthly CPF contribution, with the remaining $146 in cash.”
This 29 percent is perilously close to the HDB benchmark of 30% for assessing housing affordability. If we factor in the bank interest rates and annual inflation, it would have exceeded 30% not to mention the fact the prices of resale 3 room flats are now approaching $300,000 especially those in the prime estates of Bishan and Toa Payoh.
Again, Mr Yap failed to answer the key question whether the single paying $575 monthly from his CPF for the mortage loan will have enough savings left at the end of the day for his retirement needs.
Mr Yap also said that HDB cannot ban COV or provide loans for it, as people should be free to decide what their flat or intended purchase is worth to them, and not be forced to buy and sell at fixed prices while financing for COVs is more likely to fuel the escalation of prices and worsen the situation.
Lastly, Mr Yap sought to remind Singaporeans that the PAP government has “enabled about 80 per cent of the population to own their homes – the highest home ownership rate in the world.”
Whether Singaporeans really own their HDB flats remain debatable especially when they are 99-year leasehold projects subjected to a host of restrictions imposed by HDB such as a minimal 5 year residency period before they can be sold.
Furthermore, it doesn’t make sense for Singaporeans to slog their entire lives to pay for the roof over their heads only to realize that they do not have enough savings left in old age for retirement.
Singapore has no social safety net to speak of which explains why many elderly have to take up menial jobs like cleaners, toilet keepers and used cardboard collectors to support themselves.
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28 Responses to “HDB Deputy CEO: singles earning $2,500 a month can afford resale flats”
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Mr Yap is only a highly paid civil servant! He has to do his best to serve his political master.
So such replies from him, as of many others, is only to be expected.
To do otherwise is beyond his scope of duty.
We have to deal with the political master if we really want to solve this problem. But unfortunately not so easy, judging from past results – 50% walkovers, 66% mandate and 98% seats for the master at every election.
Somebody please, tell me where to find this $200K 3 room resale flat. He talk c*#k or not?
Yes, I want to know too…WTF are the $200K 3 room resale flats?
Add on COV, min. price looks more likely to be $300K even in places far away from town.
yeah, the 2500 guy only has 1700 a month to spend and as he grows older, his cpf ordinary contribution becomes smaller and he needs to pay more cash.
how can he sustain this for the next 30 years?
He did not mention that the period of loan is 35 years!
removing cov is not the solution. it only transfers more power to the government/corporations in deciding the hdb prices.
the main problem is the massive influx of foreigners. it’s ridiculous that the gahmen opens our doors to triple our intake of foreigners within a few years. it generates gdp growth and enables the ministars and civil servants to claim exorbitant remuneration, while creating havoc in the lives of ordinary Singaporeans.
obviously the hdb ceo yap has no compassion whatsover. can the man earning $2500 continue to make this kind of money year after year? we hear of “retrenchments” ie replacements by foreigners, we also hear of age discriminations. on top of that is the inflations over the years.
a possible solution is that the $2500 man can sell off his property when he is older, and sleep in the streets. now that is a distinct option.
poor guy condemned by HDB to pay debt all his life
“….which explains why many elderly have to take up menial jobs like cleaners, toilet keepers and used cardboard collectors to support themselves….”
Sorry hor…..now foreigners have taken up these jobs from struggling senior citizens. The latter can only collect cardboards or beg. Then again, cardboard collection and begging have also been intruded by foreigners.
Currently the prices of resale 3room flats in prime areas (north, central and east) range from S$200,000 and above that.
A lot of sellers are asking for Cash on top of the valuation amount.
Hence, it proves that those in power do not know the ground in which their power is drawn from.
The previous PAP government
Rowen,
in fact, they do know the ground very well as it is been fed back to the echelon but they will forge ignorance and nothing/superficial work will be done as the gov will never do anything that don’t give them strategic and monetary advantage. Recall how certain female minister says that no advantage to gov for temasek transparency ?
given the present and uncertain future scenario in sg, how many of us (less mortal) really earn $2,500.00? earning this figures range are also vulnerable of being laid off due to economy reasons as well as influex of FTs & FWs who happily excepted $2,000.00 and below.
so this idiot yack…is he a true singaporean or an alien?
zaobao today has a write up on hdb prices (its on the cover and inside too). will MBT serve up the same reply in parliament today? again elections consideration is hampering them to take action.
Not sure why part of my post was lost.
The previous PAP government ‘enabled about 80 per cent of the population to own their homes – the highest home ownership rate in the world’ when prices of HDB flats cost at most tens of thousands of dollars, not several hundred thousand dollars.
Lets assume Mr Yap’s data is a bit off. Give him benefit of the doubt for now.
Put aside question of how to squeeze grandparents, parents and children into a 2 bedroom flat….
Assume a Mr X, aged 32, buys a $250K 3-room flat in some part of the island, cos typical Singaporean marries at 29yo and assumes he works hard, saves enough $ and gets flat 3 years later.
$20K COV and valuation of $230K.
Assume Mr X somehow has $43K in cash and CPF for downpayment. Remainder paid thru mortgage loan at 2.6%. Over 35 years.
Works out to be $750 per month mortgage repayment.
Assumes Mr X is the typical Singaporean, making $3K per month.
He will have $1035 in CPF contributions monthly, of which $690 (OA), $150 (SA) and $194 (Medisave).
Mr X uses all $690 to pay mortgage and top up $60 per month.
So. Sounds affordable cos Mr X still has $2360 take-home salary (after 20% CPF and $60 mortgage)…..
Nevermind $2340 to feed, cloth and educate grandparents, parents and children may mean that Mr X has little savings left every month – e.g. subtracting $10 per person per day for food ($1500 per 30days for family of 5); $150 per month for utilities, $200 for child’s tuition per month etc etc etc…
More importantly, Mr X must continue to pay $750 until he is 65 years old.
Which means, (again) assuming Mr X continues to get $3K salary per month in his elder years…
at 50, Mr X’s OA only gets $390 per month so he needs to top up $360
at 60, Mr X’s OA gets $345 per month so top up slightly more
at 67, Mr X’s OA gets only $105 per month so top up even more. “Lucky” for Mr X to be able to pay off mortgage BEFORE he retires.
But by this time, Mr X’s OA has not grown a cent since 32yo cos every month’s OA contributions goes to mortgage.
So he may have difficulty making Minimum Sum requirements – which may be much more than $120K by the time he is 67yo.
Which means his CPF Life annunity will use up all of his SA and maybe, require a pledge of that 3-room resale flat that Mr X has spent 35 years paying off….ironic that upon paying off, Mr X has to reverse-mortgage it back to HDB.
Of course, Mr X’s 3-room flat would be worth more than his original buying price so reverse mortgage gives him more $ but remember, inflation also kicks in so the same (extra) $100K when Mr X is 67yo will go a lot less distance than $100K now.
Mr X would be more in the red if somewhere in between the 35years period, his 3-room flat is en-bloc-ed and he has to cough out more money to top up for a new 3-room flat.
Worse for Mr X if he happens to fall ill and hospitalise or retrenched during the 35years period.
Poor Mr X.
of course, his wife, who may be working, may be better off but since women’s wages are typically lower than men for some strange reason, I guess only slightly better off.
of course, Mr X’s salary will increase yearly from 32 to maybe 55 yo. But his expenses also increase as children and grandparents get older…medical, education etc etc.
So, I take it that Mr Yap is suggesting that
1) buy one small flat and stay there forever
2) pray hard not to get sick, retrenched etc
3) work for 35years to pay off mortgage and return flat back to HDB at the end of it.
4) tell grandparents and children not to spend so much on medical, tuition, education etc. Stay home and watch tv instead.
Sounds plausible to me.
Lifeislikethis.
Just imagine a retrenched scientist have to drive a taxi now in order to survive in this man-eat-man Singapore. What kind of future do you think the man-in-the street or the lesser mortals will have in Singapore ? Even the cleaner lady or the hawker assistant have to compete with the Indian or China imports now !
How many of us will be guaranteed this $2,500 take home pay for the rest of our working lives in order to service a 30 year loan ? Take for example, the typical taxi driver is paying at least 20~30% of their earnings to the taxi companies to pay for the rental of their taxis ? He has no CPF contributions from his employer and has hardly enough left to pay for the housing loan installment. The same can be said for the rest who are in the lower income bracket.
So is Yap trying to pull a fast one when trying to defend HDB ?
the govt has their fingers stuck in their ears and they are talking AT us. their cold, calculated response (can we even call it that) is their way of “engaging” singaporeans in a “dialogue”.
and why should MPs rock their own boats when they are not the ones facing such a situation? name a PAP MP who has a vague inkling of what it is like to be faced with daily challenges of making ends meet every day. sympathy is useless when our concern falls on deaf ears.
PAP has forgotten, that as a govt, they should be in service of the PEOPLE. not the other way around.
What Yap has cleverly left out of the picture is how HDB flats are affordable for a great many PRs, which is the key factor skewing the equation.
For HDB, PRs are a godsend. They typically make 3.5K-4K a month or more and many are married, which means 7K-8K takehome a month.
So, even a 400K flat becomes affordable for a PR couple.
It’s a win-win for them: pay EMI instead of rent, build an asset, sell it to a bigger fool after 10-15 years, go back home with a ton of money.
What Yap didn’t say was how PRs are keeping HDB smiling while whining Singaporeans are making it frown.
I read it in the Forums this morning. It was OMGWTFBBQLMAOROFL.
Seriously, what on EARTH is going on? I wish LKY bring him down, Back To Earth.
the thing in pap’s mind is how to make ordinary folks more & more poor & themselves more & more rich…so that end of day we would be virtually slaves to them & they would always remain in power…property is just 1 of the many things they are doing to us currently…no point complaining…just start telling everyone around you before the next GE comes not to cast their votes to them…
It is definite hard for the HDB top management to explain to the public how a single Singaporean earning $2,500 a month can pay for a three-room resale flat at the quoted price of $200,000.
The answer is they cannot see, they cannot hear and lastly they cannot feel it since they are drawing millions dollars annual salary including bonus.
Guess the top management is thinking, pls don;t break my millions dollars rice bowl.
the ONLY driving factor that is driving these high HDB valuations and COVs is DEMAND. And where do these demand come from? Definitely NOT SINGAPOREANS like u nor me.. (how could there be increase demand when the birth rate for singaporeans is falling for so many years?)
The DEMAND comes from PRs/Foreigners.. and it is this demand that keeps this resale market going higher and higher..
A rich acquaintance told me : singapore is actually not expensive to live in. The condos are cheap, the flats even more cheap and the bungalow is priced just right. He cannot understand why some netizens kpkb even tho he has a PhD.
A poor acquaintance told me : life is much tougher now in singapore than before. He dread to think of his retirement.
Both are not telling lies.
Get my drift?
AND NOT “PEOPLE’S ACTION Party” ….
Mr, Lee KY a co-founder of the PAP with Dr. Toh Chin Chye who is the real founder of PAP … HAS TOTALLY FORGETTEN THE “MOTTO” and “MISSION” of ‘his’ PAP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Men in WHITE DRESS and WHITE shoes TOO. And now some Women TOO … “As a SYMBOL of PURITY” … What ARE they DOING HAH?????????
Do you think IF Perhaps their skin also turn WHITE … THEN … they will br really pure In their hearts FOR US … THEIR FELLOW Singaporeans??? Any hope???
[...] the only way you can cash out is to migrate. So does anyone seriously cares? Even a person with a $2,500 income can own a resale flat [...]
The perverse of logic is this. Who says singles under 35 is allowed to buy HDB?? If you are single and 35 plus, how many more days of working life can you expect to have when they bring in cheaper planeloads of foreign “talent” and or foreign workers to replace you?
Singles past 35 and earning $2,500 per month is NOT LEGALLY DISALLOWED so that you are ‘LEGALLY AFFORDABLE” TO BUY ( NOT legally unaffordable to buy until your attainment of age) and in so buying YOU AFFORD YOURSELF A BIG PILE OF DEBT they know you will not be able to service from UNEMPLOYMENT.
AFFORDABLE here has a perverse meaning – it replaced the word “legally permissible” to dig your financial graveyard of unaffordable debt.
Yah lah, we have to deal with voting out the political basterds first before we can have any change. Read other political parties blogs, cast a blank vote, whatever you do, we need a change.
in singapore we always have these civil servants defending the govt policies whether for good or bad. i wonder what will happen when the day comes and the opposition takes control , what will happen to them ?